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Being the biggest is not good enough, says 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."

New focus as RAC eyes retail business

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.

"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.

#AM_ART_SPLIT# Also believed to be under consideration is an equivalent of Norwich Union's seven-day driveaway insurance scheme in the breakdown and recovery sector, possibly with a 60 or 90-day offer. The Norwich Union scheme has a high take up, although conversion rates are low.

Hewitt is keen to consolidate the RAC¹s relationships with manufacturers which she sees as core to its business. New initiatives launched in recent years have helped to attract new business.

They include the Rapid Deployment Trailer, which tows cars from the roadside instead of going to a contractor, and the RAC scan, a handheld diagnostics tool that covers every model. It diagnoses cars at the roadside by assessing everything that has happened to the car in its previous two weeks driving, such as service and engine management.

Fix accuracy has risen and is the highest in the JD Power at more than 80%.

The RAC has also developed branded breakdown services for some manufacturers, including Porsche and VW Group brands Volkswagen, Audi, Skoda and Seat.

They get their own technicians and patrols who are trained on the more common breakdown problems specific to those marques. Because the resource is allocated in a more direct way ­ they don't handle fuel or tyre issues, for instance - it requires fewer patrols and a quicker service.

Key to the relationship between the RAC and its manufacturer partners is its ability to help them pick up trends, particularly on new models. "We give them hourly stats on emerging problems and we can even go to the production line and explain the issues," says Hewitt.

"It's valuable for the manufacturer because it helps them to understand common faults or common driver errors caused by their instructions or design features."

This service can be extended to provide feedback directly to dealers on common problems if the manufacturer provides the RAC with the data. It's been taken up by a couple of carmakers.

As the RAC narrows the gap with sector leader AA, Hewitt is gunning for more that 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.

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