PiaggioUSA is targeting scooter-curious customers with a 12-month “test ride” on Piaggio and Vespa scooters. While the deal isn’t entirely unreasonable, the name and description of the promotion are a bit of a stretch, especially “your dealer will buy it back,” which implies that the dealer will refund the cost of the scooter.
Here’s how it works: You buy the scooter with 10% down and a three-year loan from Sheffield Financial. After 12 months, if you’re current on the loan and don’t like the bike, the dealer will take over your loan and take back the scooter. As 2SB reader Pete Selkowe points out, you’re paying 43% of the MSRP, and none of that is being refunded to you. So you pay almost half the MSRP of a scooter to ride it for a year, if you don’t like it, the dealer’s stuck making your payments until they can sell it used. If the dealer can sell it used for more than what you owe, they make some cash.
There’s nothing reprehensible about it, it’s basically the same thinking as any automobile lease. It’s just not a good deal for most consumers, or the dealer (but good for PiaggioUSA and their financing company). If you have the resources to buy a new Vespa with cash (instead of with an expensive loan), and decide not to keep it, you could almost surely sell it privately a year later and get a better deal. If you can’t buy with cash, you could certainly secure a better loan elsewhere. The line “Customer is responsible for excess wear and mileage over 4,000 miles at $0.10 /mile” is also troubling, and if comprehensive insurance isn’t required for loan approval, you’d certainly want it, as with any financing deal (lest you’re still making payments three years after your scooter is stolen).
I’m very interested what dealers think about this. When I saw it, my first thought was “PIaggioUSA finally realizes they’ve oversaturated a shrinking market, and they’re trying to unload as many bikes as possible before they bail out of the U.S. in 11 months.” If I’m not mistaken, dealers do not get a cut of financing, so they’re just making their regular dealer margin, with the added risk of having to take it back and sell it at enough of a profit to cover two years of loan payments (probably at a reduced rate, but still…). Hopefully there are some sort of incentives to make it worth the dealers’ trouble, or maybe dealers hope it will lure customers to their shops, whom they can then talk out of the “test ride” deal.
Also note the offer includes the Vespa S 50, LX 150 and GTS 300 Super and the Piaggio FLY 50, FLY 150, BV Tourer 250 and MP3 250.
It’s a good cross-section of models, but it seems strange they wouldn’t offer it on all models, or only more-expensive or less-popular or more-outdated models. Are these all lower-dealer-margin models, compared to other Vespa and Piaggio bikes?
Another though: Pete’s “43%” reasoning is based on 10% down, and 33% of the payments. That’s not exactly correct, because the payments would be about 30%, since youv’e already paid 10%.
That said, you’re also paying dealer prep, taxes, delivery fee, etc, and worse yet, you’re paying an unspecified financing APR, so your cost at the end of 12 months would almost certainly be MORE than 50% of the MSRP. Obviously, you’d be paying those fees and taxes any time you buy a bike, and financing always costs you, but paying half the MSRP of a scooter to ride it for a year (and don’t put more than 4000 miles on it!) isn’t doing you any favors.
Dealers are not impressed. Resale for used Vespas is rather poor. Because Vespa is a premium brand, few people seeking Vespas are interested in hand-me-down machines.
Vespas have a very good resale value, but they’re easy enough to sell on Craigslist, why eat the financing and then give resale profits to your dealer? The problem is all the people who spent $8000 on a scooter and think they’re doing you a favor by selling it for $500 under MSRP, after they’ve been crashing it for a year. Like you don’t have to pay taxes and title again anyway.
The main point is, it’s pretty stupid to take out a 3-year loan to buy something you don’t really want or need.