What Auto Dealers Should Know About Credit Union Vehicle Leasing

New car inventory is low, prices are going up and deals are happening fast. The convergence of low vehicle availability, price creep and digital shopper usage has forced many dealers to be more strategic about how they sell. They’re realizing that getting buyers into lengthy financing options doesn’t help them retain customers. Sure, incentives like 0%/84 months drive people to dealerships initially, but it also keeps them away longer. Leasing options have been a better fit in terms of reasonable payments that ensure buyers will be back sooner and with a well-maintained, low-mileage trade.

Thinking out of the captive box. Many dealerships are rightly loyal to their captive. But many manufacturers are not incentivizing vehicles at the 2020 level anymore and aren’t offering incentives on unpopular aged inventory. This gives dealers an opportunity to find new financial partners and explore options to get their customers into a favorable payment. Dealers that create flexible options will be in a more powerful position to get people the right deal. Many are utilizing Indirect Leasing Incentives because those incentives can be higher than the retail incentives. That helps customers get in a more equitable position and can help them achieve a slightly lower payment – something that helps with all this uncertainty and change.

Leasing provides additional revenue opportunities. With more flexible options, many dealers are realizing they have the same opportunity to sell products on a lease as they do on a retail transaction. We’ve seen dealers, last fall and into 2021, pushing trucks and SUVs onto leasing programs to get that lower payment while adding service contracts, tire-and-wheel packages, and more.

Volatility makes consistency a requirement. For some dealers, credit unions are an attractive option because they’re consistent and predictable. They offer the same interest rate across multiple terms and all types of vehicles; leases are based on simple interest. In addition, there’s no penalty or market adjustment for leaving the lease early.

Change is the biggest driver of all. Car buyers have changed because their lives have changed. Many now work from home, while others work partially remotely; some are unemployed or furloughed. Customers need more options to meet their needs, which is why we see more people using the 5,000-, 7,500- or 10,000-mile (8,000-, 12,000-, 16,000-km) options on leases. Customers are realizing they don’t have to limit their options because dealers are able to arrange a more customized lease.