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New technology reduces courtesy car loan periods by 25%

Car dealers are reducing the length of courtesy car loans using telematics and AX Innovation’s real-time loan car management system.

The accident aftercare and vehicle management technology provider claims that dealers are reducing the length of loans by 25%, on average.

“This new study reveals some genuinely intriguing and helpful insight which should help dealers evaluate their courtesy car strategy. Combining telematics with day-to-day vehicle management tools clearly impacts loan periods, and the effect is quite powerful,” said Vince Powell, managing director of AX Innovation.

He added: “When customers know there’s telematics on board, they tend to return cars half a day sooner. It seems that the subtle psychological shift means they only keep a car for as long is it’s required. 

“Ultimately it is good for them because of the added safety and security, but also an opportunity for dealers to reconsider vehicle deployment.

“While telematics reduces courtesy car loan duration, we suggest using it in the opposite way to support sales with extended test drives. The insight generated from a test drive helps the sales team ensure the customer is buying the right car for them, improving trust and helping turn strong leads into sales.”   

The trend was seen across large dealer groups and individual retailers, and in every case resulted in improved utilisation of vehicle fleets, allowing dealerships to either increase the maximum number of courtesy loans – to increase revenue – or reduce the number of courtesy cars on their books to minimise costs.

AX’s analysis comes as dealer revenues come under pressure, with UK new car registrations falling 7.3% in January 2020 after a drop of 2.4% overall in 2019.

Improving utilisation for courtesy car loan fleets will improve the bottom line by boosting the number of potential loans – which generate a profit via day-rate insurance – or will enable dealers and groups alike to rethink the size of their fleets. 



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