Guest Concepts, Inc. (702)

Transcription

1 Guest Concepts, Inc. (702) Welcome to our tutorial on the Lease End Renewal Process The process you will see here is extremely effective and has been used successfully with thousands of renewal opportunities. It has resulted in some of the highest renewal and Lease satisfaction rates in the Nation. This process not only increases renewal rates, it helps increase gross profits on a New Vehicle and can turn Customers that want to buy their Leased vehicle, even the ones that want to pay Cash, into new car buyers by showing them that a New Vehicle makes more sense. So with that Let s get started!

2 Let s go ahead and talk about the Steps in the Options Meeting Process

3 Step 1 is to go out and walk around the Customer s vehicle with them. When Customers come into a Dealership they tend to be defensive. We want to put them in their Comfort Zone. When we walk out to their vehicle we are on their territory That Vehicle they have been driving for the last couple of years is familiar It s their Comfort Zone. This helps us break the ice It puts them at ease and it helps us start a dialog. This is an important step in building a positive relationship with the Customer

4 Step 2 is to present the Original Terms portion of the Lease End Options Analysis. This not only shows them what they did, it shows them their other alternative, which was Conventional Financing. We help them Discover that they made a smart decision by leasing the vehicle. I say Discover because it s much more effective if the Customer comes to that conclusion on their own rather than us Telling them. At this point our job is to Discover along with the Customer. Additionally, this part of the process introduces the fact that Maintenance and Repair becomes a real factor after the first couple of years and drives up the effective monthly cost of the vehicle.

5 Step 3 is the Buyout Analysis. In this step we show them what their Payment would be if they bought their existing Leased Vehicle. We also show them the approximate monthly cost of Maintenance and Repair that would apply and add that to the Payment to show them the effective Monthly Cost Most of the Customers that buy their Leased Vehicle will trade their vehicle after about two years, before it enters the major repair cycle. Because of that, the most effective portion of the Buyout Analysis is the two year position. This outlines where they would be two years down the road if they purchase the vehicle today. It s important that we show them the Buyout Analysis before we start talking numbers on a New Vehicle because it shows them that buying their vehicle doesn t make sense and raises their thinking on a payment for the New Vehicle.

6 Step 4 is to show them a New Vehicle Since the reason we are here is to sell cars.

7 So let s go ahead and dive into the process we like to use when walking around the existing Leased Vehicle

8 This diagram is basically a road map of how we like to conduct the walk-around. We found that if we assigned a step to each corner of the car it made things a lot easier and made sure we didn t leave anything out. The walk-around is all about building a relationship with the Customer and asking questions that will provide important information that we can use during the renewal presentation. So let s look at each one of those a little more in depth At position 1 we say something nice about the vehicle In this case we said:

9 It looks like you take pretty good care of your vehicle Has it been a good car for you? It could just as easily be something like: The blue really looks good on these cars doesn t it? The goal here is to break the ice and start a dialog At position 2 we ask: Have you had to do anything to it yet Things like Tires, Brakes and so forth? Our Goal is to introduce the thought of Maintenance and Repair. Many times the Customer may apologize for things they didn t do or damage that just happened. It also lets us find out if they have done anything significant that may make them feel like they have an investment they need to protect by purchasing the Vehicle. Many times, by coming up with a way where they feel like they are recovering that money in savings on a New Vehicle, we have been able to turn something that could have been an obstacle into a closing tool.

10 At position 3 we say: We re going to go over all of your Options in just a minute, but have you thought about which option you might take? This helps us determine what the Customer may be thinking. It also helps us determine exactly how to structure the presentation on a Buyout. If the Customer says I want to buy my vehicle, we say: That s Great A lot of our Customers look at buying their vehicle at the end of their Lease If you did that, would you like us to help with the financing?

