Even in this period of low inventory and intense competition, leasing continues to be the best way to create repeat business—and data shows that financing with Honda Financial Services (HFS) produces more loyal customers compared to financing through noncaptive lenders.
In fact, HFS has a 26-point lift on lease brand retention versus noncaptive purchase retention based on data from Q1 2022, according to the S&P Global Mobility report. It’s the second-highest lift in the industry.
Ongoing brand-centric communication is one reason lease retention generally is much higher than retail retention. “Leasing allows our dealerships to remain in contact with our customers,” says Paul Hardwick, manager, Lease Maturity Center (LMC), American Honda Finance Corporation (AHFC). “Communications throughout the lease lifecycle repeatedly refer the customer back to their originating dealer.” Those communications have recently been updated, and several new programs have been introduced to help dealers retain their lease customers.
When it comes to lease customers, HFS offers several advantages that make them want to return.
One major benefit is the LMC itself. “We’re dedicated to helping customers through the end-of-term process,” Hardwick says. “AHFC set up the Lease Maturity Center exclusively for the purpose of managing our Honda and Acura end-of-term customers in ways that maximize the likelihood that they’ll return to the dealership.” With that kind of attention, it’s no surprise that AHFC’s lease-end process was ranked number one by the NADA (National Automobile Dealers Association) Winter 2022 Dealer Attitude Survey.
Though the LMC serves both brands, Honda customers are recognized as such and encouraged to stay with the brand. That kind of service results in increased brand loyalty to Honda and HFS. “Look at the roles and responsibilities of HFS associates as opposed to those of a traditional bank or credit union,” Hardwick says. “At HFS, our primary roles and responsibilities are to represent the brand and make sure that everything revolves around continuing to do business with our Honda dealers, with the goal of selling another Honda vehicle.”
HFS then reinforces that brand relationship with loyalty benefits like the excessive wear-and-use or damage waiver and the turn-in fee waiver, which is included when a customer leases or purchases their next Honda or Acura vehicle within 30 days of lease maturity.
Dealers reap the benefits of doing business with HFS, Hardwick adds. “We only allow our Honda dealers to purchase these returned vehicles at the end of term for the residual, and that’s proved to be a good source of profit for our dealers throughout this extended period of low inventory.”
Supporting Lease Retention
In today’s tough environment—with inventory shortages and increased competition for lease business—HFS offers dealers several tools that can encourage lease loyalty.
Lease Extensions
HFS is offering lease extensions to all eligible customers to keep them in their vehicles until their next one becomes available. Those customers understand that they can cancel the arrangement at any time.
Enhanced End-of-Term Communications
Customers receive monthly communications via email and direct mail throughout the last six months of their lease encouraging them to return to their originating dealers. The new HFS website sends targeted notifications telling customers whether they qualify for extensions and reminds them to take the next steps in their lease-end process.
“I hear it on calls all the time—customers are unsure of what to do. They’ve never been in a situation where their lease is expiring, and they’re visiting their local dealership and finding a lack of inventory,” Hardwick says. “Everything that HFS does to ease the customer’s concerns and provide them with stable transportation throughout—we’re putting that information on their statements and on the website. It’s really provided a level of certainty in a very uncertain time for a lot of our customers.”
48-Month Leasing
Introduced in June 2022, this is another leasing option to help customers with their payments. “Traditionally, leasing allows customers to have lower monthly payments for products,” Hardwick says. “As vehicles get more expensive due to the latest technology, it’s becoming more and more essential to have a variety of lease terms available.”
Lease to Retail Rollover
This program offers end-of-term customers the opportunity to certify their vehicles when they purchase them. The customer gets the additional warranty that all certified vehicles have, and the dealer can use certified specials as well as designated Lease to Retail Rollover specials. “When customers call in wishing to purchase their leases, we direct them back to their Honda dealers to give dealers the opportunity to facilitate the buyouts of their vehicles,” Hardwick says.
This all adds up to a strong argument for leasing through HFS, as this provides your dealership with better long-term success and customer support—and that argument only continues to get stronger. “We’re always looking for ways to improve the process,” Hardwick says, “and make it a little bit easier for our dealers and for our customers. We want to create lifetime brand loyalty with our customers.”