Slobotkin said analyzing the company’s data gives it a competitive advantage.
CAL tracks more than 40 data points per vehicle, such as average rating, contact rate and year of last body style change, he said.
Based on that data, he strategically chooses which brands and models to rent, Slobotkin said. For example, CAL rents Honda Accords and Civics but not pilots, he said.
The company looked for the 2019 Jeep Cherokees, which they knew had been refreshed and made a more attractive vehicle for non-lease resale, according to Slobotkin. âIt’s going to have a premium in the back,â he said.
CAL could become particularly competitive on vehicles it believes will retain their value three years from now, Slobotkin said. For example, when the next-generation 2017 Honda CR-V hit the market, âwe jumped on this vehicle,â he said. He also noted that captives would often not subsidize – support with payments – such new models from their manufacturers. Subsidy is a key variable in the indirect leasing market, according to CAL.
If an automaker subverts its vehicles and increases tailings in the name of market share, “we can’t compete with that,” Wimmer said. So CAL won’t bother you; instead, it will only rent a model from a different brand, he said.
âWe can’t compete with silliness,â Wimmer said.
But the current shortage of inventory means automakers could do without such subsidies. This has allowed CAL to lease models it should generally avoid, like the F-150 that Ford has historically subsidized, Wimmer said.
Armed with low-cost capital – Wimmer said CAL has a good relationship with the banks – and no longer disadvantaged by subsidized vehicles, “we can compete with anyone,” he said. CAL would thrive in a low inventory scenario such as the 60-day supply it expects to represent for future market equilibrium, according to Wimmer.
CAL also tries to foster good relationships with original dealers. It offers a single tier pricing system, which means retailers won’t need to guess the money factor, according to Wimmer. The company remains consistent in its criteria and considers all leases to be quality A agreements.
âThe dealers love it,â he said.
CAL averages a FICO score in the “770 area” for its leases, according to Wimmer. However, its portfolio also includes tenants whose ratings are more than 100 points lower but who still meet the criteria for a CAL lease.
While a competitor might increase the price of these lower-rated leases, CAL will maintain its Class A valuation and pricing. “There is no mark-up,” Wimmer said.
CAL also encourages dealers to do business with it by offering the right to purchase the vehicle at the same residual amount as the customer, plus a $ 500 fee for exercising this option.
“We are not treading on them,” Slobotkin said.