Lease Turn-Ins Made Easy

The Mercedes brand is trying to make the sometimes-painful process of turning in cars at the end of leases better for both customers and dealers.

The auto maker's “lease-end redesign” aims to boost customer retention and satisfaction, says Jeff Gartland, director-remarketing for Mercedes-Benz Financial, a business unit of DCFS USA LLC.

“It's pioneering,” he tells Ward's. “I'm convinced it will increase sales, loyalty and customer pay (for wear-and-tear reconditioning work). We want dealers to close out the experience.”

A pilot program is under way at 24 Florida dealerships. The captive finance firm plans full implementation by next year. In 2007, U.S. Mercedes dealers delivered 253,218 units. Most of those were leased.

Currently, when a lease-termination date approaches, an inspector is dispatched to the Mercedes lessee's home or work to check the car for wear and tear. If reconditioning is required, the customer must cover costs.

“That process sounds good, but the inspector is a third party who is sometimes doing eight inspections a day,” Gartland says. “Anything can happen.”

In focus groups, customers indicate the inspection process can be a “pain point,” especially if unexpected charges occur.

Under the new process, dealership personnel are trained to do the inspections at the dealership itself.

“It's a 3-point, 20-item simplified inspection covering the interior, exterior and equipment,” Gartland says. “Beforehand, we send a self-inspection form to customers, so they can see what to look for. But Mercedes customers usually take pretty good care of their cars.”

If reconditioning costs are involved, the customer can discuss them with dealership personnel. The dealership also is in a position to do the repairs, if the customer so desires. Some costs might be waived through prospective loyalty programs.

Although most dealers like the new program, the ones with apprehensions are put off by the prospect of presenting a wear-and-tear bill to a customer.

“But we are not asking dealers to collect on those bills,” Gartland says. “People can call us if they have questions.”

The program's biggest strength is that it gets customers back to the lease-originating dealership and in a position to buy or lease another vehicle, he says.

Another benefit is the dealership gets a chance to see the car and determine if it wants to add it to its used-car inventory. Most off-lease Mercedes vehicles are purchased by dealers for resale.

“We want the best cars back at franchised dealers' lots so they can best represent the franchise,” Gartland says.

If dealers pass on buying off-lease vehicles returned to their stores, the vehicles go to auctions. That includes OVE.com, with a closed channel for buying and selling among Mercedes dealers only.