Automotive News Canada - June 2017 - v2 - 4

* JUNE 2017

LEASING'S

EXOTIC SIDE

Canadian companies thrive on quality low-kilometre
lease returns while creating a captive audience
By STEVE MERTL
WINNIPEG CORRESPONDENT

LEASING IS ON THE UPSWING
in Canada, even at the top of
the market with exotic brand
names that often end in "i" and
ultra-luxury cars such as RollsRoyce and Bentley.
Auto dealers who play in this
rarefied niche say there's room
for growth, but it takes a clear
understanding of who the customer is and how to work the
numbers.
"Leasing of luxury cars is
the lowest-risk business in the
industry," said Gad Bitton, president of Montreal-based Holand
Automotive Group. "The segment is an untapped segment."
Holand is the largest privately held leasing and financing operation in Canada, said
Bitton. It also owns Quebec's
only Rolls-Royce dealership and
a Lamborghini store in Palm
Beach, Fla.
Bitton, whose company has
been in business since 1979, estimated that 50 to 60 per cent of
all exotic and ultra-luxury cars
are leased, above the 40 per cent
average for the whole market.
Paul Mirretta-Barrone, who
manages leasing nationally for
Pfaff Automotive Partners, is a
little more conservative.
"We would be happy with
a 35 per cent penetration from
a leasing perspective," he told
Automotive News Canada.
He and Bitton agree, though,
that leasing volumes in the segment could be higher. It's an
option for any high-end-car customer, regardless of wealth.
"There are people that will
come in and pay cash," said
Morris Lubinich, general sales
manager at Pfaff's Vancouver
McLaren store. "We certainly
present leasing options to them
because there's a benefit."
Those opportunities often
aren't explored because sales
people, perhaps intimidated by a
client's wealth, might not broach
the leasing option, said MirrettaBarrone.
"I'm not insulted by you ask-

ing me and it's not going to jeopardize the deal," he said of the
customer. "In fact, if anything,
you've got more credibility
because you're giving me options
and you're trying to discover
what my needs are."
Better sales training could
prevent dealers from missing leasing opportunities with
a prospect for better customer retention than cash or self-financed deals in this segment,
Mirretta-Barrone said. Many flip
their rides after two years or less
for the newest model, Lubinich
added.

DEALERS LOSING OUT
Bitton said dealers and automakers rely too much on analysis from consulting firms when
the Internet provides all the tools
they need to track prices. The
key, he said, is to watch auctions
of off-lease vehicles and what
resellers then market them for.

automotivenews.ca
GENESIS OPENS FIRST CANADIAN
RETAIL BOUTIQUE IN TORONTO

Genesis Motors Canada,
Hyundai's luxury brand, opened
its first Canadian retail storefront
location on Toronto's Queen Street
on May 29. Until that point the
"Genesis at Home" program had
sales staff bring demonstrator cars ( P H O T O : G E N E S I S )
to the homes and workplaces of
prospective buyers. Hyundai dealers do not stock Genesis cars.

MITSUBISHI LANCER GETS LONGER LIFELINE
IN CANADA THAN IN THE UNITED STATES

REPEAT BUSINESS
"Typically if you've done
a good job with that customer you'll lease them a new car
again," he said. "You've got sort
of a captive customer that comes
back to you."
Calculating residuals is an
important part of structuring
any lease, but harder in the exotic and ultra-luxury segment
where only a relative handful of
units of a model change hands in
Canada.
Experience is crucial, said
Mirretta-Barrone.
"That's the benefit to coming to guys like us, is we're not
looking at any black book or
any other basic market data,"
he said. "That's why I think
we have a competitive market advantage over our peers
because we get the residuals
right."
Bitton goes further, saying
automakers and authorized dealers are too conservative in calculating residuals below the vehicle's true market value and leaving money on the table.
"We've been in this business
with them for 37 years," he said.
"I did residuals at 10-12 per cent
higher than the prescribed rate
and I only made money when the
cars came back."