11 Many times the Customer will just say something like Yes, as long as you re competitive, but sometimes they will say they are paying Cash or they are getting their own financing. If they say they are paying Cash we want to ask if there will be a lien holder. This lets us determine if it is truly Cash (in which case we will show them the Cash Buyout presentation) or if it is really outside financing. If it s outside financing, say something like: You know, we try and stay on top of the rates that are being offered by the different Banks and Credit Unions Can you give me an idea what kinds of rates they are quoting? When we generate the Financed Buyout presentation, we will want to use the Customer s rate so that the numbers will make sense to them. If the Customer says they want a New Vehicle, we say: That s Great We love it when our Customers want a New Car!

12 At the last position, we say: A couple of years ago you decided to take the Lease Option, do you remember why you chose the Lease? This helps us introduce the fact that we are going to go over the Options Presentation when we return to the office. We want to make sure that when we lay down the printed presentation, it isn t a surprise Many times, the Customer will say something fairly positive like, I liked the Low Payments or I didn t want to put a lot of money down. In that case we say:

13 That s what we hear from a lot of our Customers. Still, one of the things we like to do today is go back in time and look at other alternative, which was conventional financing That helps us see if Leasing really worked for you With the changes in interest rates and programs over the last couple of years a lot of our Customers just want to make sure. Let s go inside and I ll show you what it looks like. In some cases the Customer may respond negatively. They may say something like the Salesperson forced me to Lease or that they made a big mistake by Leasing. We say to the Customer: I m glad you came in today! One of the things we like to do today is go back in time and look at other alternative, which was conventional financing That lets us see if Leasing really worked for you It sounds like you have some questions. We have a program that helps us do that. Let s go inside and I ll show you what it looks like. Saying I m glad you came in today! disarms the Customer and makes it a lot easier to put things back on the right track.

14 The next step is to create the Presentation In some cases, if you know a Customer that Leased from the Dealership before is coming in you may do this in advance. Realistically, it takes just a few seconds so the timing is not important. This is an example of the Options tab in our program The entry is extremely simple. You enter the white fields on the left, the Vehicle Description, Cap Cost, Cap Reduction, Lease Term, Elapsed Months, Base Payment and Residual Value for the program to creates Presentation.

15 The light blue fields at the right side are default items but can be quickly changed by simply clicking on them and entering the new value. The Elapsed Months allows you to do a Lease Options Analysis Presentation at any point in the Lease. This can be a powerful tool in helping Customers terminating early that may feel they are in a negative equity position simply because they Leased understand that they would probably have been in a worse position had they Purchased and Financed their vehicle. The area below shows the results that will be displayed on the presentation. In some cases, if the Finance Payment is less than the Lease Payment, you will see blinking red arrows pointing to the two Payments. This is because you may want to shorten the term on the Finance Side to make the numbers more relative. A similar scenario can happen when the Buyout Payment is less than the current Lease Payment. This is fairly common if you are using a longer Buyout Term or a low Buyout APR. In some cases this may not be an issue since longer terms often result in substantial negative equity after 2 Years. At this point, to create the presentation just click on the Print button Before we get into the Options Presentation, let me just say that different States have different Tax Structures. The most common is where the Sales Tax is on the Monthly Payment so the following example shows that.

16 Your Options Presentations will be based upon the Tax Structure for your State, so if your State taxes the Total Cap or the Total of Payments the items that show the Payment Tax do not appear. Also, any other fees, such as Documentary Fees, would be based upon he fees for your Dealership. Now let s go over the actual Options Presentation. Page 1 of the Options Presentation relates to their original Alternatives. We want our Customer to Discover that Leasing was a smart choice for them. In this section we will review their other Alternative, which was Conventional Financing. We cover the costs of Maintenance and Repair that typically occur after the first couple of years. Finally we show them what they did, their position at Lease end and their three great Options.

