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Courtesy cars: buy, lease or rent?

Courtesy cars: the subject has raised the hackles on the most mild of bodyshop managers ever since the former Drake Insurance first introduced them in the late 1980s. How do you best manage the cost – buy outright, lease or outsource?

The cost of running a fleet is often much higher than bodyshops forecast: hidden costs include standing charges like tax and insurance together with hidden costs such as administration and valeting.

Added to this is the seasonal nature of accident repair. Around two-thirds of work is crammed in the five-month period between November and March.

Flexibility can be a real issue for bodyshops who run their own courtesy car fleets. They need sufficient numbers to meet demand during the peak winter period, but then can have vehicles sitting idle over the summer, while still having to pay the overheads.

Then there’s the initial outlay for the vehicle, not to mention the cost of servicing and depreciation.

Growth in leasing

Steve Evans, chief executive of Accident Exchange, claims that cost is not even the biggest issue. “The difficulty for bodyshops is in actually managing the fleet,” he says. “The majority of bodyshops have manufacturer schemes but they also have to take into account insurance plus issues like cleaning, health and safety and liability as there is an element of risk.”

The average bodyshop runs a fleet of between 40 to 100 vehicles, which is comparable to a small car rental company. It’s a huge drain on resources, as well as a distraction from the core business.

“There is no real benefit to bodyshops of running their own fleets. They should concentrate on their core business as it’s difficult to justify unless they are big in the credit hire business, says Evans.

Many bodyshops now exploit leasing schemes, often carmaker-backed programmes through local dealers. The MVRA and VBRA also run their own schemes. The MVRA launched its programme in 2000 to give its members a single point of contact for courtesy cars.

“These schemes allow bodyshops to have access to guaranteed quotes for courtesy cars and ones they know are available to everyone. They are supported by the vehicle manufacturers, such as Ford and Vauxhall through certain dealer groups, but if a bodyshop was to approach any mainstream dealer with a make of their choice, they will no doubt have some form of manufacturer backed scheme,” says Evans.

“Companies such as Lombard also have specific schemes aimed at bodyshops and due to the downturn in the new car market it’s becoming possible to get 12 month, rather than two-year deals, so it is a good time to move into it.”

Right car at the right timep> Bodyshops are also finding that renting vehicles is becoming a more viable option and can be a useful tool to improve the quality of customer service.

“Vehicles must be available upon demand and customers expectations must be met at the drop of a hat. If the right car is not available at the right time, you’re in a position where valuable work could be turned away,” says Diane Lynch, assistant vice-president of Rental for Enterprise Rent-A-Car in the UK and Ireland.

Although renown for its daily rental business, Enterprise established itself by renting to local customers in need of vehicles while theirs were being repaired. It now works with more than 800 bodyshops and repairers in the UK and has a fleet of more than 30,000 vehicles.

“Using rental firms to supply vehicles means that bodyshops can spend more time repairing cars, rather than arranging replacement vehicles. It also gives them the flexibility to book work around the workshop space and technicians time, rather than the availability of their courtesy cars,” says Lynch.

Guaranteed mobility

Rental firms allow bodyshops to hire cars and vans on an ad hoc basis so they can guarantee customers a quality, fuelled and clean replacement vehicle. They can hire more cars at peak times and less during quiet times, ideal for overflow work.

“Guaranteed mobility for customers is as important as ever and in a critical situation you need a solution immediately,” says Lynch. “This method is becoming increasingly popular as an alternative to buying or leasing replacement fleets.

“The important thing is to ensure that the rental provider is up to the challenge. That means an extensive network of locations, plus staff who are capable of providing the right service.”

‘Renting fulfills customer needs’

The body repair centre at TC Harrison’s Ford dealership in Peterborough has been using Enterprise Rent-A-Car to supply courtesy cars to customers for more than 12 months and it has seen an increase in customer service.

“Customers find it a very good service. For warranty work and non-fault claims they get a quality like for like car that fulfils their needs,” says Lee McLoughlin, bodyshop manager.

“The benefits for us are that we can deal with customers a lot quicker. Enterprise offer a very fast service, for instance if we request a car in the morning, they can deliver it in the afternoon. They will also deliver the car to the customers choice of location, either here at the bodyshop, or to their house or place.”

Not having to run a courtesy car fleet means that the bodyshop no longer has to pay insurance or tax costs, or worry about depreciation, and the amount of paperwork and administration involved has also decreased.

“We only need one receptionist and she now has much more time to deal with customers. All we need to do is fax the customers details over to Enterprise and then it is forgotten about. It effectively takes all the stress out of courtesy cars fleet management,” McLoughlin adds.

“We have a good relationship with the company and they allow us to be flexible with our courtesy cars. It allows us to keep our customers happy and hopefully keep them coming back.”

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