Leasing has its benefits: brand loyalty, customer retention and a short trade cycle for dealers, and for consumers, cheaper payments, an advantage especially important to millennials.
But since the lender often includes GAP with the lease and the factory warranty covers the duration of the contract, some F&I managers could face a challenge when selling F&I products to lease buyers.
Savvy dealers will put the offer into monthly payment terms, says Dave Robertson, executive director of the Association of Finance and Insurance Professionals.
The buyer is working around the monthly payment, an amount he or she knows will fit in the budget. “The thing with the lease buyer is, in his world, he wants to pay a certain amount of money each month for the car,” Robertson says.
“The array of products [F&I managers] can sell [to lease buyers] is considerably smaller,” he says, so managers have to sell “more peripheral products” and sell them based on the payment.
For example, he says, when selling a prepaid maintenance contract, tell the customer: “It’ll be a monthly amount, too, and we’ll include it in your payment.”
That practice will help F&I managers buoy their product sales as leasing continues to rise.
And rise it will, especially as millennials enter the market, says Jim Nguyen, general manager of ALG and executive vice president of TrueCar.
Leasing “is one of those products [millennials are] going to use to address the affordability issue,” he said. “That’s why it’s been so successful.”
Adjusting sales tactics for lease buyers is yet another changing facet in auto retail. But by focusing on monthly payment, F&I managers will likely generate more product sales and happier millennial customers.