Many bodyshops underestimate their outlay on courtesy cars, because they do not account for all the costs, particularly administration. Depending on how bodyshops acquire their courtesy cars, the costs can include standing charges (like road tax, insurance and breakdown cover); direct running costs (including servicing, repairs, tyres and petrol); capital costs (depreciation, interest or leasing charges); and ‘hidden costs’ such as administration and valeting.
In 2000, our research showed that bodyshops spent £4,000 a year running a basic courtesy car.
Since 2000, lower interest rates and cheaper basic cars have stabilised costs and helped to counteract the wage increases that have adversely affected servicing, repairs, valeting and administration. However interest rates are now rising, vehicle manufacturers are pushing up the prices of basic cars, and residuals are weakening: lease costs could increase by as much as 20%.
Of course courtesy cars are generally only a requirement for insurance and accident management work, so the costs must be offset against the hours sold to insurers and accident management companies.
Primary bodyshops carry out the majority of jobs for these work providers, and if you lay off the cost of their courtesy cars against the hours they produce for them, it works out at more than £4.50 per hour sold.
This cost is probably far higher than many body repairers imagine, and it is rising fast. It is also far more than the courtesy car allowance made by insurers and accident managers. But the cost per hour could be even higher because our simple calculation assumes 100% utilisation – and that’s the killer. More and more bodyshops say their courtesy car fleets are tied up with customers whose cars are waiting for work to start.
Poor parts supply is one reason, but tardy authorisation by insurers and accident managers is another. We would like to offer a simple solution, but there is none other than accurately tracking costs and utilisation.