Company Reports It Saw Comeback In Auto Leasing During Q4
HAUPPAUGE, N.Y.-In upstate New York, CU auto leasing made a comeback in the fourth quarter, according to one vendor who predicts leasing will be stronger in 2011.
GrooveCar had its best auto leasing month ever in November for its CU Xpress Lease program, financing 800 leases for its member CUs for $22 million. GrooveCar President David Jacobson said the company has had a 300% increase in leasing year over year (Nov. 2009 to Nov. 2010). "We find the vehicles that the factories are not promoting. It is a matter of being more diligent and finding opportunities."
What that means, Jacobson said, is if Honda has 14 models and is running leasing specials on 11 of them, GrooveCar works deals around the remaining three. "Every day we communicate with the dealer network to find out what cars are not being supported by factories, and the number of these types of cars adds up."
That's the case more-so in the fourth quarter than GrooveCar has seen in recent memory, stated SVP Frank Rinaudo. "I believe it will continue into 2011. Recently we have been competitive on a wider variety of vehicles than we have been in CU Xpress Lease history."
Leading the way in November were opportunities left open by American Honda Finance, Rinaudo said,
GrooveCar is doing a lot of leasing on Nissans, like the new Juke. Rinaudo said that the end of the year and early next year also present opportunities on 2010 models, since many manufacturers are not supporting the cars with special financing. "It allows us to compete on those vehicles and we don't have to be very aggressive on residuals on those cars. If dealers are sitting with 2010 vehicles on their lots, they have to move the cars. So if we give them a lease program on 2010 cars, we typically see a good amount of volume."
Manufactures are also giving CUs and banks special deals. GrooveCar was able to compete effectively this year on a number of Mazda vehicles, because of the rebate structure offered to "outside" lenders, Rinaudo explained. "Let's say manufacturers gave dealers $1,000 rebates on these cars. In some cases we would get $2,000. They may give dealers $1,000 plus a 2.5% rate-but we would get $2,000. The reason is that manufacturers sometimes do that to make sure they have the most competitive programs on the street."
What's also making CU leasing more competitive is being creative on term, offered Rinaudo. "We may step up a little on the residual and support a car for a longer term. Typically the longer the lease term the less likely the car comes back, we have found, so we can be a little more aggressive on longer-term leases, going out to 48 months. Manufacturers do not compete as well on longer-term leases."