Outsourcing Rentals Can Save Money

In an effort to help reduce dealers’ liability exposure, lower costs and meet increased demand for service loaners, AIADA maintains an affinity partnership on behalf of America’s 11,000 international nameplate automobile franchises with Enterprise Rent-A-Car, the largest rental car company in North America.

”Enterprise can consistently meet the needs of individual dealers who represent a wide variety of domestic and international manufacturers, while maintaining the highest degree of customer satisfaction,” said Cody Lusk, president of AIADA. “With nearly 7,000  locations and more than  600,000 vehicles in service, Enterprise not only has the coverage and proximity to meet the needs of each of our members nationwide, but it has the flexibility to offer 65 different vehicle makes and models.”

Customers Appreciate Added Value of Rental Cars

Many dealers are surprised to learn that when Enterprise was founded in 1957, its first office actually was located in a cramped office next to the body shop in the basement of a St. Louis Cadillac dealership.  Over the years, Enterprise built its reputation as the company that rents cars to local consumers in need of vehicles while theirs are being serviced or repaired.

This includes catering to the loaner needs of dealerships across the country with the help of local offices staffed with career-minded individuals who are empowered to make decisions that are beneficial to the dealership. And, with the highest percentage of completely satisfied customers in the industry, according to JD Power, Enterprise’s commitment to service can enhance a dealership’s overall CSI.

When the dealer provides a car from Enterprise, the customer perceives they are getting added value because it is not just a “free” car from the dealer’s own lot.  And with Enterprise’s virtually unlimited fleet, dealers are able to accept the customer’s first choice in service appointment, which enhances customer satisfaction.

“Our partnership with AIADA gives us an exceptional opportunity to reinforce our commitment to serving the needs of all dealers across the country,” said Pam Nicholson, Chief Operating Officer of Enterprise Rent-A-Car.  “We look forward to providing solutions for AIADA and its franchise dealers.”

Recognizing the advantages of outsourcing, many manufacturers and dealer groups recommend Enterprise to meet their customers’ service loaner needs. “Outsourcing frees up space on dealership lots by eliminating parked loaner cars, especially on busy weekends,” said Hugh Whiles, of Sonic Automotive.  “Outsourcing also is effective in helping dealerships avoid large capital investments associated with having a dealer-owned rental department. These include savings in direct costs such as depreciation, interest, fuel, license, taxes, inspections, maintenance, uninsured losses and insurance premiums.”

Another important advantage of outsourcing loaner vehicles is that dealers can save significant money by reducing their insurance liability exposure. Each year, Federated Insurance Companies conducts a loss study of its auto dealer clients and AIADA members to pinpoint the types of losses that occurred most frequently and which of those losses had the highest claims costs.

“The results continue to show a problem with customers driving service loaners and rental vehicles,” said Kelly Martin, Vice President of AIADA Services.  “By outsourcing loaner cars and rental vehicles, dealers are able to greatly reduce their exposure and impact their insurance cost.”

Nissan Dealership Uses Service Loaners to Boost Customer Loyalty

Nissan North America recently endorsed Enterprise as its service loaner outsourcing partner to its network of almost 1,100 U.S. dealerships, and Enterprise is prepared to provide like-sized Nissan vehicles to Nissan owners across the country.

In the April issue of DealersEdge, Ron Tonkin Wilsonville Nissan Service Manager Bill Rush says he is launching Saturday hours in his Oregon shop – he thinks this new program from Nissan and Enterprise will contribute to the new schedule’s success.

Nissan’s new program with Enterprise will ensure that all loaners are Nissan vehicles of equal brand level, Rush notes. According to Rush, it’s a smart move because it also will help keep Nissan buyers in the fold and reinforce brand loyalty.

The new program is expected to be a useful “goodwill tool for customers,” Rush said in the article in DealersEdge. “Customer satisfaction is key and this will help us with it.”

