Michael Silver’s lease on a Mercedes S Class sedan wasn’t up till November, but he sensed opportunity as the coronavirus outbreak shuttered businesses and sent many car buyers to the sidelines. The Florida retiree discovered Mercedes was offering 0 percent financing and low lease fees, while also waiving one monthly payment and deferring the first payment for 90 days. By combining a variety of incentives, he could save nearly enough money to cover the cost of ending his current lease early. So he contacted a nearby dealer in Coconut Creek.
The dealer was eager to make a deal, but with assembly lines shut down, vehicles were scarce. After checking inventory across the southeast, the salesman found an E450 sedan with a sticker price of about $75,000 at the port in Georgia, bound for a dealer in Mississippi. He arranged a trade, and a few days later, Silver donned a mask and went to the dealership to close the deal. “I got the car phenomenally below sticker,” he says. “I felt uncomfortable spending the money, but it was a deal too good to pass up. I could never, ever get a current year Mercedes this cheap.”
The coronavirus recession has hammered the auto industry, with April sales plunging 46% below 2019 levels, to a 50-year low. But buyers willing to commit to a large purchase are finding some of the best deals in years, plus another nice extra: Dealers willing to do nearly anything to close a sale.
Like Silver, Johnathan Dinan of Hamilton, N.J., ended a lease early because of the generous deal he got on a new vehicle. He returned a GMC Acadia that ran $380 per month for a Jeep Gladiator pickup that costs $396 per month, including payments for the last 10 months of the Acadia lease. He never visited the dealership and negotiated by phone, text and email. The dealer was offering vehicle delivery within a 15-mile radius, but he lives farther away, so he took a train to Secaucus and the salesperson met him there. They finalized the paperwork in the Gladiator at the train station, both wearing masks.
“I negotiated all of it ahead of time,” says Dinan, who works for the New York City courts and is a volunteer moderator on the car-research site leasehackr.com. “Nobody should set foot in a dealership unless you need to do a test drive.”
Salespeople normally like to coax buyers to the showroom, where they can upsell features and trim lines costing more than a buyer may have planned to spend. But lockdown procedures are changing that paradigm. Some showrooms are closed, forcing dealers to sell vehicles remotely. Other showrooms only let buyers in by appointment, to keep crowds thin. Many car buyers want to avoid showrooms anyway.
Carmen Wilmer of Sterling Heights, Mich., is shopping for a luxury SUV, with her eye on the Range Rover Velar. She’s doing all her research online, but went to the dealer for a test drive. The showroom is closed, but she made an appointment online, and the salesman met her outside the dealership with a vehicle to drive. “We were both wearing masks, keeping some distance,” says Wilmer, who works for the local government. He explained some features of the car, and she drove alone. She loves the vehicle and hopes to make a purchase soon.
No need to go to the showroom
Car shoppers have been drifting away from dealerships for years, doing research on price and features on websites like Edmunds, KBB and TrueCar instead of going to the showroom and asking for a brochure. Salespeople have adapted grudgingly, but many now think the old hard-sell model is dead for good. “I think it’s going to change the car business forever,” says Alex Flores, general manager of Capitol Chevrolet in Austin, Texas. “We’re doing Internet, email, texting, Zoom meetings, bringing cars to people’s homes. We always want to make an appointment in person, but now we’re changing our mindset.”
Texas considers car dealers essential businesses, so they’re allowed to open—but with modifications. Shoppers come by appointment only. Salespeople wear masks and cannot work consecutive days. One of the trickiest parts of doing remote deals is evaluating trade-ins. The dealership asks buyers with a trade-in to send pictures and videos of the entire car, including the engine compartment and the interior. Sometimes they’ll check out a trade-in over live video, even asking owners to show the dashboard while the car’s running, to see if the “check engine” light is on.
Sales at Capitol Chevrolet have been surprisingly strong—down only about 20% year-over-year, much better than the national average. Pickups and other trucks account for 60% of volume, and Flores credits lavish incentive programs from Chevy parent General Motors. The biggest looming problem isn’t lack of buyers, but lack of inventory. “I’m down to a month’s supply,” Flores says. “That’s a little scary. We’ve been trying to buy cars from other dealers, but everyone’s in the same boat. Everybody knows how bad it’s about to get.” GM, Ford and other automakers plan to reopen assembly lines beginning May 18.
Some buyers have jumped because they think exceptional deals won’t last. Matt Staggers of Chandler, Ariz., had been planning to replace his Honda Odyssey minivan with a new model, and noticed a substantial drop in lease fees from March to April, as interest rates declined. With the reeling economy, he wondered about making a large financial commitment, but decided his job as a benefits broker was safe enough. Plus, he might have to pay more if he waited.
“I got a much more favorable deal because rates dropped so much,” Staggers says. “That made the decision a lot easier. With the plants all shut down, there might be a shortage in a couple months, which might hike prices.” During the last month, Staggers has also helped his father lease a Nissan Leaf, and his mother-in-law lease a Mercedes E450. Both are retired and comfortable with the purchase. Now that’s the mindset.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: email@example.com. Encrypted communication available. Click here to get Rick’s stories by email.