Most people are familiar with the power of compound interest when it comes to investing. The interest earned on your initial investment also earns interest, which over time can yield impressive returns. Kam Javid, general manager of Woodland Hills Honda in Woodland Hills, California, thinks leasing offers the same type of compounding benefit to dealers.
“It’s mathematically proven that when we increase our lease penetration, we increase our long-term sales and market share,” he says. “If you take the customers out of their leases every two years and buy that vehicle back, you can then not only lease a new vehicle to that customer, but you can also sell that Honda Certified Pre-Owned Vehicle (HCPV) to a different customer. Now, you have three vehicle deals instead of one, every two years. If you extrapolate that for 10 years or more, you can grow tenfold just through leasing.”
Woodland Hills Honda has operated in the same neighborhood for more than 50 years, but it became part of Keys Motors 20 years ago. Today, it’s a five-time Council of Excellence winner, a two-time Masters Circle winner and a President’s Award winner.
Javid, who has been general manager for four years, is particularly proud of the store’s high market share, volume and customer retention numbers. And while excellent customer service has a lot to do with the store’s success, he believes there is a strong link between those metrics and leasing.
“Our lease penetration rate is consistently between 50% and 60%,” he says. “I’ve always compared Honda leases with other brands, and Honda leases are just a lot better when you compare them apples to apples. There are a lot of extra out-of-pocket costs for customers with other brands. Our leases are very customer-friendly, and I’m super proud of that.”
All staff members have been trained on how Honda leases work and how to explain them to customers, and the benefits sell themselves. They include automatic Guaranteed Asset Protection, lower monthly costs, equity retention and the opportunity to upgrade every two to three years.
“Sales associates will share upfront the numbers for retail and lease with every customer, and when the numbers line up side by side, customers tend to choose leasing,” says Amy Martin, dealer relations manager, American Honda Finance Corporation. “Not only that, but when those vehicles come off lease, the dealership can certify them and put them back on the lot. They don’t have to go to auctions and pay the inflated prices that we’re seeing now. Leasing is seeing them through this season when it’s hard to come by certified deals.”
Javid agrees and says that good communication helps get those vehicles back into the store. “Most of our HCPV come from our own customers, and that’s because we reach out to them early and often. We want to know what they like about their current vehicles and what they’re looking for in the next one. By staying in touch, we’re able to get them into a new lease sooner.”
AT A GLANCE
Woodland Hills Honda
Woodland Hills, California
Nestled in the foothills of the Santa Monica Mountains, Woodland Hills, California, is one of the least-crowded neighborhoods of the greater Los Angeles area, offering residents the benefits of suburban living plus easy access to all that the city has to offer. That makes Woodland Hills Honda uniquely situated to serve a wide range of customers.
“We’re kind of centrally located, so we actually serve both urban and suburban neighborhoods, and our customers come from all walks of life,” says Kam Javid, general manager of the 50-year-old destination store, which has been part of Keys Motors for more than 20 years.
THE HONDA EFFECT
The COVID-19 pandemic offered Kam Javid, general manager of Woodland Hills Honda in Woodland Hills, California, a rare opportunity to review two decades of store sales data. What he found was proof that the Honda brand always delivers.
He explains, “During the shutdown in April 2020, I came to work every day, even though we were closed, and because I was the only one here, I took advantage of having some extra time to put together a spreadsheet based on our monthly financial statements over the past 20 years. You can see the ups and downs on the chart.
“Whenever we face some challenges, whether that’s the economy, inventory availability, the market or sales challenges, I can pull out that spreadsheet so my staff can see that, historically, the Honda brand has maintained sales and performance no matter what. I believe that Honda is one of the steadiest, most recession-proof brands that exists. Seeing the proof in that big-picture view of our store’s performance, even during the Great Recession, is heartwarming for my staff.”