ARMS® Technology Lowers Costs and Improves Efficiencies

Improvements and upgrades in technology also are making renting cars for service loaners easier by streamlining invoicing, managing rental costs and sending rental authorizations directly to the rental car company.

For example, Enterprise Rent-A-Car’s application, called Automated Rental Management System (ARMS®), which has been used effectively by the insurance industry for nearly 10 years, is available to dealerships.

In addition to giving dealerships more control of the rental process, the ARMS® application enables retailers to lower costs and improve efficiencies while enhancing service to customers.

For Inskip Automall in Rhode Island the ARMS® application’s two-way electronic communications creates a seamless process that streamlines invoicing and helps them better manage costs by sending electronic authorizations directly from the dealership to Enterprise, including the number of days authorized.

The ARMS® application makes it faster and easier to provide rental cars for our customers,” said Mike Johnston, Service Manager for Inskip Automall’s Volvo dealership in Warwick, R. I., which rents an average of 600 cars a month from Enterprise.  “We also are able to better analyze and manage the rental activity on every level because the automated application provides management reporting and reduces errors, as well as unnecessary delays that can impact customer satisfaction”.

With the new ARMS® application, Johnston’s service advisors are able to create an electronic authorization for a rental car at the same time they are initiating a repair order for service.  “All of the renter’s information, along with the number of days authorized, is sent to Enterprise electronically,” said Johnston.  “Best of all, Enterprise is ready for our customers when they arrive for their service appointments and the contract is closed as soon as the rental car is returned to our dealership.”

“If we need to extend the rental, information is sent directly to Enterprise, eliminating the need for follow-up phone or fax requests.  We also can view and print invoice information online within the ARMS® system,” he added.

The ARMS® system not only enables the dealership to better analyze and manage the rental process on every level, it is a very efficient system for significantly reducing errors and unnecessary delays.

Catering to Individual Dealers’ Needs

Since no two dealers are alike, Enterprise gives local branch offices the flexibility to tailor loaner programs to the individual needs of each dealership on a market-by-market basis.  In addition to offering the most competitive local rates and step-by-step operational plans, Enterprise provides ongoing follow-up to identify opportunities for continuous improvement.  

To demonstrate that cost considerations extend far beyond depreciation and interest payments, Enterprise has developed a Dealer Service Loaner Cost Analysis program.  It not only determines the dealership’s hard costs of maintaining loaner cars, including license, depreciation, insurance and maintenance, it also reveals the soft costs, from uncollected fuel expenses, storage and parking costs to personnel expenses.

As dealers consider various options, the following questions can begin to serve as a guideline for comparing the expense of an internal service loaner program to the potential cost and time savings of outsourcing car rentals:

  • Is the dealership maximizing available service appointments or limiting revenue opportunities by scheduling service around the availability of internal loaners?
  • Does the dealership have a designated, well-trained manager and staff needed to effectively manage the loaner process, including the experience to control costs, reduce potential liability, and deliver the same or higher level of customer service provided by outside rental agencies?
  • What are the costs associated with dedicating dealership personnel and financial resources to running an internal loaner operation?
  • Does running an internal service loaner fleet fit within the dealership’s overall business strategy?  Is it a major contributing factor to its success or bottom line?
  • Is the dealership already landlocked or would outsourcing free up valuable space for customers and new and used cars?
  • Are loaners being utilized correctly and by the right customers? Are they being utilized as intended?
  • What are the costs associated with windshield damage, minor dents, uncollected fuel expense, cleaning and other miscellaneous expenses? Are these costs paid by the customer or added to the dealers’ expenses?

Most dealerships consider themselves in the car business, not the rental business, both of which are very complex.  Not only does outsourcing reduce liability exposure and lower costs by adding operational efficiencies, it creates more time for the dealership to focus on revenue generating activities such as selling and servicing cars.  And that’s a bottom line that most dealerships can appreciate.

For more information about outsourcing rentals, dealers may send an email to ARMSDealership@erac.com