In light of the Dodge brand’s “Double-Up” program announced Monday, Kelley Blue Book shared some analysis from Eric Ibara, its director of residual value consulting, about what sort of impact this move could have both in terms of marketing as well as future auction volumes and values.
First, the basics of the offer.
Chrysler Group said the Double-Up deal allows eligible customers to lease a 2014 model-year Dodge Charger (excluding SE and SRT models) or Challenger (excluding SRT models) for 12 months and then return to lease a new 2015 Charger or Challenger with the lease payment, provided they follow program rules.
The returning lessee would enter into a 36-month lease with no additional down payment and choose from select 2015 Charger (excluding SE and SRT models) and Challenger (excluding SRT) vehicles. If the customer decides to buy the 2015 model, he or she gets bonus cash of $1,000 towards the purchase. Under the program — which runs through the end of August — customers are required to lease from the same Dodge store for both transactions, lease through Chrysler Capital and follow program rules for eligibility.
KBB’s Ibara believes this promotion will create some much-needed “buzz” around these muscle cars while also shoring up brand retention and possibly hitting two birds with one stone.
“From a marketing standpoint, this is an innovative approach that will create some buzz around both vehicles right now as both cars are down in sales so far this year,” he said. “With the refreshes coming in just a few months, this is a way to lock in customers now to ensure they don’t defect in the meantime. Also, it has the effect of locking in two sales for perhaps the price of one.”
Ibara also looked at the implications on the remarketing side, which seem to be a bit more complicated.
He explained that Enterprise will be taking these cars once the year finishes, but emphasized that these units still have to be remarketed in some fashion.
“Enterprise has a method of selling vehicles directly to dealers, but in theory, this just means the dealers won’t be going to auction to purchase other Chargers and Challengers,” Ibara said. “Unless Dodge cuts back on its rental sales over the next 12 months, there will be additional volume at auction at some point.
“So it all comes down to how many customers take this offer,” he continued. “Currently, the 2013 model year Charger has a 33-percent rental penetration (fairly high for a full-size sedan) and the Challenger is at 22 percent (about in line with the others in this segment).
“A slight volume increase will likely not affect values much, but a successful program could easily increase the volume at auction by 50 percent or more. Unless Dodge has a program in place to absorb the greater volume at auction, values could be softer down the road.”