From off-lease Lincolns to certified cash cows
New program aims to boost residuals
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Next year, Ford Motor Co. will effectively pick up most of the tab for certifying certain off-lease Lincolns for sale as certified used vehicles.
Lincoln is also changing how it handles off-lease vehicles to give Lincoln, then Ford, dealers first shot at the cars and trucks.
Lincoln dealers who buy off-lease vehicles that are returned to their dealerships will pay, on average, about $900 less for those vehicles than they would now, says Kevin Cour, Lincoln sales and service operations manager. The cost of preparing a vehicle for sale in Lincoln's certified used-vehicle program: $995.
In addition, under a separate bonus program, Lincoln dealers can earn as much as $800 per off-lease vehicle bought and then sold as certified.
The Lincoln Certified Pre-Owned & Off-Lease Retention Program starts Jan. 14 and is designed to strengthen Lincoln residual values, a key element in Lincoln's effort to re-establish itself as a premium luxury brand, Cour says.
"Less than half of Lincoln's off-lease vehicles are being retained within the Lincoln dealer network," Cour says. "Non-Lincoln dealers have too much impact in establishing the retail used-vehicle value of a Lincoln in the marketplace."
The new program goes hand-in-hand with discontinuation of a Lincoln payment program to dealers known as holdback. As part of that change, beginning in January, Lincoln dealers who meet certain criteria, including off-lease vehicle purchase and certified used-vehicle sales goals, will receive payments equal to 2 percent of their new-vehicle invoice prices, paid quarterly.
Those payments are separate from the certified used-vehicle bonus money. To qualify for the latter, dealers must buy off-lease vehicles from Accelerate, Lincoln Automotive Financial Services' online sales channel, at a rate at least equal to 30 percent of the vehicles that come back to their dealerships at lease-end within a quarter. Early lease terminations don't count.
Hitting that 30 percent level earns dealers a flat $300 per certified unit sold. Dealers who go above the 30 percent minimum purchase rate to 50 percent, earn $500 per unit sold. If they go to 80 percent, they earn $800.
Lincoln dealers who accept the off-lease vehicles on behalf of Lincoln and its finance arm will be offered the vehicles first, at what Cour calls "the best possible price."
If the dealer doesn't buy the vehicle within two days, it is offered exclusively to all Lincoln dealers on an online auction the next day. Still-unsold vehicles are then offered to all Lincoln and Ford dealers for another day. If the vehicle remains unsold, it is offered for sale to all dealers online for two more days before being sent to a physical auction.
Lincoln dealers sold 13,259 certified used vehicles through August, up 38 percent from the year-earlier period. Industrywide certified sales through August rose 5 percent.
You can reach Arlena Sawyers at asawyers@crain.com.
