There’s not a more uncomfortable phone call for a car dealership’s finance manager to make then asking a customer to come back to have their finance or lease contract rewritten. This is typically caused by sales managers — the people most despised by finance departments — who spot deliver a vehicle based on their wrong guess about the rate or term a lender would approve the deal. Needless to say, the vast majority of these rewrites result in a higher monthly payment for the customer.
A couple of years ago, a finance manager at a Los Angeles Mercedes-Benz dealer told me and a Mercedes-Benz Financial colleague of mine about the day he picked up the phone to fix the opposite situation: the dealership had miscalculated the taxes on a client’s lease on a black ML350 Bluetec SUV and they needed the client to return and sign a new lease agreement reflecting payments of $14 per month lower than the original contract.
He called the customer with the good news only to hear, “No no no! Payment good. Payment good. We OK!”
After he hung up, he thought, “We just got snookered. That ML is probably on a slow boat to China and the factory is going to kill us.” (Read More…)
Volkswagen Group of America has begun the process of buying back cars affected by the ongoing diesel emissions scandal, but you shouldn’t expect to receive a letter or phone call with a buyback offer anytime soon.
VW is going ahead with a buyback program that will see the automaker acquire affected vehicles from dealers’ certified pre-owned (CPO) inventories, a source familiar with the plan told TTAC.
General Motors will sell highly coveted lease returns and company cars online starting next month through a program called the Factory Pre-owned Collection.
The program, which we’ve covered briefly, will sell lease returns and company cars through an online portal that makes those cars available nationwide. GM said its inventory would be roughly 30,000 cars, which all have fewer than 37,000 miles and be covered by extended warranties from the factory. Potential owners can apply for credit through the online portal and pick up their cars at a nearby dealer.
So … if GM is selling the cars owned by GM and GM Financial (or related bank) from a nationwide database, which can be financed online, and merely picked up at a nearby dealership, isn’t that just a direct sale?
Imagine the following scenario: You’re a Buick salesman. An elderly woman comes into your showroom to inquire about a replacement for her Regal. You decide that she’s a great candidate for an Encore, and since you have some previous-year Encore stock you decide that she’s a great candidate for a 2015 Encore instead of the new model. There’s a $149/month lease deal available from GM Financial. What kind of deal do you make for this woman?
If your answer is, “I’d charge her over sticker for the vehicle, switch the lease company to make some back-end money, and add nearly a thousand dollars of profit in fees above that,” then you might just be the salesman that Buick GMC of Beachwood, OH needs.
With the CT6 and XT5 hitting the floor soon, Cadillac is working on a new dealer incentive program to encourage improvement of the buying experience at its stores.
Automotive News reports the program could bring as much as $850 million to $1 billion USD “in incremental profit” for the brand’s dealership network over the next four to five years, according to president Johan de Nysschen:
If we want to have a strong brand, we need to have a strong franchise. To do that, it means the dealers are profitable and that they’re able to invest in the business and to build the customer experience.
As Volkswagen works to make amends with customers and the public, TDI owners ready to give up their illegally polluting cars are hearing conflicting messages from some Volkswagen dealers who are either unwilling to or begrudgingly taking in those cars on trade.
A TDI owner said when he took his car into Flow Motors Volkswagen in North Carolina last month the dealership told him it wouldn’t initially accept his vehicle for trade. The dealer originally had asked if the owner had found a willing dealership to take his car.
“ … Let me know as I have a couple of other diesel owners I will send if things worked out for you,” the dealer wrote in an email after they turned down the man’s diesel car.
“To say I’m irritated is an understatement,” the TDI owner wrote. (Read More…)
Volkswagen told dealers that it would buy back some of its unsellable, used diesel cars withering on their lots at fixed prices to help dealers cope during the automaker’s growing diesel scandal, Automotive News reported.
The cars that dealers are accepting on trade-in, but can’t sell due to their illegally polluting engines, have sat on lots while the automaker develops its plan to fix 482,000 cars sold in the U.S. with the illegal “defeat device.” Volkswagen has offered a $2,000 “loyalty discount” for any Volkswagen trade-in, including diesel cars. (Read More…)
Volkswagen is offering up to double the average amount of incentives on some of its cars to help dealers during its diesel crisis, Bloomberg reported (via Automotive News).
Dealers, who received no-strings-attached cash from Volkswagen at the beginning of this month, are offering up to 11 percent off their cars’ stickers to help weather the storm of its diesel cheating scandal. The industry average is roughly 6.2 percent according to TrueCar. (Read More…)
(Updated with comment from GoodCarBadCar’s Tim Cain)
Analysts at IHS Automotive says car sales may be nearing its peak and automakers may expect a downturn in sales by 2017 due to rising interest rates, Automotive News reported.
Strong demand for auto loans is starting to wane, banks are reporting, and a pending federal interest rate hike could push some buyers out of the market, the agency reported.
After 2017 “credit markets are going to be much more difficult,” Charles Chesbrough, IHS senior economist, told Automotive News. Most analysts predict that interest rates will remain where they are for the rest of this year but many anticipate a rate hike by March 2016.