Risky Business

Why loaning cars instead of offering rides can create a safer and less-expensive customer service.

It’s good to periodically choose one line in the shop’s profit-and-loss statement and analytically rip it apart. For the purposes of this column, I’ll focus on providing rides for customers.

Option 1: There are no “extra people” on the staff of any automotive service or collision repair shop. You can’t just take the batteries out of a staff member and store them in a closet when they’re not in use – although, in some cases, this idea offers a tempting alternative.

The costs to you of offering rides to customers include payroll, taxes, benefits, uniforms, liability and worker’s comp insurance, vacations, sick days and, well, doughnuts. Hiring someone to perform this job also poses high risks for your business that involve the driving skills of your employee, the probability of no-fault accidents and the potential for customer injury. There’s also the possibility of a negative interaction between your employee and the customer, on which your entire business reputation rests.

Include a vehicle for your employee to drive, and you can easily spend $50,000 a year just to offer customer rides. That’s assuming that everyone needing a ride can be scheduled to provide them when and where they’re needed. A serious pain for most shops.

Option 2: Buy a bunch of old loaner cars. For about three grand each, cars can be bought and reconditioned to loan out. If one of them gets totaled, that’s still less than the monthly cost of providing rides.

I’ve purchased a shop insurance policy that covers us. Each customer who takes out a loaner must have personal insurance and sign a statement agreeing that their personal policy will serve as the primary coverage in case of an accident. I also require that they have a valid driver’s license and swear they’re not wanted in more than five states (that they know of). This is key: If they have an accident, we want to be the last to know.

Each car is loaned out with a full tank of gas, and we ask only that the customer return it to us the same way. If they drive just a mile or two, they give us whatever money they think is appropriate for the gas that was used. The gas fund is used as needed.

The benefits of using loaner cars include:

• It’s an educational tool. Giving customers a nice, clean car with 200,000 miles on it demonstrates that maintaining their car is a great way to save money.
• It communicates trust. Giving customers one of your cars signals that you can be trusted, as well as that you trust them.
• It frees you from the need to provide promise times. If their car repair isn’t completed the same day they bring it in, they have a car to drive while they wait. It’s increased our production by 20 percent and significantly reduced stress among the staff.
• It’s a great marketing statement. Each of our cars has a custom license plate, from WITT 1 through WITT 7 – and everyone gets picked up when and where they want. We have a convenience factor unmatched in our market.
• It has substantially reduced our operating expenses, and everyone loves it. A great lesson learned from analysis.

Shop owners who haven’t learned to trust can always tell their customers, “A car isn’t available right now, but we’ll pay for your cab fare.”

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