He’s right. Volvo does not adjust RV %. Now, if a loaner does not qualify for loaner cash then dealers do not have to adjust for mileage in lieu of passing that cash to a customer. Dealers can sell loaners that did not meet requirements as “new” with mileage at the lower discount (-$3k), but 1-2% higher than normal. That’s my understanding. @jthacker48 - you can search @Benedetto’s posts. He explained how demo/loaner cash works. I was told it is 3 months/3,500 miles (I think) and 6 months/6,000 miles.
Edit: to clarify - RV amount does get adjusted, but not the %
Is the residual value on a loaner in the contract the base RV minus $.20 per mile or is the RV on the contract the base RV and then$.20 per mile is just added to the cap cost?
@Ursus indicated there is a time / mileage component
I am attempting to understand if this is time AND mileage vs time OR mileage. For example, if a low mileage punched car does not meet the 3.5k/6k threshold, but has sat for 6 mos…does the demo/loan cash support from Volvo get better (and therefore the improve the possible retail discount)
RV in $$ amount is adjusted for mileage in the contract. I guess what I’m saying is that dealers enter mileage and software adjusts RV amount in $$. I suggested before to add mileage penalty to the sale price for ease of adjusting LH calculator.
But I’m getting more and more confused myself
Is the residual value on a loaner in the contract the base RV minus $.20 per mile or is the RV on the contract the base RV and then$.20 per mile is just added to the cap cost?
I believe it’s neither of those. I believe the deduction for mileage all takes place behind the scenes between the dealer and VFS and is NOT reflected anywhere on the contract between the leasee and the dealer. I believe the RV remains the same as non-demo vehicles on the contract. I should preface all of this with “only on Volvo demos”. My BMW does deduct the mileage hit from the RV.
Here is a screenshot of the backend software and how the lease was being calculated. As you can see, it’s showing no RV hit for mileage despite having 6,000 actual miles.
Bendetto, I want to make sure I understand as well. I believe you’re referring to the incentive given to the dealership by Volvo OEM for demos. In addition to that, I believe there is also a mileage hit from VFS for mileage on demos. I believe it’s $0.20 per mile allocated as a cost to the dealer. We are trying to figure out if that hit reflects on the contract as an RV hit or if it’s on the backend between dealer and VFS.
It has to show up on your lease contract. It can either occur as an actual reduction in the residual value (I agree with everyone that it isn’t and never was a “percentage” reduction in RV, but I thought it was a $ value reduction in RV and showed up in the RV column on the contract) or it is rolled in to the cap cost (be it through a separate line item; #5 on the backened software shown above, or passed on through the dealer discount).
I find it even odder that the backend software you’re showing has a column specifically for this but it isn’t being populated.
This is the entire email (so it’s not in parts) from the General Sales Manager at a Volvo dealership.
"At the moment, this is the only loaner available to receive the loaner rebate.
There is no change in residual for the loaner vehicles vs non loaner. The XC90 currently has just under 6,000 Miles. So there is an extra .20/mile charge from VCFS amounting to $1,200.00 charged to us as the dealer. I have not passed that charge to you as you can see in the adj cap cost. "
Read to what I replied to again. I repeat again: RV is adjusted for mileage on the contract for loaners. No idea what your dealer is doing, but the contract is with VCFS (which owns the car), so I’d think they want to know the adjusted RV for a loaner car.
Aronchi just simplified it by halving incentives to adjust for mileage instead of adjusting RV
Read what Aronchi wrote and what the dealer wrote. I’m not saying that VCFS doesn’t know the mileage. I’m saying they don’t charge the customer for it. They charge the dealer. Both Aronchi and the local dealer said as much. Show me proof that contradicts the actual evidence I’ve provided.
“Note full loaners have 6k miles and an extra $3k in incentives (1500 when adjusting for mileage). Half loaners have 3k miles and an extra $1500 in incentives (750 when adjusting for mileage).”
I’m referring to that quote and Aronchi’s calculators as well. NONE of them show a hit to RV nor is a hit for mileage reflected. The hit (if you call it that) is simply removed subtracted from the incentive for the demo. But this is not reflected anywhere in the paperwork. All you see is the reduction in sales price along with the other discounts into a net discount reflected in the sales price.
I don’t interpret his quote in that way at all. There is a hit, due to the RV change, that cancels out some of the incentives. His calculators just simplify it, just as his calculators don’t show the incentives itemized.
I do understand. Can you show me a contract on a Volvo demo that reflects that deduction? If it does work that way, why doesn’t the calculator for Volvo operate the same way as BMW?
