A global pandemic and supply chain shortages have led to the most volatile automotive market the world has ever seen. As such, any mention of higher prices or new fees garners attention. Last week we heard about just such a thing from Nissan, allowing dealers to add $2,500 in reconditioning costs to folks wanting to use their end-lease buyout option. That certainly caught our attention, but as is often the case, it's not quite that simple.
We first heard about the fee from Cars Direct, but for starters, it's not a fee at all. Motor1.com contacted Nissan for clarification; the automaker confirmed that on March 9, a communication was sent to dealerships outlining a new option through Nissan's finance arm, NMAC. In short, dealers can now include a maximum of $2,500 in customer-approved reconditioning costs when financing the lease buyout through Nissan. This applies to Infiniti lease buyouts as well. Previously, dealerships were not allowed to do this.
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However, the charges only apply to customer-approved repairs and reconditioning required for a vehicle to achieve Nissan/Infiniti Certified Pre-Owned requirements. Lessees can still choose to purchase the vehicle without having CPO status, in which cases, the standard contract applies.
Here is Nissan's official statement on the matter:
On March 9th, NMAC and IFS communicated to all Nissan and Infiniti dealers a new finance option for customers wishing to purchase their vehicle at lease end who also wish to have their vehicle certified for CPO protection. Prior to March 9th, NMAC and IFS would not allow customer-approved reconditioning costs associated with the certification process to be included into the new NMAC or IFS Certified Pre-Owned (CPO) retail contract. This update now allows for a $2,500 cap on customer-approved reconditioning costs. Additionally, reconditioning costs are limited to required repairs needed to meet CPO requirements, and do not include the CPO Certification Fee, which is paid for by the dealer. As a reminder, Certified Pre-Owned (CPO) certification is NOT a requirement for customers to be able to purchase their lease vehicle, and should not be represented as such.
The obvious question at this point is, if buyers could be subjected to added costs on a lease buyout, why bother with the CPO certification? According to Nissan's website, CPO vehicles come with a limited powertrain warranty and roadside assistance, and sometimes there are special finance offers through NMAC. In other words, getting CPO status on a lease buyout might give buyers a better finance rate through NMAC, though it could come at an extra cost to the buyer which, conveniently, NMAC will now allow as part of the financing. And the dealer would get paid for the repair work.
So, what's to stop a dealership from charging buyers $2,500 for an oil change to meet CPO requirements? We asked Nissan that question point-blank, and the automaker explained that a dealership cannot misrepresent repair costs or services needed. "That conduct violates obligations it owes, not only to NMAC, but to its parent company Nissan North America, Inc., as well as applicable law," said a Nissan spokesperson in an email to Motor1.com.
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The timing of this announcement is very interesting, as it comes just two weeks after Nissan's luxury brand Infiniti issued a warning to dealers over bogus lease buyout fees. Reports surfaced that some dealers were refusing to honor contracts, with claims that state Attorneys General offices were even involved in some situations.
As for why Nissan is now allowing dealers to apply a maximum $2,500 cost for CPO lease buyouts, a spokesperson told Motor1.com this "enables NMAC to have greater exposure to a dealer's assessment of fees and charges in the lease purchase option process."