High Down Payment Lease Offers

Chris K.

So I've been leasing cars to folks since 1999 and most people only put $500-$1500 down. I'm struggling with my Sales Manager who is picking the ads to put on the website and he's weak I think in the GUTS area. They think beating the competitor's ad by $10 is enough to draw people in. Problem is the ad is for over $3000 down plus fees, on last years model. We have new 2018's in better supply and can show less down? We all know NOBODY puts $5000 down on a lease, in fact we tell people NOT to put a lot of money down when they are here, but why run these ads? I'd rather run ads with ZERO down + fee's or run a true sign & drive with really no money. It's this type of advertising that annoys me most about car dealers. Where is the common sense or do we all still want to lead the customers down a road they know is too good to be true. We are experts at starting at MSRP and then working them until they are worn out. Not sure if you all are doing that?

Chris K Leslie

I understand his login but the problem with that is that they don't really understand that it's going to bite you guys in the ass when it comes to reviews and referral business down the road. It's not worth it. 

Jason Stum

Not sure how it is in your market Chris K (not the Leslie one lol), but here in the Detroit Market leasing is HUGE and has been for decades. Allow me to play devil's advocate here for a second. Even in a market like mine where leasing is prevalent. Even after all these years, shoppers still seem to have blinders on when it comes to the terms of the lease. They only see the PAYMENT on the website or in the ad, and never bother to look at the fine print.

So in defense of your sales manager, I can see why he's structuring those lease deals the way he is. If a lease savvy market like mine doesn't pay attention to the details, I can only imagine it's no different anywhere else.

That doesn't mean I agree with those tactics though. I had the 'pleasure' of working for a sales manager who liked to do something similar and it would drive those of us on the floor crazy. He would run an ad for a $99/mo lease with $4,000 down, employee pricing & lease loyalty required.

Sure this would drive phone & foot traffic, but it made it insanely difficult to sell a car. People would just come in based off the payment and had zero interest in the actual car. As soon as they found out that their lease payment would be closer to $250 instead of $99, the vehicle wasn't "worth" it to them" because in their own mind they had already decided this was a $99 car and why would anyone ever pay $250 a month for a $99 car?

Then they'd leave and feel like they we a victim of the old bait n' switch (even though everything they needed to know was right there in front of them before they came in). This of course would lead to a scenario much like CKL describes with bad reviews and negative word of mouth.

So maybe that's an angle you can take with your Sales Manager. Let him know how difficult it is to overcome objections on the floor if the customers come in already mentally committed to a low low payment. IMO, the more upfront and transparent you are about pricing from the very start of the shopping journey, the more successful you'll be.

 

 

Brendan Dolan

I have very mixed feelings about this, as it was what we did at my old dealer group. We'd do $3-4k down plus drive off, $99 a month plus tax, 10k miles a year. Tech savvy NorCal full of software engineers who would put all the data into Excel to compare dealer offers.

It all came down to training. When we hammered it into the sales guys, and gave them the word tracks to get through the conversation, sales went waaaay up. Our VW store was dead in the water, and went from bottom 5% in the nation for volume to top 5% in the nation for volume. Low lease payments were huge in driving the traffic we needed. 

The progressive guy inside of me says "c'mon, this is setting up a CSI disaster, it's close to bait and switch (even though EVERYTHING is disclosed in the compliant ad) and a customers willful ignorance will set the salesmen up for failure when they want $0 down $99 a month. 

I just couldn't argue with the results. I was on the "lets not do it" side of the table, but then I pivoted to "we'll if we're going to do it, let me train the guys to talk about it" and then all was well. Leases were >70% of our business in our VW store, and a few years later our used business was fantastic due to it. 

He is trying to drive traffic and that's what he is focused on. I don't think that I am in love with this way of doing things from a salespersons point of view, but like Brendan said if you are trained properly to handle the consumer, it is an effective marketing strategy. Your point is heard though and yes, it is a typical car dealership move. 

Ryan Sark

There isn't a right answer, both ways can work, it is up the the dealership as to what message you want to market to your customers.  Are you looking to drive traffic or are you looking to drive buyers.  Personally I prefer driving buyers, but it is hard to run an ad showing a price of $350 when you know your competition is doing to run an ad for $169.  Especially when as dealers, we can hardly figure out how other dealerships are getting to the payments that they are quoting and we are in the business. What we have done to try to help combat this battle without going away from marketing to buyers with a transparent message is we try to including multiple payment points in ads to give your customer real options yet allowing them to see what money down can do to their payments ($0 Sign & Drive, $2,000 down, etc).

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