Top 10 Advantages of Not Buying From a Dealership

March 23, 2018

Imagine a world where buying vehicles was fun and you knew you received what you wanted at a great price. Imagine a world where you felt as though you had an ally and advocate in the process who knew your needs and expectations. Imagine a world where you did not feel the information about car buying was stacked against you.

If you prefer a root canal over the car buying experience at a dealership, you aren’t alone. Accenture® conducted a survey of car buyers and consumers are not fans of the car dealership experience. In fact, three quarters said “if given the opportunity, they would consider making their entire car-buying process online.” Why do people despise the process? Car buying at dealerships can be confusing, high-pressure, and unreasonably time-consuming.

Experiences include feeling like they were ripped off, spending countless hours “waiting for approvals,” good-guy-bad-guy routines, adversarial conversations with sales people, and buying options and services people later regret. The stories are endless.

If you value your time and money, there are better ways to acquire the vehicles of your choice. Dealerships are not your only option, especially if you are buying vehicles for company use.

Professional leasing and fleet management companies (“FMCs”) offer an alternative to the dealership experiences. By enlisting the services of an FMC, there is a good chance you never have to leave your office! You certainly do not need to enter a dealership.

TOP 10 Advantages

1. Save Time

A top complaint of the car buying experience is it takes far too much time. It is not unusual for a busy company owner or manager to spend ten to twelve hours in the process of acquiring a vehicle. Many company CFOs and company owners have learned they can save time and money by working with a FMC.

Much of the process is handled in your office. The FMC representative works with you to determine which vehicle(s) suit your needs, what equipment and features are required, and how the vehicle will be used. FMC’s offer all brands so if your business fleet requires multiple brands, you work with one person at one company across all brands. The same holds true for upfitting. If your vehicles require aftermarket equipment, the FMC handles it all, decals, equipment, electronics.

2. Options Galore

Dealers sell their inventory and push people toward “what we have in stock today.” FMC’s find the right vehicle for your needs. If you plan properly, you can spec the exact vehicle you need and factory order it. If you have immediate needs for a vehicle, FMCs search the country to find the vehicle that best matches your specs. FMCs are not tied to any brand and if used vehicles are the best options for you, FMCs have access to many used vehicle channels including auctions and wholesalers.

3. Fleet Rebates

There are three ways to acquire a vehicle in terms of price: retail, fleet, and large fleet rebates. The vehicles can then be purchased out-of-stock or factory ordered. Lower prices are achieved by factory ordering vehicles.

A fleet of 15 vehicles qualifies for fleet rebate status with most OEM’s and much larger fleets qualify for large fleet rebates. Fleet rebates are based on the end user, not the fleet management company in most cases. Don’t be fooled by FMCs saying they are the largest, best, or cheapest. It is the responsibility of the fleet management company to know which rebates you qualify for. A good FMC maximizes rebates and minimizes vehicle cost. The FMC does not need to be the biggest to get you the rebates for which you qualify.

4. We Bank You

FMCs rely on funding sources to finance all your vehicle needs and hold them in their portfolio. The same company that you call on to source vehicles also provides the financing.

Companies can avoid tapping into their line of credit for vehicle acquisition and save it for core business needs or strategic business opportunities.

Many companies purchase vehicles because they don’t understand how they can benefit by leasing their vehicle. Once leasing is explained, the majority of companies choose leasing over purchasing.

Leasing is a financing alternative with a built-in exit strategy. Leasing is a perfect option to finance a vehicle even if you intend to use your vehicle for many years. Also, leasing provides protection from the risk of market value fluctuations. Traditional financing puts the entire risk of resale value on the vehicle owner.

5. Customized Terms That Fit Your Needs

A well-written lease takes into consideration the anticipated use of the vehicle, whether it is the number of miles that will be driven or the condition of the vehicle at lease-end. Simply stated, with a lease you avoid paying for the portion of the vehicle’s value that remains when you no longer want to use the vehicle. This drives monthly payments down considerably and keeps lease terms shorter than purchase terms.

Dealers are known for writing leases that won’t match the actual use of the vehicle. The leases available to dealers are consumer leases written for businesses, but not built for business needs at all.

The terms are generic and often too restrictive for many business lessees. For example, dealers typically offer three year leases allowing for 12,000 or 15,000 miles per year and anticipating consumer use, thus any damage to the vehicle is billed back to the lessee. This isn’t how businesses use vehicles. They use them, often much harder than consumers. This can result in heavy punitive charges at lease-end. FMCs have the ability to customize each lease to ensure that every client is satisfied and protected from excessive charges at lease-end.

Open-ended leases are purpose-built for fleets and have no mileage or damage restrictions.

Leases can be written for 2,000 – 100,000 miles annually. This is by far the most common misconception of business leasing. Open-end leases are written for the anticipated use of the vehicle without limiting miles or imposing charges for damage.
Both open and closed-end fleet leases can be configured with high mileage where dealer/OEM leases cannot be configured for high miles or damage.
FMCs specialize in business leasing and have more lease options. Leasing for fleets exists – no mileage limits, no damage charges, and no restrictive lease terms.

6. Free Up Cash

Leasing requires a smaller investment of your capital compared to purchasing. What you will have at the end of the lease is only limited by how you choose to use the extra money! You could choose to invest in an asset that has the potential to appreciate or use the additional liquidity to fund critical expenses. When the many benefits of leasing are explained to accountants and financial planners, most agree that vehicle leasing is a better strategy for financial growth than investing your money in a depreciating asset.

7. Need Upfitting – No Problem!

Providing turnkey vehicles is core to the fleet management business. Vehicle upfitting is often built into lease agreements.

Fleet vehicles are regularly upfitted with necessary equipment including tool storage, ladders, safety equipment, lifts, accessories, decals, and wraps. Matching fleet and driver needs with vehicle capabilities is crucial. Fleet management companies will lend advice on upfitting that satisfies the needs, preserves resale value, and is repeatable for years to come.

8. Services That Improve Operations

Fleet management companies have fleet services including maintenance management, fuel management, telematics, driver testing, and a remarketing department dedicated to reselling used vehicles. Savings of 20-40% can be realized through maintenance programs. These services can also help you save money, reduce downtime, and improve vehicle reliability/safety.

9. Remarketing

FMCs handle the disposition of your vehicles at the end of the lease. This can be the least appreciated service offered but the most important in terms of dollars and cents.
With an extensive customer base and management experience, FMCs can generate higher net sales proceeds on used vehicle sales. Instead of organizing a private deal or posting your vehicle for sale online, the FMC will position your vehicle in a highly sellable market and recondition it to have the best opportunity to sell at top dollar. This simplifies the administrative tasks creating a far less time consuming experience. The typical vehicle sold by an FMC receives at least 10-20 bids/offers.

10. Make a Friend for Life

Dealerships experience up to 300% staff turnover each year. Many FMCs with rental vehicle operations or dealership roots have rapid staff turnover as well.

The best FMCs value long-term relationships with customers and employees and are independent of dealerships/brands. The best FMCs also make the investment in helping clients learning the business, building relationships with their clients’ employees, and building a long-term fleet management program customized for each fleet.

If you own a company or a manage a fleet, contact Doering Fleet Management. Doering is primarily known for its expertise, service, and client satisfaction. Fleet Wellness® is a proprietary product of and practice of Doering Fleet Management that drive a holistic view of fleet costs, risks, and ensures fleets are measured, tracked, and improve over time.