New app enables lease customers to skip the showroom

Toni Anne Fardette believes a new app can help Atlantic Auto Group recapture business from leasing companies that made inroads with consumers who prefer to avoid the "runaround" they get at some car dealerships.

The Long Island, N.Y., dealership group is testing out Honcker -- an app that enables consumers to complete the leasing process without entering a showroom -- at eight of its 22 stores.

The app sends lease offers to consumers after a "soft credit check" that's completed based on information such as name and address that is provided upon registration, said Nathan Hecht, CEO of Honcker Inc. Clients can have their vehicles delivered to them by the dealership once the transaction is done.

If a customer has a trade-in, the dealership will take it from the customer when the new vehicle is delivered.

Some leasing companies have made a living on being the middlemen for shoppers. Consumers know they're going to pay a fee to have the companies do the leg work on a lease, but Fardette says certain buyers feel this method is more transparent than dealing with salesmen.

"That's what we're up against and that's what I feel like this app is going to help us to combat, because they won't need to go to a leasing company if we're providing that transparent information as a dealer," Fardette told Automotive News.

She's hoping the app will make the leasing process as easy as booking flights or hotel rooms online. Around 55 percent of the group's business comes from leasing.

Hecht said he's going after the leasing market because of the momentum there.

Lease penetration reached a record 31 percent of all new-vehicle transactions in the second quarter, up from 27 percent in the year-earlier period, Experian Automotive data show. Used-vehicle leasing is also on the rise. It accounted for 3.7 percent of the lease market in the second quarter, up from 3.3 percent the year before.

"We are nothing more than a marketplace," Hecht told Automotive News. Dealers "control their inventory and their pricing. Customers see it, get a real-time price and can actually complete the transaction."

Honcker went live last month in the New York, New Jersey, Pennsylvania tri-state area and in Southern California, from Los Angeles to San Diego. Hecht said a lease can be completed in three minutes on the app.

After a few months, the plan is to roll out used-car leasing and financing options as well.

Honcker launched with more than 75 dealerships on the platform. The stores upload their products to the app through inventory providers such as DealerSocket or vAuto. The dealerships operate on a dashboard where they can control details such as pricing, add-ons and warranties offered.

A store can go into the app, for example, and trim $500 off the invoice prices for specific vehicles or the entire inventory. The leases are then calculated from those discounted prices.

Hecht said the app automatically applies the available conquest or loyalty rebates when a customer registers by asking them what vehicle they are coming out of.

The app also will offer virtual reality in limited doses in the beginning. Users with Samsung Galaxy S7 phones or better will be able to take virtual test drives and check out showrooms if they have access to Gear VR goggles. Virtual reality isn't available for iOS users.

Ron Dubin, COO of Jack Daniels Motors, with five stores in northern New Jersey, says Honcker will help his dealerships reach consumers who are nervous about dealing with salespeople.

The Bergen County-based group, which has Porsche, Audi, Volkswagen and Kia stores, uses leasing companies on a limited basis. Dubin predicts the app will help the group pick up around 10 to 20 extra leases per month, with the added benefit of cutting out the middlemen on certain deals.

"We'd rather be dealing with the consumer directly that [leasing companies are] getting and sending over to us," Dubin said. "There's obviously a piece of the pie that's going to them that we would like to be able to eliminate."