OEM restrictions on customer lease returns

[Greg Spencer]

Hi,
I'm working on an article for the AIM Group about how OEM restrictions on off-lease returns are impacting dealerships. AutoNews reported last fall that there were at least 13 OEM captive financing companies that had policies to keep off-lease cars within their own dealer networks.
My questions would be:

1. Is this having a meaningful impact on the efforts of independents to build their inventory of late-model vehicles?
2. If you're a franchise dealers whose OEM has off-lease restrictions, does it give a competitive advantage?
3. If you're a franchise dealer, do these policies impair your ability to acquire lease returns of other OEMs?
4. What about customers? How have they responded to these restrictions, and, if you're a franchise dealers, how do you defend them?

If you have anything relevant to share, please PM me! I'll make sure you get a copy of the article.

Thank you!
Greg

 

[Jeff Kershner]

Hi,
I'm working on an article for the AIM Group about how OEM restrictions on off-lease returns are impacting dealerships. AutoNews reported last fall that there were at least 13 OEM captive financing companies that had policies to keep off-lease cars within their own dealer networks.
My questions would be:

1. Is this having a meaningful impact on the efforts of independents to build their inventory of late-model vehicles?
2. If you're a franchise dealers whose OEM has off-lease restrictions, does it give a competitive advantage?
3. If you're a franchise dealer, do these policies impair your ability to acquire lease returns of other OEMs?
4. What about customers? How have they responded to these restrictions, and, if you're a franchise dealers, how do you defend them?

If you have anything relevant to share, please PM me! I'll make sure you get a copy of the article.

Thank you!
Greg

@Greg Spencer I shot this across our social and I'll get you some specific answers around Mercedes-Benz tomorrow.

Until then, I came across this article - https://cars.usnews.com/cars-trucks/lease-end-options-restrictions

 

[Greg Spencer]

@Greg Spencer I shot this across our social and I'll get you some specific answers around Mercedes-Benz tomorrow.

Until then, I came across this article - https://cars.usnews.com/cars-trucks/lease-end-options-restrictions

Appreciate the help, Jeff!

 

[Tallcool1]

Sorry I missed this post. I have been out of the office and actually took some time off.

I am an independent dealer.

In the last few months, I have purchased or traded for GM Financial, Chrysler Capital, and US Bank leases. I know US Bank is not an OEM, but I thought I would mention it anyway.

Chrysler Capital was an absolute pleasure to deal with. They specifically told me that they don't car who buys out a lease. I told them that I was an Independent dealer and that I didn't like surprises.

GM Financial was horrible. They were very specific that they would not allow anyone but the selling dealer to handle the buyout, unless the customer bought it out themselves. I issued my customer a check, and they then personally paid off the lease. They then issued the title to my customer, and our DMV tried to make her pay the sales tax on the buyout in order to get a title that she could reassign. I ended up contacting the Department of Revenue and got it all handled, but it was a nightmare.

US Bank was like Chrysler Capital, they had no loyalty to the selling dealership.

I understand why these companies want to hold the customer and vehicle hostage however I wonder if they are not ultimately hurting themselves more with these tactics. My customer that was with GM Financial told me that she would never lease or buy another GM product because of this experience. Interesting.

 

[john.quinn]

Clint -- had the EXACT same experience with a GM Financial lease -- the payoff for the DEALER was quite a bit more than the payoff for me. So I actually bought the unit myself and paid it off, then "technically" treated it like a trade with the dealer, then did a whole lot of fancy-dancing around the tax issue.

Not quite relevant to the thread topic... but I haven't posted anything in a while...

 

[Greg Spencer]

Clint -- had the EXACT same experience with a GM Financial lease -- the payoff for the DEALER was quite a bit more than the payoff for me. So I actually bought the unit myself and paid it off, then "technically" treated it like a trade with the dealer, then did a whole lot of fancy-dancing around the tax issue.

Not quite relevant to the thread topic... but I haven't posted anything in a while...

This is familiar. One dealership consultant told me that OEM franchise dealerships will typically let an out-of-network dealer acquire the OEM's vehicles from lease customers. But there's a "payoff" fee. He explained:

"These off-lease restrictions allow dealers to generate income out of thin air by processing payoffs for other dealers who want to acquire a particular car from a customer or from customers who want to buy out their leased car. Dealers charge a fee for pressing a payoff button in the portal. I hear these fees can be as high as $1500 per vehicle."