Money is cheap, sales are hot and if customers want to lease their vehicles, no carmaker wants to get left behind.
Leasing, which had fallen off a cliff for mainstream manufacturers since 2008, is rebounding, capturing about 20 per cent of the new-car market in Canada.
So strong is the rebound, it’s even attracted a company that previously did not do lease financing.
SCI Lease Corp., a subsidiary of SCI Marketview, is now the sole, national leasing provider for Fiat Chrysler Automobiles.
Alan Bird, SCI Marketview president, said the move came around largely by identifying an opportunity, a chance to fill a void in FCA’s marketing plans and provide a crucial component to dealers.
New to used
“We see ourselves as a manufacturer of used cars,” said Bird. “We take in new cars and 36 or 48 months later, we turn out a used one.”
Bird said it’s an important factor for dealers, who often use used cars to draw in buyers, then either convert them to new-car shoppers or sell them a used car and build a relationship, with the hope of being the dealer of choice when it is time for a new car.
“We developed a great relationship with SCI Lease Corp. and feel with their expertise, it’s the right time to re-enter the leasing market,” said Bill Levasseur, vice president of marketing for FCA Canada. Leasing provides consumers and dealers with “a great new addition” to FCA Canada’s current financing options.”
Leasing is an important tool in the sale of new cars, offering customers more value at a lower monthly cost, while avoiding the main pitfall of long-term finance deals: being upside-down, or owing more than the car is worth.
That’s a thought that dealers support.
Michael Shrimpton, vice president of Waverley Chrysler in Winnipeg, said having a strong leasing program not only supports part of his new-car market, it drives the used-car business, as well.
“It’s absolutely important,” Shrimpton said.
For one, leasing provides a built-in return customer who has to at least come back at the end of the lease to return the car. Most decide then and there to sign back up.
But it also provides the lot with premium used cars, he said.
He’s looking forward to FCA’s newfound zeal for leasing impacting his used-car business, as much as for its effect on new-car sales.
“We tried to keep as many trade-ins as we could,” he said, referring to the hiatus leasing had taken. “And people are trading up a lot sooner than they used to.
“But there’s no doubt a lease return is a prime unit.”
Bird said SCI’s success would hinge on its ability to provide value to leasing customers such that SCI, and FCA, will be their first choice for repeat business. Some of the ways it will do that includes using technology to safeguard customers’ privacy and ease the approval process.
Moving the approval process out of the dealership’s business manager’s office to an online portal is one way to do that. Bird said customers currently have to provide significant amounts of confidential information to the business manager, who then has to pass it along to the company underwriting the financing.
Yet that information, really, should only be between the customer and finance company. The only information the dealership requires is whether the lease has been approved and can they turn over possession of the vehicle.
Waverley’s Shrimpton isn’t convinced that’s a primary concern for customers, but he’s not steadfastly opposed, either.
“I think it’s nice to have that contact with customers. I don’t really know if this is a benefit to dealers.”
SCI has an online tool and mobile application allowing customers to obtain credit approval privately from home or their smartphones.
“What sets us apart is leveraging technology to service our customers to the extent they have great things to say about us,” said Lori Murtagh, SCI team leader. “We want to make sure they’re thinking about us first when it comes time for their next transaction.”