Six-Month Car Leases?

A consumer leases a new car. When is a good time for a dealership to contact the customer about replacing that vehicle with a new one?

As soon as six months later, says Jeff Cotton, executive vice president of AutoAlert. If that sounds early, some car sales people think so too, he acknowledges. “Salesmen will ask, ‘Why call so soon?’”

AutoAlert software uses analytical data to show why. “We alert dealerships of clients that should be able to get out of their current car and in a new one at about the same monthly payment,” Cotton says.

It is an appealing prospect for many customers and for dealerships interested in turning inventory, says Cotton, a former salesman at a Mercedes-Benz dealership.

Various factors come into play in determining how a customer can swap a current leased car for a new one for the same or similar terms.

One reason is that “nearly” new cars are in demand, increasing their value on the pre-owned vehicle market.

Other factors include new-vehicle rebates and incentives, varying interest rates, discounts, model-year changes, longer lease terms, a different deal structure, mileage penalties and end-of-term payoffs.

AutoAlert software crunches that real-time data for dealership clients and tells them which lease customers might benefit from exchanging their current vehicle for a new one earlier than they might think.

Boyd Warner, left, and Jeff Cotton of AutoAlert.

But it is vital for dealership management to convince sales staffers to call the customers and make the case, Cotton says. “At this point, 30% of it is software and 70% is sales training,” Cotton says.

“Part of the script is to never say the name of the dealership, because people will feel it is a sales pitch,” he says. “Just identify yourself with the vehicle brand, as in ‘I’m calling from Mercedes-Benz.’

“Then you say, ‘The reason I’m calling is I have someone interested in your vehicle. As compensation to you, if you bring it back, I can get you in a new vehicle for equivalent payments.’”

That gets a lot of people’s attention. Often, the takers change models or trim levels. “Very few people drive out of the dealership in exactly the same car they drove in with,” Cotton says.

AutoAlert originally offered its products only to Mercedes stores. It is now expanding to other brands, but Mercedes dealers and others with high lease rates are the strongest clients.

“We’re in 70% of the top-producing Mercedes-Benz dealerships,” Cotton says. Those include Fletcher-Jones Motorcars in Newport Beach, CA, the nation’s top Mercedes store and “one of the most forward-thinking,” says Cotton, who was a salesman there.

He cofounded AutoAlert with Boyd H. Warner, the firm’s president and CEO who has a banking background. “A company like ours needs people from the car business, but it also needs people from somewhere else,” Cotton says.

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