17 This is an example of the Options Presentation We ll break this down into segments so that it s easier to see and follow

18 The first segment is their Other Alternative. Here is how we present it: This section goes over what would have happened if you chose Conventional Financing back at the beginning This isn t what you did, but it was your Other Alternative. For Down Payment we used the same amount as the Cap Reduction on your Lease, which is like Down Payment That was $800. The first thing that happens when you buy a vehicle is you pay Sales Tax on the whole Car That would have been $1,341. In this case, the Tax would have been more than your Down Payment so you would have been financing more than you paid for the car. We stretched out the Payments to 72 months to try and keep them comparable That comes out to $351 a month. So 36 months later, where we are today, you would have paid in $12,636, but you wouldn t be done yet. Because we financed for 72 months, that would still leave the last 36 Payments that total $12,636.

19 Most of our Customers tell us that the best part of any Cars life is the first couple of years. Basically you put in Gas, change the Oil and most everything else is under the Warranty. Between 30,000 and 50,000 miles you start to enter the Maintenance and Repair cycle where things like Tires, Brakes and Batteries need to be replaced and the Warranty expires. The Complete Car Cost Guide does a study every year on Repair and Maintenance costs They say that during that next couple of years this typically averages somewhere between $1,800 and $2,400. Most people put that on a Credit Card which results in about $75 to $100 a month. So if you would have purchased the vehicle and kept it beyond today date your Payment plus the Maintenance would have been a little over $425 a month After 75,000 miles, vehicles enter the Major Repair Cycle, but I m not even going to talk about that since most of our Customers will trade long before they get there.

20 So let s take a look at what you actually did. Your Down Payment was $800 but your first benefit was that on a Lease in this State you pay Tax as you spend money. That means the initial Tax was only $58. That left $742 to go towards reducing your Monthly Payments and because of that your Payment was only $316. At this point you have paid in only $11,389 rather than $12,636 on the Finance Side. That means you saved almost $35 each month in Payments for a total of $1,246. Did you realize that you saved that much? But the best part is that you have three great Options based upon $9,250

21 Your first Option is the Profit Option. If the value of the car is more than $9,250 you could Buy it to Trade or Sell it and you keep the Profit. The second Option is the Safety Option. At Lease End, if the value of the car is less than the Option price, you aren t responsible for a loss that was due to market conditions. If that s the case, you can just drop the keys on my desk and we ll go look at New Cars. The third Option is the Love Option. If you Love the Car and want to keep it, you can complete the Purchase.

22 The next section is the Finance Buyout Presentation. Use this when a Customer wants us to handle the financing or they plan to use Outside Financing. If the Customer plans to Finance, only show the Finance Buyout Presentation, don t present both because it would just be a waste of your and the Customer s time. We want to show the Customer this section even if they are not thinking about purchasing their Leased Vehicle since it helps us establish a higher price point that is extremely beneficial when presenting the numbers on a New Vehicle. If the Customer said they didn t want to buy their vehicle, then at this point we say: I know you weren t planning to buy your vehicle, but I had already printed the breakdown of what it would cost Let s go ahead and look at that since it is one of your options. In this presentation: We review the breakdown of the pricing and Payments Show them the impact of maintenance and repairs on their monthly cost Show them their position in 2 years if they did buy the vehicle Review their Equity Position at that time and the cost to get there This is an example of the Finance Buyout Presentation. Again, we ll break this down into segments so that it s easier to see and follow

23 This is what it would look like if you decided to Buy your vehicle and finance it today The Purchase Option price is $9,250 There is a small Documentary Fee of $55 and there is Sales Tax of $671 since you have not paid Tax on this portion yet. Most of our Customers will get a Service Contract if they buy their Vehicle I didn t figure that here just so you could make that decision later if you want. That totals up to $9,975 So your Payments for 36 months would be about $321 But remember that Maintenance and Repairs will be a real cost of driving in the next couple of years. We used the low end of that Complete Car Cost Guide of $75 a month What that means is that your Monthly Cost comes out to around $396. Hmmmm It looks like you were paying $316 to drive it when it was a New Car. Still, the reason that most of our Customers buy their vehicle at the end of their Lease is for Ownership and Equity which is probably what you were thinking.

