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Insight: RAC

The RAC has spent much of the past decade wedged between the establishment AA and the upstart Green Flag, but is now trying to lift its image.

Under the ownership of Norwich Union parent Aviva, it has created a new look and a new focus on the corporate sector targeting manufacturer, fleet and dealer business.

CVC Capital Partner’s purchase of the AA in 2004 shook up the vehicle recovery market. Its policy of cutting costs to focus on price competition reduced margins and forced other operators to follow suit.

The RAC, under the new leadership of managing director Debbie Hewitt, has started to pull away from the price-led deals by identifying areas where it can add value.

“In the last two and a half years we have won business by offering innovation for customers in a mature marketplace,” she says.

With 14 manufacturer contracts in the bag, five of which have been secured in the past two years or so, several sizeable fleet deals and a growing number of pan-European deals, the RAC’s attention has now turned to the franchised dealer market.

It has been piloting a licensing service, RAC Accredited, with a couple of large retail groups which it expects to launch within the next month or so. RAC Accredited will allow dealers to carry out their own used vehicle checks using the RAC brand. The RAC will audit the inspectors rather than checking every car.

For Hewitt, the scheme fits perfectly with the company’s growth objectives. “We are focusing our business on where we can add value for the partner company,” she says.

“This scheme gives dealerships a way to bring differentiation in a competitive market.”

Dealers can use the RAC brand on their signage and will call the inspected cars RAC Accredited. They will also have access to technical training and the RAC will provide temporary cover via its own inspections operation.

“The benefit to dealers is using the RAC brand which, in consumers’ minds, is independent,” says Hewitt. “It means trust for the customer which adds value for the dealer.”

She believes RAC Accredited complements the manufacturer used car programmes and says they were consulted at an early stage to ensure there was no conflict.

#AM_ART_SPLIT# “There are lots of changes in the corporate market especially in aftersales with Block Exemption and manufacturers changing policies,” says Hewitt. “For dealer groups, aftersales is the most significant part of the customer experience. They need new and innovative ways to add to that experience.”

Industry sources expect the RAC to return to the warranty market later this year with a joint venture – it withdrew from the deal with Motorway Direct which then signed up with the AA last year.

Hewitt is keen to consolidate the RAC’s relationships with carmakers, which she sees as core to its business.

New initiatives launched in recent years include the Rapid Deployment Trailer, which tows cars from the roadside instead of going to a contractor, and RAC Scan, a handheld tool that diagnoses cars at the roadside by assessing everything that has happened in its previous two weeks. Fix accuracy is now the highest in the JD Power.

RAC Scan also helps the RAC pick up trends, particularly on new models. “We give manufacturers hourly stats on emerging problems and we can even go to the production line and explain the issues,” says Hewitt.

“It helps them to understand common faults or driver errors caused by their instructions or design features.”

This service can be extended to provide feedback directly to dealers on common problems. As the RAC narrows the gap with sector leader the AA, Hewitt is gunning for more than simply being the biggest. “The long-term goal is to be number one in every conceivable measure: CSI, scale of business, growth and profitability and employee satisfaction,” she says.

#AM_ART_SPLIT# Retailing paved way to the RAC

Debbie Hewitt was appointed RAC managing director three months ago. She started her career at Marks and Spencer, spending seven years at the high street retailer before joining Lex in an HR role at its car retail business.

“Car retailing is an industry that is close to the customer and has sharp accountability because the margins are slim so everything is attributed back to the P&L,” Hewitt says.

“It’s one of the best opportunities to understand how to run a business without putting your house at risk. You have different departments, you manage profit, you have brand dynamics and there are lots of areas you can influence. And you also have to be an entrepreneur.”

The Liverpool FC season ticketholder was appointed to the main board at Lex before it acquired the RAC in 1999. Aviva bought the business in 2005.

Hewitt believes vehicle recovery patrols should not issue blame for breakdowns, an accusation levelled at the AA in AM (April 13). “They are trained for technician and customer handling skills so they try not to issue blame,” she says.

“No-one wins if you get into a blame culture, including the customer.”

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