Subscriber Services
Magazines & e-Newsletters
Auto Service World
Feature   August 1, 2011   by Tom Venetis, Editor

The Leasing Challenge

Here is a scenario: A vehicle owner comes in with a vehicle that needs some work, replacing worn struts or some transmission work, for example. The service writer is diligent and produces an estimate for the work and parts, and then hands that...


Here is a scenario: A vehicle owner comes in with a vehicle that needs some work, replacing worn struts or some transmission work, for example. The service writer is diligent and produces an estimate for the work and parts, and then hands that estimate to the owner. The owner looks at the estimate and remarks, “For this price, I might as well lease a new vehicle.”
Think it is uncommon? Think again. I’ve had many conversations with vehicle owners who have scrapped perfectly working vehicles over a single bill to replace worn shocks and struts, or for some transmission work. In most cases, the vehicles were less than a decade old and had never exhibited any other problems. The repairs would have sent those vehicles back on the road with many good years of service awaiting their owners.
The lure of cheap leasing rates makes it a tough sell. How do you argue against a person who reasons if a repair – parts, labour and taxes included – is well-over a thousand dollars, it is ‘cheaper’ to simply dump the car and lease a new vehicle, where for the next five year the only expense is the regular oil change?
The reality is leasing is more expensive than maintaining a vehicle over many years. I know having a thousand-dollar-plus bill is never fun. It produces the proverbial ‘sticker shock.’
What this industry has to do better is inducing ‘sticker shock’ in the vehicle owner who makes the argument that is it cheaper to lease a new vehicle rather than pay to have the transmission worked on. Have a calculator on hand to run the vehicle owner through the numbers. They think that transmission repair is expensive? Show them what it costs to lease a new vehicle over five years, even at the lowest leasing rates available. Now that transmission repair looks a lot cheaper. The customer is better off having the work done and keeping the vehicle on the road in good condition with regular maintenance for another ten years than leasing a new vehicle. It’s simple math; but it gets lost in the emotional impact of the price for doing the repair.
This is going to be an ongoing struggle for independents. Major vehicle makers are pushing aggressive leasing and zero-interest rate financing to boost sales. Others are offering warranties that were not contemplated a few years ago, such 100,000 or more kilometres on the drive train. Prices have dropped dramatically on some models.
So no one should be surprised that some vehicle owners are tempted to abandon their vehicles at the first major repair or maintenance bill. Our job is to make them think very hard about this emotional reaction and show them why it is wrong; and why it will save them money.