24 Now, most of our Customers that buy their vehicle at the end of their Lease keep it for another couple of years and then look to trade it before they hit that Major Repair Cycle. We ran the numbers to see where you would be at 2 years from now if you bought the vehicle. In Payments and Maintenance during that 2 years you would have paid in $9,514 but because we are financing for 36 months, there would still be 12 Payments remaining that total $3,857. We tried to predict the value of your vehicle 2 years from now, based upon the way vehicles depreciate. We estimated about $4,100 since your vehicle tends to hold its value pretty well at this point. The good news is that you would probably have about $242 in Equity But you would have paid in $9,514 to get only $242 back I m just thinking You were only paying $316 to drive it when it was a New Car with New Tires, New Brakes and a Warranty. I m not sure it makes sense to spend $387 a month to drive it as a 3 year old Used Car and deal with the hassles and headaches of Maintenance and Repair I ll bet you could be driving a New Car for the same money, maybe even less In a lot of cases, the Equity number will be Negative. In that case might say: Our Customers that being Upside Down You know, I m just thinking You aren t upside down today I don t know that it makes sense to pay $9514 just to get there! -Or- You take really nice care of your car I think you would probably break even, but the point is Why pay $9,514 in and deal with all those maintenance and repair hassles and have nothing to

25 show for it? Anybody that has ever tried to convince a Customer that wants to buy their Leased vehicle at the end and pay Cash into a New Car, knows it s an uphill battle. This presentation is one of the most effective tools we have ever seen to help make that happen. The next section is the Cash Buyout Presentation. Use this when a Customer wants to pay Cash. Use only the Cash Buyout Presentation don t present the Finance Buyout since it doesn t apply and will only waste your and the Customer s time. We want to show the Customer this section even if they are not thinking about purchasing their Leased Vehicle since it helps us establish a higher price point that is extremely beneficial when presenting the numbers on a New Vehicle. If the Customer said they didn t want to buy their vehicle, then at this point we say: I know you weren t planning to buy your vehicle, but I had already printed the breakdown of what it would cost Let s go ahead and look at that since it is one of your options. In this presentation: We review the breakdown of the pricing Show them the impact of maintenance, repairs and lost investment Show them their position in 2 years if they did buy the vehicle Show their total 2 year cost and the effective Monthly Cost which equates to a Payment

26 This is an example of the Cash Buyout Presentation. Again, we ll break this down into segments so that it s easier to see and follow

27 On this first side, we simply review the breakdown of the numbers and the amount they would be writing a check for today.

28 I know you re paying Cash, but most of our Customers, even when they pay Cash, drive the car for a couple of years and then trade before they hit the Major Repair Cycle. I wanted to take a look at where you would be two years from now if you did that Now, you would be writing us a check today for $9,975. We need to remember that Maintenance and Repair will be a real cost of driving in the next couple of years I used the low end of that Complete Car Cost Guide number of $1,800. We also know that if you had invested that $9,975 it would be earning some interest or investment income. We estimated 4.5%, it might be a little more, or it might be a little less. That would be about $897 over two years. That means the total 2 year cost would be about $12,673. Now to be fair, the vehicle would have some value that needs to be deducted. We estimated about $4,100 based upon the way vehicles depreciate. This one holds its value pretty well at this point. That makes your actual two year cost $8,573 You know we can divide that by 24 and come up with a monthly cost That would be $357. I m just thinking You were only paying $316 when it was Brand New, had New Tires, New Brakes and was under Warranty You would be taking $9,975 out of your Bank, effectively paying $357 a month for your Old Used Car and dealing with the headaches and hassles of Maintenance and Repairs. For about the same monthly cost, I ll bet you could be driving a New Car.

29 Like we said in the beginning If you follow this process it will increase your Lease Renewal Rates Your Customers will be happier and the New Deals will close easier. Remember, the key to this process is the section on buying their vehicle. Don t skip any steps and you will be amazed at the results.

30 Now, let s go look at New Cars

31 Guest Concepts, Inc. (702) This concludes our tutorial Thank you for your time.