Automotive loaner fleets typically are the third-highest item on a dealership’s profit and loss sheet, behind real estate and staff.
Driving down the costs of operating a loaner fleet is critical, however dealerships leave thousands of dollars on the table each month that they could be recovering. Why? Honestly, it can be a hassle to try to get this money back, but recovering the costs is less complicated than it may seem.
Any dealership can transform their loaner fleet from a cost center to a program that drives profitability and loyalty by identifying blind spots and friction, and turning solutions into value for customers,
First up, fuel
Dealerships predominantly choose from two refueling fee strategies: either refueling fees are eaten by the dealership, or they’re weaponized in an attempt to incentivize service customers to refill loaner vehicles before returning them.
The truth about refueling charges is that, whether you think refueling fees put CSI scores at risk or believe punitive fees will keep customers from wasting your time, you’re probably mistaken.
Time and convenience are luxuries for consumers. Research conducted in recent years by market intelligence firm GfK indicates 31% of consumers said they would prefer to have more time than more money. It’s for this reason that high refueling fees don’t prevent customers from returning loaners with empty tanks.
So, consumers’ preference for time over money is an opportunity for dealerships to present refueling fees as an added convenience for customers who don’t have time to stop at the pump.
To make the most of this opportunity, dealers should match or barely exceed local fuel prices and explain to customers that they’d prefer loaners be returned with a full tank, but customers who don’t do so won’t be punished. This maintains customer satisfaction and trust.
Connected car services can simplify this process even further. Telematics devices take more precise fuel measurements. Digital interfaces provide customers with transparent information about charges (and remove some contract friction in the process). Dealerships can automate refueling charges for simpler billing.
Dealing with damages
While you might be able to let a rock chip slide, customers who return loaner vehicles with noticeable dings or even major damage need to be held accountable. The discussion about responsibility needs to happen as soon as possible. If you don’t reach an agreement with customers about their responsibility for repairs before they leave, the likelihood of recovering those costs is significantly diminished.
Sometimes employees forgo their chance to walk around the car with a customer in favor of speed. Or during a rushed visual inspection, they might miss damages that are difficult to broach with a customer later.
Video walkarounds are an effective way for employees to ensure that damage is appropriately recorded without taking much time. They can narrate any issues with the vehicle in place of writing notes on an inspection sheet or typing them into a digital notepad. Conducting a video walkaround also provides an opportunity to explain that repair costs will need to be evaluated and that customers may receive a bill later.
Dealerships that use mobile tools for contract processes may find additional efficiencies there. Mobile contract tools should by default offer ways to record video or photo evidence of damages, attaching those to the contract. More advanced mobile tools should also add damage reports and outstanding charges to a customer’s profile, so dealerships can be sure to recover any unpaid balances before a new loaner contract can be started.
Tackling the toll problem
Toll charges can easily become a major cost issue as individual tolls add up across a fleet, but especially if payments are missed and late fees are applied. One typical approach to limiting toll and late-fee expenses is to dedicate an employee to the task of searching for charges on toll agency websites, though it’s a painstaking task.
A better approach is to automate toll identification and, where possible, automate the process of charging customers for those tolls.
Dealerships evaluating toll automation solutions should consider whether technology vendors integrate with toll authorities’ billing systems, which will provide the most accurate capture of all the tolls tied to a particular vehicle.
Don’t leave it unsettled
The last measure dealerships should take to ensure they’re recovering all the costs they can from their loaner fleet is simple: Don’t skip it.
Once a customer leaves, the likelihood that you’ll recover fuel, damage or toll costs decreases significantly. The further removed customers are from their loaner experience, the more difficult it is for you to reopen the issue of unsettled charges. Many dealerships choose to defer a fuel charge or skip a vehicle inspection in favor of speed, and then are shocked to see how those decisions multiply into serious expenses.
The best thing you can do to ensure you recover fleet costs is to be transparent, respectful and proactive about addressing the payments your customer agreed to make. Don’t leave it unsettled. (Russ Lemmer, right)
Russ Lemmer is president and founder of Dealerware that uses technology to manage automotive fleets, from loaner cars to subscription units.