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answer to higher prices.'' AGILE DEALERS TIGHTENING THE LEASE CYCLE

By Published on .

In July 1982, a Lincoln-Mercury dealership in Seekonk, Mass., helped touch off an automobile retailing revolution.

Tasca Lincoln-Mercury began promoting and offering short-term 24-month leases to everyday vehicle buyers.

Competing dealers laughed. Customers accustomed to owning a vehicle were skeptical. Ford Motor Co. waited and watched.

With dogged persistence, the Tasca family pushed its vehicle lease plan, and when its lease customers drove in to trade for a new vehicle after 24 months, Ford took note and the rest, as they say, is history.

By the late 1980s Ford threw its national marketing and advertising dollars behind short-term retail leases-fundamentally altering the way many Americans acquire transportation.

During the first three months of the 1995 model year, one out of every four retail vehicle transactions in the U.S. were personal-use leases. About 42% of those leases were for 24 months, says Art Spinella, VP-general manager of the consultancy CNW Marketing/Research.

At Ford, the industry's market leader in leasing, the trend is even more pronounced. Currently, 30% of Ford's vehicle transactions are leases and 60% of the leases are short-term, says Mr. Spinella. The industry considers leases up to 36 months to be short-term but Ford's focus has been and remains 24-month contracts.

Bob Tasca Jr., president of Tasca Lincoln-Mercury, credits Eustace Wolfington, founder of Half-A-Car, a short-term-lease training company, with creating and recognizing the marketing clout of a 24-month automobile lease.

"In 1982, Eustace Wolfington had the idea of a 24-month, short-term lease," Mr. Tasca says. "He went to Ford Motor Co. with the idea. Ford called my dad, who was interested in trading cycles."

The meeting between Mr. Wolfington and Bob Tasca Sr. produced the dealership's short-term lease experiment.

The willingness to experiment and invest time and money in a non-traditional marketing approach has paid off for Tasca.

The dealership has written 11,000 short-term leases since 1982. Since 1989, the store has not written one lease longer than 24 months.

The dealership has ranked in Lincoln-Mercury's top 15 volume producers in the last decade. It ranked No.*1 among the marketer's dealers in 1986 and 1987.

Tasca Lincoln-Mercury has the highest customer satisfaction rating among Lincoln-Mercury stores with volume in excess of 1,000 units annually.

The store's owner loyalty rate as measured by Ford exceeds 60%, compared to an average of 25% at similarly sized dealerships, Mr. Tasca Jr. says.

"They took a very complicated process that was unfriendly to consumers and they made it very acceptable to the general consumer," Mr. Spinella says.

The success of short-term leasing lies in giving customers the lowest cost of driving, says a spokesman for Half-A-Car.

Short-term leasing lowers consumers' monthly payments because only a percentage of the vehicle price is financed and because the financing automaker assumes the resale value risk.

Adds Mr. Tasca Jr.: "It's made new cars affordable. It's been the answer to higher prices."

Mr. Tasca Jr. relied on advertising and in-depth discussions with customers to swing his market to short-term leasing.

The primary message to consumers, as mentioned in ads from Creative Broadcast Concepts, Biddeford, Maine: "Why pay for the whole car? Why not only pay for the portion you use?"

The dealership's print, TV and radio spots promote the concept of short-term leasing but do not use the word lease. Instead, the program is called "Pre-Trade."

Ads tout monthly lease payments and tell consumers: "While your neighbors are changing tires, you'll be changing cars."

Training the dealership sales force to convey the benefits of short-term leasing is key to building volume, Mr. Tasca Jr. says.

"Once a customer realizes they can drive a new car every two years with affordable payments, they don't want to go back to the old way," he says. "They've forgotten what it's like to spend money to fix a car."

The dealership begins contacting lease customers about a new vehicle 120 days before term expiration.

Tasca's more than 11,000 "Pre-Trade" customers are a vital selling tool. All 11,000 are named on colored slides in the showroom along with the vehicle purchased, lease-contract period and the salesman's name. Prospective customers are shown the roster-particularly the purple slides that represent customers leasing for the seventh or eighth time at the dealership.

In 1994, 73% of Tasca Lincoln-Mercury's vehicle transactions were short-term leases. In October 1994, Mr. Tasca Sr. and his three sons acquired Tasca Ford in East Providence, R.I. About 62% of transactions are 24-month leases.

"Anytime I can make my product more affordable to the masses, it is a win-win situation," says the younger Mr. Tasca.

Tasca is now creating the second wave in short-term leasing: 24-month leases on used vehicles.

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