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NVLA LeaseWire
07/05/2020 | Issue 16
   

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President's Message
Time for a reboot

You may feel that you have aged a generation in the last eight weeks. That would put some of us close to being ancient! To those who are waiting for things to go back to normal, I have a question: How was normal working for you? If we were actually to go back to the old normal, we would miss what is likely a once in a lifetime opportunity to reboot. 

If you have ever wanted to be like Michael J. Fox in the movie Back to the Future by taking a DeLorean (I leased a few DMC 12s back in the day) to time travel and then exploit the knowledge gained from history to buy Xerox or Apple stock or to take advantage of an opportunity that you had previously passed over, now may be your chance. Just because you missed the goal on your first kick no longer means that you don’t get another shot.

How many times have we wanted to retrench, restructure, or even do a 180 but have been held back by self-doubt or self-consciousness about how our results will look to the bank or investors during the ramp-up to new initiatives? CV19 has now made it much easier. Everyone is already expecting poorer results for the next while, so that is no longer an excuse.

Those who continue in the old routine and wait for their new normal to sprout out of the ground and embrace them will have missed the lesson. It is up to us to strategically craft and invent our own new normal.

The gift of CV19 has now made it possible and, frankly, for many, it's a necessity to press control + alt + delete. New business plan. Amended sales forecast. Structural changes. Maybe even some staffing changes. New approaches to shape the story of our future. Some of the start-ups founded during the 2008-2009 recession: Uber, Airbnb, Slack, Pinterest, WhatsApp Inc., Square, and Venmo.

The likelihood is that you already know what to do. Research. Consult your peers and those in-the-know for advice. Make the necessary plans, set some goals, and start taking action now. Rip the band-aid off and release the hounds. It's going to be a great ride!

-Doug
NVLA Membership Survey Results

Thank you to all who completed our survey that will help provide our readership with the most relevant and specific support through member-related resources and LeaseWire content.

Your responses will help us better understand your unique challenges and needs as a result of these unprecedented circumstances and help us better serve you as NVLA members and industry leaders.
NVLA Webinar Recap: "Getting Back to Business"
Earlier this month, NVLA hosted the webinar “Getting Back to Business” with three NVLA member-panelists: Scott Crawford of Wilmar Inc., Dan Ewald of Ewald Fleet Solutions, and Ken Sopp of CULA. Our member-panelists shared their plans for how their companies are getting back to business in a safe and effective manner as the U.S. economy gradually reopens.

Each of our panelists shared common key initiatives for how they are working their way out of the crisis: the importance of marketing, training, risk mitigation, and office operations and logistics.

  • Marketing – The panelists shared the importance of keeping up current plans or even increasing marketing plans and budgets. Panelist Scott Crawford emphasized the importance of radio advertising in 2020 because of the pandemic and presidential election year.  These current events drive more people to tune in on local radio stations for updates; local radio advertising allows Crawford to reach more people in his target demographics of business owners and decision-makers. Even in these unpredictable times, keep up with marketing plans and budgets to remain relevant and at the front of your current and prospective clients’ minds.

  • Training – Each panelist touched on training staff and recalibrating sales teams for the current climate. The key takeaway: refine your procedures to increase operational efficiency and continue (or start) to cross-train your employees. In these times, it is essential for staff to learn other team members' responsibilities for the continuation of being remote or other disruptions to normal functioning.

  • Risk Mitigation – How do we continue to mitigate the risk of our organizations and customers? In brokering, it is recommended to transfer credit risk to your funding partners and mitigate risk with high-risk clients, such as hotels, event-related companies, restaurants, and others. Another way to mitigate risk is to foster and then maintain constant, open communication with existing customers.

  • Office Operations and Logistics – How do we get back to work and what does that look like? Begin with developing and announcing office opening procedures, openly communicate expectations with your team, and continue to allow remote working for employees who are either uncomfortable with returning or those who have underlying health risks. When offices do begin to reopen, make sure it is at a gradual pace and all equipment gets wiped down and sanitized regularly.

Did you miss our "Getting Back to Business" webinar or simply want to re-listen to any of our webinars? All NVLA members have immediate access to our library of webinars.
The Silver Linings Within Economic Disruption
Nick Markosian, President of Markosian Auto
Amid the huge economic and life interruptions happening this spring due to the "corona crisis," it can be hard to find the silver linings in all of this. However, with the right mindset, an appetite for risk, and access to capital, this crisis could be a once-in-a-decade opportunity for the growth and expansion of your Lease Here Pay Here business.

When the crisis first hit in mid-March, our business at Markosian Auto completely stalled. It didn’t help that there was a 5.7 magnitude earthquake in Utah that week. But, things quickly turned around and April proved to be a record-breaking month. Now, in May, we are on pace to beat our best month ever by about 50 cars. This development was certainly not expected but is very welcome.

Throughout my career, I have been told that the in-house finance business is a counter-cyclical business. Meaning: when the economy contracts, business improves for in-house finance dealers.

Why does it work this way?

In a recession, sub-prime lenders tighten up their underwriting, requiring more minimum income, job time, and other criteria. This often means that when customers are applying for car loans from our competitors, they are getting turned down. So, of course, these customers then go to the in-house finance enterprises like LHPH dealerships.

Couple this favorable environment with a historic drop in car prices and we now have an opportunity to salivate over. For example, we are seeing 2018 Hyundai Elantras and Nissan Sentras that, pre-COVID, we were buying for $8,500 to $9,500. Now, those same vehicles are selling everywhere for $5,000 to $6,500.  In this financial climate, we are able to command the same or higher revenue from these assets with thousands off of our initial acquisition prices.

In addition, media companies are really hurting from the crisis and are offering the best advertising deals in a decade. Most are doubling ad exposure for customers who keep spending at the same pre-COVID level. This is a valuable opportunity to increase brand recognition and expand clientele at half the cost.

Another benefit of this particular market is that since more people will be shopping LHPH dealers, you can be a bit more discerning as to who you approve. Interest rates are at historic lows, making borrowing against your portfolio cheaper than ever.

All of these favorable conditions could take your business to the next level if you have the right mindset to take advantage. If you are concerned about risk in all of this, you picked the wrong business.  Risk is what this business is all about. Time to put some cars on the road!
 
 

National Vehicle Leasing Association
N83 W13410 Leon Road
Menomonee Falls, Wisconsin 53051
United States

nvla.org | 414-533-3300


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