A loaner vehicle and building the cost of having one into your shop’s pricing structure can become a profitable strategy, according to a former shop owner.
Fred Hules, who sold his shop and now is an industry coach with the Institute for Automotive Business Excellence, said a loaner vehicle was the biggest profit centre in his business.
Why? “Because it takes pressure off. It takes pressure off the customer. It takes pressure off your staff,” he said during the webinar, 7 Keys to Productivity. ”And they don’t cost a lot of money. In the grand scheme of things, it helps you in your productivity. I would not know how to do without them.”
There are different ways you can go about getting one, Hules said, be it buying one outright or leasing one. A customer may have a car they’re tired of that you can buy off them — you’ve serviced their vehicle so you know it’d been taken care of properly.
There are costs, such as buying the vehicle, getting insurance, paying potential fines for parking and so on. But those costs should be built into the invoice customers are paying. They should be paying for the conveniences and experiences the shop is offering.
That led to a larger discussion on ensuring everything is priced properly in the shop. Shops have a certain number of expenses and enough needs to be sold to cover those expenses.
“Are we pricing properly? Are we charging the correct amount for our labour? Are we matrixing our parts properly so that we have a sufficient amount of gross profit to cover those expenses?” Hules noted as key questions shop owners need to be asking themselves.
And the type of customers all shops should be trying to attract are those who are happy to pay for the services being offered.
“The customer, that I look for my shop, and I think a lot of you would love to have, is the type of customer that will gladly pay your price to be taken care of knowing the car is going be taken care of, it’s going to get fixed, they’re not going to have to worry about anything, they’re not going to have to worry about breakdowns, it’s going to get them where they want to go and they’re not going to have to worry about transportation,” he said. “It’s the whole thing — it’s that whole experience.”