Gaines Service Leasing Corp. Profile

LCT staff
Posted on September 1, 1983

Taking responsibility, pro­ving needed attention to details, assuring a customer's satisfaction all are elements Jack Schwartz believes are basic re­quirements for conducting business, Schwartz, president of Gaines Ser­vice Leasing Corp. and Dillinger/ Gaines, of Brooklyn, New York, uses this strategy to build repeat busi­ness, providing for his customers what others seem reluctant to.

As reported in these pages in June, 1983, Dillinger/Gaines delivers the complete set of services, a plan of action combining manufacturing, leasing, financing, insurance and sales.

With many customers teasing from Gaines a limousine built by Dillinger, Schwartz sees a competitive edge in providing them with extra service.

"We can give the customer the complete package with insurance if he wants if and at the same time we will constantly govern his tease. Where if we feel after X amount of months he's got a certain amount of miles on his car and he should be put into a new car, we will auto­matically call him and voluntarily say, "Get out of the car. Let's put you in­to a new product,"' Whereby, if that car is purchased from a bank, he can't call the bank and say, "Get me another limousine."

"With a bank," Schwartz said, "He's dealing with an entity that is a paper entity. We know his needs. We manufacture the car, we know we can tell him, 'Look, get rid of the car. The market is good right now in your par­ticular car. You have a lot of miles on it. You might start having trouble."

It should be pointed out that Dillinger/Gaines completely overhauls each used limousine it takes as a trade-in, Schwartz said.

"We set his lease up so he can get out of it. We're going to put him into a new car and he's already got his down payment because we set up equity in his present lease. But with the bank, it's a paper relationship. They don't know who he is or what he is. If he has a problem, he needs help, he needs a leaner vehicle, whatever it may be, we're here, Schwartz said.

Many teasing companies try to of­fer livery services tow rates, believing the lower the rate, the better off the livery service will be, Schwartz follows an alternate scheme.

Others who lease, he said, "try to get the customer in to the showroom by promising low rates. Now a lot of leasing companies set up very low rates for livery companies not realiz­ing they're doing them more harm than good. Many people are coming to us and saying, "Jack, could you bring my payments down? I can't put more money down, could you stretch it out to 48 months; to 60 months?' We understand that they want to get the car as inexpensively as they can on their monthly payments.

"But, we also try to tell them that if they're going to be busy, this vehi­cle will not last that long (48 to 80 months). And if they don't build equi­ty with the vehicle as they're using it, by the time they have to get out of this vehicle and want to replace it with new equipment, they won't be in that position if they have a 48-month lease or longer.

“We gear our leases to the use of the vehicle, for what we feel is the op­timum period that this car should be out on the road," Schwartz said, "So the man can generate equity on the vehicle as soon as possible, so after 12 to 15 months, he wants to get out of his vehicle, he's got some equity because we're depreciating along with the current use of it and the man can get out of the car and get into a new product if he needs it.”

Schwartz warns his clients of cer­tain costs involved in operating a limousine service, costs that can't be avoided "We tell them, if you're in this business, you have to expect a certain overhead. If you can't afford the overhead, get out of it. Don't lease from us. Go someplace else. We don't want to be your downfall.

"If a man has to worry about another $40 a month, $50 a month, he doesn't have the clientele to pay for the use of the vehicle."

"I would talk a man out of leasing a car rather than try to just move another one of my vehicles. And I do this all the time I want to make the company successful so I have repeat customers I don't want a customer who will ultimately be a repossession."

It is the overhead costs that can become troublesome for some ser­vices, placing financial hardships on them which will, in turn, place the leasing company in a bind.

As Schwartz explained, "When somebody is not making money and their livelihood is at stake and they've got an overhead of $1400, $1500 a month, they're going to hurt some body before they hurt themselves. If they become that desperate, I don't want to be put in that position and I don't even want to put a man in that position I'd rather not do business with him, let him go someplace else."

Because of the numerous limousines Gaines leases, Schwartz said, he empath­izes with his clients. "We are out there with all the heartaches of these people, we are subjecting ourselves to a lot of possible repossessions. We insure most of our cars, so we're subjecting ourselves to constant pro­blems where we have to go out on the road and spot-check cars constantly update the drivers' motor vehicle license and make sure that unre­ported accidents are caught up with."

Schwartz described his relation­ship with the factories that build the base cars as both cooperative and difficult. This relationship plays a role in Dillinger/Gaines’ strategy for keep­ing their customers satisfied. With 7000 Gaines limousines out on the road, there are bound to be problems.

"In 1983," Schwartz explained, "I've had about 20 incidents where the customers come to me within a very short period after taking delivery of their cars. They had severe prob­lems with the engines and they said, "Jack, I cannot operate this car, it's going to be tied up for maybe two months while the manufacturer re­pairs the engine and gets the parts."

"I had to cancel the lease — they refused to pay me. I said, "Look, they have a right (not to pay). They can't make any money, how can I charge them'?" Even though this is not my responsibility, they say, "Jack, we don't know whose responsibility it is, all we know is that we got it from Gaines."

"So there again, Gaines takes the brunt of all the complaints. It's not even our product. It's the manufac­turer's problem that we are taking the blame for.

"I had to give them a temporary vehicle. That customer will not go back into same car because he now says there's something wrong with the engine. So I have to put him into a new car."

Discussing a recent predicament a limousine service ran up against in­volving the dealer that originally sold the limousine to Gaines, Schwartz said. "We delivered a car to a man, three hours later the car was brought back. We found out the engine was no good The dealer was very co­operative, he said he'd take care of it 100 percent, but it would take about six or seven weeks."

Schwartz' customer, who was now without a limousine to hire out, asked him, "What am I going to do for six, seven weeks? How can I pay you?"

Schwartz said, "If you had a house and your plumbing went bad, would you stop your mortgage payment?"

"I know," the customer replied, "But this is a car and that's different."

"Everything is always different," Schwartz said, "So again, Gaines is in the middle We ate the car, The car still isn't ready, We gave the man a new car, His temporary car is going to have miles on it, It's now a used vehicle and I'm going to have to dispose of it. All this time, I'm pay­ing interest on this Cadillac in for repair. What does Cadillac do for me?All they do is repair the engine Gaines has to replace the vehicle for the limousine operator. All the warranty that General Motors is doing is replacing the engine. I'm replacing the car I'm keeping that Cadillac customer happy for General Motors. I don't know anybody else that does that.

"We do business with a lot of new car dealers I could buy the cars, if I shopped around, for hundred of dol­lars less than I pay some of these dealers for their cars. But my theory is, I want these people to make money when they sell us their cars, so when my customers have a war­ranty problem, they take care of them.           


"Everybody has to stay alive to ser­vice this customer. So there again, we relinquish a great deal of profit."

Providing that much needed ser­vice is what keeps Dillinger/Gaines ahead of the competition, or as Schwartz said, "There's no competi­tion in the sense that nobody does what we do. They're our competitors in the sense that they build a car and it gives the ultimate consumer a multiple choice in which car to select. But in the total package, they don't perform what we perform."

The average manufacturer, he said, will refer a customer to a leasing company who will do little more than come up with a low rate. "They are completely unfamiliar with the needs of this individual."

"Maybe I could make a lot more money if I worked the way some other people did, but I don't think our reputation would be as good I have to live with myself and my reputation. I don't want somebody running me over when I cross the street I prefer to have the guy stop and say, "Hi, Jack I love the car."

Related Topics: coach-builder profiles, Dillinger/Gaines

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