FATHER OF LEASING SEES GOOD & BAD

HE'S CALLED "THE FATHER OF LEASING." ROBERT REWEY laughs off that title. Yet he was Lincoln Mercury's general manager when that Ford Motor Co. division pioneered non-commercial leasing in a big way in the late 1980s.

"We had quite a lead," recalls Mr. Rewey, now Ford's group vice president of marketing, sales and service.

And quite a task.

"There was a lot of dealer training and educating because they didn't understand short-term leasing," he says of those early days.

It's no stretch to call Mr. Rewey leasing's daddy, says Della DiPietro, a Ford public affairs executive. She also credits William Odom, who headed Ford Credit when the leasing baby was born.

"Bob Rewey got dealers behind leasing. Bill Odom got Ford Credit behind it," says Ms. DiPietro.

Looking back, Mr. Rewey says the leasing phenomenon produced a problem child here and there.

He explains, "Leasing was designed as an alternative to owning a vehicle. Unfortunately in the mid '90s a lot of manufacturers started using it as strictly a price promotion...

"A lot of people got in trouble because 75-80% of some vehicle lines were coming back after two years. It was too big of a supply of two-year vehicles."

Added to that, waves of one-year rental vehicles were flooding back, too.

Leasing has created a whole new segment of "nearly new" vehicles - sandwiched between new and used. But Mr. Rewey says only a limited number of consumers are in the market for one- and two-year-old vehicles.

Most consumers shopping in the used-car market are looking for three- to five-year-old vehicles "because that's what their budget permits," says Mr. Rewey.

He thinks Ford has corrected the uncomfortably high percentage of leased vehicles.

"We are more at 30-35% with our volume cars," he says. "Premium vehicles such as Lincolns are up in the 50-60% range. But we can deal with that."

Such containment creates better residuals on vehicles coming off-lease. And it makes the leasing process more sustainable, less artificial, says Mr. Rewey.

He says Ford Credit plans to launch a new and improved Red Carpet leasing program by mid-year "to get us back into a more competitive leasing posture."

Meanwhile, Mr. Rewey tries to placate dealers who are skittish about Ford Internet initiatives and similar programs intended to cozy the company up to customers.

Some dealers say that could horn in on their customer relationships. It becomes a question of: Whose customer is it?

Mr. Rewey says no one - neither dealer nor manufacturer - can lay full claim to a customer.

"Consumers would find it somewhat ridiculous if they heard that Ford and its dealers were arguing over who they belonged to," he says.

Sometimes customers want to talk to the dealer about their vehicles, and other times they want to talk to the manufacturer, according to Mr. Rewey. "We have to make sure we have the most user-friendly way to accommodate that. It's non-productive to debate whose customer it is.

"If you follow that question to its end, should we tell the 10,000 people who daily call our consumer assistance center to call the dealer - and hang up on them?"

On another touchy dealer issue, Mr. Rewey says Ford, contrary to some reports, is moving forward with its controversial "Ford Collections" in certain markets.

The plan calls for the automaker to invest in mid-size cities' dealerships, combine the business operations and initiate one-price selling.

Many dealers hate the thought of a manufacturer dipping into their business. The Ford Retail Network has "collections" in Tulsa, Oklahoma City, Salt Lake City, Rochester, NY., and San Diego.

Dealers elsewhere say: "Not here."

Mr. Rewey says, "There's a lot of discussion that we put restraints on the program or slowed it down. That's not really the case...

"We haven't really pulled back from it. You put enough things into operation, and you want to take some time to see that you're actually capable of reaching your visions and objectives."

What might Ford have done differently to make the retail network plan work better?

Mr. Rewey says the automaker did too much simultaneously with the first collections.

It tried to consolidate the business operations. It tried to change the sales personnel's compensation from straight commissions to salaries with bonuses. It tried to sell the public on all the changes.

"We tried to do all that at once," says Mr. Rewey. "But we underestimated the complexity of getting these disparate dealerships to work together after they had viewed each other as the enemy."

How do Ford dealers view Mr. Rewey? Well, he's got something of an unfair image problem there.

A dealer explains it this way:

Mr. Rewey is one of two top Ford executives who are keyed into dealers. The other is James O'Connor, president of Ford Division.

Dealers really like Mr. O'Connor. He's charming. He came from their ranks as a former dealership general manager. He talks their language.

Dealers find it hard to believe that anything they dislike coming out of Ford Motor Co. comes from good old Jim O'Connor. So, alas, they reckon it comes from Mr. Rewey.

Steve Finlay is editor of Ward's Dealer Business. His e-mail address is: [email protected]