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IARA’s Certified Automotive Remarketer Program: CAR-7

UNIT:  Pre-sale Activities

COURSE:  CAR-7 Lease Maturity

Course Purpose

This course will identify the skills required to effectively manage a lease end-of-term program. The outcome to be achieved varies from portfolio to portfolio, or client to client, predicated on the program goals.

The primary goal of the manufacturer/captive finance company is substantively distinct from that of the pure financial lessor. However, this course unit focuses on independent financial institutions. Their objective is portfolio profitability enhancement. To the extent that strategies employed in the lease termination program operate with this objective as the guiding principle, the opportunities to significantly influence the outcome exist. The course will allow the participant to develop a comprehensive understanding of the several potential paths lease maturity management may follow to effect the desired outcomes. This course is specific to closed end lease units. A different course will cover the process to sell to open-end units to drivers and employees.

Learning Objectives

Upon completion of the course, the participant will have incorporated the skills set required to effectively manage a lease end-of-term program. The participant will develop an understanding of specific achievable program outcomes based on the client or wholly owned portfolio goal.

•    The goal of the pure financial lessor — banks, credit unions, independent lease funding sources —is one that:

1.    Mitigates potential losses that result from the exposure that may exist between the vehicle’s lease residual value and true market value.
2.    Captures the equity when lease market value exceeds lease residual value.
•    The manufacturer/captive finance company’s primary goal, addressed in another unit of the course curriculum, is customer retention, influencing the lessee to consider a new vehicle purchase of the same nameplate or in the same family of nameplates. While mitigation of lease residual risk is important as a secondary goal, once the lessee indicates that he/she has no interest in purchasing their leased vehicle, the initial conversations typically address new -vehicle purchase, which is the manufacturer’s primary goal.

Case studies, accompanied by metrics, must be used to establish sensitivity to the influence of variables and become familiar with the exigencies of the marketplace. The specific skills set presented includes:

•    A description of the distinct differences between the goals of the pure financial lessor and those of the manufacturer/captive finance company.
•    Needs-based consultative sales skills.
•    An explanation of the impact of various offers and propensity to achieve each offer’s desired outcome.
•    Listening skills to address lessee desires.
•    To achieve desired program results, the strategies for the careful hiring for attributes, verbal and critical thinking skills, training for non-scripted interactive outcome-based dialog, honing and mentoring to enhance client or wholly owned portfolio performance, coupled with methodologies to enhance lease consultant retention.
•    Description of the holistic approach and tools necessary to effectively manage a client’s or wholly owned lease-end portfolio.
•    The ability to calculate the economic impact of each negotiation between the lessee and the lease maturity management consultant.
•    Recognition of the dynamic nature of lessee offers in response to the ever-changing marketplace realities, and the crafting of lessee offers that demonstrate value to the lessee.
•    Identification and discussion of alternative sales channels, including sale to lessee, pre-auction to the dealer upon grounding, sale via Internet sites, and traditional physical auction. Fixed price, bid sales, and negotiation strategies in one-on-one sales to the dealer will be addressed. The participant will be able to assess each distinct sales channel effectiveness, benefits, marketing methodologies, and benchmarking to ensure, on a portfolio basis, net sales price maximization.
•    The capability, flexibility, and capacity of the systems infrastructure required to effectively manage the lease maturity initiative.
•    Reporting necessary to demonstrate value of, and incremental return from, the lease maturity management program.

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