Dimmitt Auto prioritizes leasing as finance dips

Dimmitt Automotive Group is shifting its focus to leasing as financing penetration dipped in 2023 and elevated interest rates prompted cash purchases. The Clearwater, Fla.-based group has 13 auto and powersports dealership locations in Florida, according to the company’s website. Dimmitt’s auto finance penetration sat in the low-60% range for much of 2023 compared with a high-60% range in 2022, Nick Waddell , general manager of Cycle Springs PowerSports , a division of Dimmitt, told Auto Finance News . Waddell was the dealer group’s director of financial services and chief compliance officer from March 2021 until transitioning to powersports in January. Dimmitt’s product service contract penetration also dipped about 4 percentage points year over year by yearend 2023, Waddell said, without providing the specific rate. Dimmitt offers financing through banks, credit unions and captive financiers, Waddell said. In 2023, 3,932 units sold were financed or leased across the dealership group, up 2.9% compared with yearend 2022, he said. Lease penetration rose 19 percentage points YoY in the fourth quarter of 2023 to 32%, up compared with about 22% in Q1, Waddell said. “We saw a lot of cash, either in downpayment or in cash transactions, in the higher rate environment,” he said. “One of the things that we did, from an organizational standpoint, is [focused on] one-pay lease options.” Single-pay leasing gains traction A single-pay lease allows consumers to pay upfront for the entire lease term, a setup that typically offers lower interest costs and frees up funds for other purposes rather than purchasing the vehicle at full cost, Waddell said. Dimmitt offers single-pay leases to consumers who plan to purchase the vehicle in cash, he said. “It offers the same benefits of leasing but allows the customer that would be a cash buyer to pay for only that portion of the car for the two or three years and have the guaranteed future value still,” Waddell said. “They're not taking their money and putting it into a depreciating asset.” Whether a consumer opts for a one-pay lease is largely tied to the incentives available and whether the customer can afford the vehicle they want, Scott Kunes , chief operating officer at Delavan, Wis.-based Kunes Auto Group , told AFN . Many consumers who make the payment upfront intend to purchase the vehicle at the end of the lease term, he said. “For a cash buyer, it gives them a couple of different options,” Kunes said. “That cash plays over the whole of the lease better if they do a single-pay lease. ... This gives them the ability to purchase the vehicle that they want with the cash that they have now and then be ready in two or three years after [the lease] to purchase the rest.” While a one-pay lease has existed in the industry for years — manufacturers like Lexus , Mercedes-Benz and Volkswagen offer one-pay lease programs — Dimmitt began pushing single-pay leasing in early 2023 as part of a wider shift to prioritize leasing, Waddell said. The group branded the product Dimmitt Smart Choice, according to its website. Consumers who pay for their lease upfront remain beholden to the mileage limitations and criteria of a lease and can buy the car at the end of the term or return the vehicle. “We got our OEM captive finance companies to participate in training with our teams and really push [single-pay leasing],” Waddell said. “We felt like [leasing] was where we needed to be organizationally. In the last three years, we took so many people out of the market for such a long time, through transactional value or term, to afford vehicles. It was our time to reset and focus on lease penetration and push that to the forefront.” Dimmitt works with nine auto manufacturers: Aston Martin , Audi , Bentley , Cadillac , Jaguar , Land Rover , McLaren , Rolls Royce and Toyota , Waddell said. Leasing will help prop up Dimmitt’s financing and sales business over the next 24 to 36 months, he said, adding that the automotive group is focused on leasing even as manufacturers are slow to bring back incentives . Industrywide, leasing has not recovered to pre-pandemic numbers. In Q3, 27.4% of consumers opted to lease their cars, up from 21.2% a year prior but below 29.4% of prime borrowers who leased in Q3 2021, according to the latest data from Experian . “[Leasing is] going to help us have a healthier business model two and three years down the road,” Waddell said. “It’s important for [leasing] to come back for the health of any dealer. It must be the initiative of the dealer from the top down.” Early Bird registration is now available for the second annual Auto Finance Summit East , May 1-3 in Nashville, which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross-section of industry players. Early Bird pricing ends March 15. Visit AutoFinance.Live to learn more.

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