So this past week or so Honda joined the group of OEMs not allowing 3rd parties to buy out HFS leases. We are also hearing that Honda told dealers that they cannot buy out the customer’s lease then sell it a 3rd party to help facilitate a work-around for a customer to realize equity in their trade/lease return with a different store. Does anyone out there have any documentation of this? (feel free to PM if you’re more comfortable with that). I don’t know how Honda could prevent a dealer from paying off a lease return and then turning around selling it to a Toyota store where the customer wants to get a new car. (For sake of argument, ignore the ‘well why would the Honda store do that?’ angle. Lets assume they charge a doc fee or D&H fee for the paperwork processing)
If you’re a Honda store or anyone who knows more details of this new directive, please share any insight you may have. Thank you!
Why would a Honda store do this to begin with? If they buy the car for 10k, and it’s worth 15k, they have a 5k profit buffer (minus reconditioning and any repairs).
You’re saying a Honda store would sell it back to the customer at 10k, so the customer can, in turn, flip it to someone else for 15k? I can’t see anyone doing that outside of a sales manager personally knowing someone and doing a favor.
My 2020 Acura Base FWD TLX was quoted at +$3k over my payoff amount…with 17 months left on my 36 month lease. I’d do that in a heartbeat, so yeah- disappointed in the Honda news about selling to a 3rd party.
You’re on the right track; I’m not saying the dealer would do it for free. They would likely charge a flat fee or their doc fee to do it. Also, they wouldn’t sell it to the customer since the customer would then would have to pay tax. The Honda store buys it from AFS. Honda store then sells it to Toyota store for payoff price + a fee. Customer gets $X of equity from Toyota store when they trade it in for a Toyota. It’s just paperwork that the Honda store is doing.
There’s no guarantee that Honda store is getting that car anyway since the customer can return it anywhere. They are just providing a service. It happens all the time with us when we have to go through an OEM dealer to buy a car out. We have relationships with all local stores and they’re willing to help us; sometimes for free, sometimes for a fee.
Well shit. Learn something new every day. I can’t imagine why a Honda store would go through that trouble and paperwork for little to nothing. It doesn’t seem worth their while.
For a random store competing OEM store across town, yea probably not. For a brokerage that generates dozens of deals a month for them, almost definitely.
My thoughts exactly. I feel like they’d only find out through audits which I’m not sure they’d actually do. If it’s true that they told stores they can’t sell to 3rd parties, I’m sure they used some type of scare tactic to ensure dealers don’t try since there’s no easy way to track it happen in real time.
The bank takes the risk when they lend the car/money so they might want to get extra $ instead of the dealership. The dealer already made money selling the car when it was brand new.
Just like the Volvo example mentioned above. And the audit shouldn’t be that difficult to make. I’m guessing majority of the lease returns become CPO cars and sold to retail clients. If they don’t retail it, it means the car went to another dealer. The manufacturer wants Honda dealers to sell their Hondas not the Toyota dealer.
