GM counts on leasing to boost customer retention and dealers’ supplies of cars

Article by Christian A., on September 16, 2013

General Motors is hoping that leasing will experience an uptake so that customer retention improves and dealers' supplies of recent-model used cars will expand. In a conference call last week, U.S. sales chief Kurt McNeil said that GM is “most excited” about the leasing aspect. He added that its number of lessees continues to increase, particular in the fourth quarter when many lessees are returning.

On the other hand, Cadillac will be offering lease deals on selected 2013 models through September, according to Don Johnson, vice president of Chevrolet sales and service.

The reason why dealers, manufacturers and auto lenders want lease customers to increase is their intense loyalty (compared to customers who purchased using cash or via loan) and the probability that they will lease another vehicle with the same brand. McNeill admitted that the company is excited about retention and that off-lease cars will boost dealers' supply of almost-new used cars.

He also said that traditional finance customers tend to come back and choose an older vehicle. According to the Power Information Network, there are estimated to be 1.7 million vehicles coming off lease in 2013 nationwide. This is 35% higher than 2012 (with the addition of 447,000 units). Starting in 2010, the number of new leases has gradually rebounded.

GM officials hope to attain "competitive" levels of lease penetration. For the second quarter, leasing made up about 20% of GM's U.S. sales volume while the industry recorded 24% (excluding GM). GM provides leases via captive finance company GM Financial, Ally Financial Inc. and U.S. Bank. [source: automotive news - sub. required]

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