JIM HENRY

Time to brace for the luxury rush

Jim Henry is a special correspondent for Automotive NewsJim Henry is a special correspondent for Automotive News
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For the past 10 years or so, December has become the biggest sales month of the year for luxury brands. But it seems as if those brands' year-end sales pushes start earlier every year.

BMW of North America already is promoting its Happier New Year Event, which runs through Jan. 2. And Mercedes-Benz USA is promoting its Winter Event, which runs through Nov. 30, unless the company opts to extend it. Both companies are offering discount loans as well as leases.

Year-end clearance sales are a self-fulfilling prophecy for luxury brands. That's especially true for sales based on discount lease deals, which the luxury brands perceive as less damaging to resale values and brand image than deals with cash incentives. Leases that start in December are likely to end in December three or four years later -- just in time for the latest round of discount leases. Repeat.

In the F&I office, more leasing means a different mix of F&I products. Lease customers are not likely to buy GAP, since it comes with most leases. They're not prone to buy extended-service contracts either, since most leases end long before the new-car warranty expires.

So F&I managers pitch luxury-brand lease customers the products many mass-market dealerships place in the "other" category: tire-and wheel plans, wear-and-tear protection and key replacement.

BMW and Mercedes dealers are used to a high lease mix. So their F&I managers probably don't need to brush up on their skills for selling F&I products to lease customers. What they will need to do is to eat sensibly and get plenty of sleep. The year-end rush is on.

You can reach Jim Henry at autonews@crain.com.

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