TRENDING
STORIES

I never wholesale a car. It's
the most profitable segment
of our business because
we re-lease the vehicle.
GAD BITTON

President of Holand
Automotive Group in Montreal
"The dealers suffer because
they don't take a chance on their
own inventory," he said. "Their
cars are being marketed off lease
at $30,000-$40,000 more than they
sell them for at auction. They
don't need as much data as they
think they need. They need limited data by geographic area."
Dealers who dump off-lease
exotic and high-line vehicles at
auction are also missing out,
Bitton said. Low-mileage limits and careful maintenance
mean they're good candidates for
re-leasing, something Pfaff executives echo.
"I never wholesale a car,"
Bitton said. "It's the most profitable segment of our business
because we re-lease the vehicle.
"That means we're retailing
it at a retail markup and we're
refinancing it at a markup. It's
the most unbelievable part of our
business."
Bitton has waiting lists for clients ready to take older exotics
coming off lease.
"We have Ferraris that have
been on lease with us for 12
years," he said. "We just keep
leasing them." - ANC

The Mitsubishi Lancer will be available in Canada until at
least the first quarter of 2018 while sales in the United States will
cease in August this year. "The Mitsubishi Lancer has historically been a stronger seller (proportionately) in Canada," Mitsubishi
Canada spokesman John Arnone wrote in an email. "Lancer's
size, value equation and warranty resonate strongly among
Canadian consumers."

CANADA TO GET A NEW ELECTRIC PICKUP
WITH A UNIQUELY CANADIAN NAME: BISON

Havelaar Canada unveiled
an all-wheel-drive battery electric pickup concept at the Electric
Mobility Canada conference in
Markham, Ont. The Bison has a
dual-motor powertrain, and has a
300-kilometre range on a single
charge.

( P H O T O : H AV E L A A R C A N A D A )

MONTREAL'S RALPH GILLES: FCA'S
DESIGN CHIEF AND CLOSET RACER

Ralph Gilles was born in New
York but raised in Montreal. He's
now the head of FCA's global
design and just happens to be a
race fanatic.
"I have an inner racer inside of
me," Gilles explains in the Netflix
series Abstract: The Art of Design. ( P H O T O : N E T F L I X )
"I've been watching racing since I
was a kid. I went to four different driving schools in a span of six
years, and briefly competed. But the part that speaks to me even
to this day, and why I do it, is the escape."
Gilles' talent came to the forefront with the design of the current-generation Chrysler 300.

THREE TAKEAWAYS FROM THE RECENT
CHEVROLET EQUINOX MEDIA LAUNCH

Nicolas Longpré, brand manager for Chevrolet crossovers
and electric vehicles, calls the
2018 Equinox "the most important
launch for Chevrolet this year."
Chevy has focused on the inte- ( P H O T O : G M C A N A D A )
rior, technology in particular. It
offers Apple CarPlay and Android Auto. It's also created some
additional storage but not lost legroom. Chevrolet also made
heated seats, heated mirrors and remote start standard on all
three trim levels in the Great White North.

MAGNA AT THE FOREFRONT AS CAMERAEQUIPPED MIRRORS BECOME REALITY,

Magna International has developed a pair of camera-equipped mirrors that allow drivers to see video of their surroundings as they travel. The ClearView system is designed to
help improve visibility while changing lanes, backing out of a
parking space, or while driving with a vehicle full of passengers
or cargo. The exterior sideview mirror combines a self-cleaning
camera with a traditional sideview mirror to display a live video
feed inside the vehicle. Magna expects the camera-based driver
assistance market to be worth about US $10 billion per year by
2020.

FOR FULL TE
XT

Gad Bitton, president of Holand Automotive
Group, says that leasing high-end cars is
the "lowest-risk business in the industry."

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s.ca
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TORIES AND
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Table of Contents for the Digital Edition of Automotive News Canada - June 2017 - v2