Another automaker has found itself cautioning some of its own dealerships to treat customers well amid a rapidly changing car market. This time, it’s Nissan and its luxury arm, Infiniti.
It’s About Lease Buyouts
CarsDirect reports Infiniti Financial Services (IFS) has sent a letter to Infiniti dealers warning them against some practices that put the brand’s reputation at risk. The letter tells dealers that the Better Business Bureau, the Consumer Financial Protection Bureau, and some state attorneys general report receiving complaints from Infiniti customers.
This time, the complaints mostly center around lease purchases — when a customer chooses to buy a car they’ve been leasing at the end of the lease term.
The cost of purchasing a vehicle when its lease ends is written into the lease contract itself. Under normal market conditions, a dealership can easily predict the approximate value a car will hold at the end of its lease. But shockwaves — from COVID-19 to a worldwide microchip shortage — have radically upset car prices over the last two years.
That has been bad for most car shoppers but good for drivers coming to the end of a lease. Many have the right to purchase their cars at a price fixed several years ago. The same cars would sell for a higher price under current market conditions, but leaseholders have a signed agreement the dealer must honor.
Related: End of Lease – What to Do During the Chip Shortage
According to Cars Direct, the letter alleges that dealers have attempted:
- Charging “COVID fees,” chip shortage fees, and other creative ways to present dealer profit as a fixed and mandatory part of the sale
- Refusing to honor lease-purchase quotes
- Charging additional fees if a customer brings outside financing to a lease purchase
- Refusing a lease-purchase at all unless the customer uses dealer financing
A Nissan spokesman confirms that Nissan dealerships received a similar letter.
Several Automakers Have Warned Dealerships
Nissan is hardly the first automaker to find itself in conflict with its own dealers over pricing in this market. General Motors recently sent a letter warning its own dealers from charging unreasonable fees. Ford has sent a similar letter, and its CEO has discussed the issue with investors.
Automakers have limited control over the prices dealers charge for their products. The two work together to sell cars but are separate companies. Both GM and Ford have warned dealers that they may not be allocated popular cars to sell if they engage in shady pricing practices.
Nissan and Infiniti may have more options because a lease is a well-documented legal agreement. CarsDirect reports that IFS plans to begin reviewing lease purchases in April and may launch “a remediation process” for customers unhappy with their lease-purchase experience.
