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Fleeting ThoughtsPosted 8/10/1999By Levy Joffrion
Leased vehicles represent more than 22 percent of all new car sales, according to consumer lease trends compiled by CNW Marketing/Research and published by ADT Automotive. That's a pretty good chunk of business, considering that CNW Marketing/Research predicts 15 and a half million new vehicles will be sold in 1999. Those new vehicles eventually require mechanical repair. And, starting almost immediately, preventive maintenance work. Who's doing that work? How much of this business are independent shops getting? And how can they get more? According to several industry leaders, independent shops probably aren't getting the bulk of the repair business from individuals who lease because most leased vehicles are still under warranty. The individuals driving them are more likely to take them back to the dealer for warranty work. In fact, some car manufacturers have their dealers stipulate in lease agreements that the leased vehicle will be brought back to a factory-authorized dealer. In spite of all that, independent repair shops are doing a considerable amount of work on leased vehicles - particularly on fleet vehicles. When a fleet vehicle is still under warranty, it is also most likely to be taken back to the dealer for repair. But these vehicles also require routine maintenance work, and that's where independent shops can get their fair share of the business. Moreover, many of the fleet vehicles are under long-term lease, which means they may be out of warranty. So independent shops are likely to be called on for repairs, as well as maintenance.
Getting Started It's this basic formula that's key to getting leased vehicle business from popular leasing companies like Enterprise Rent-A-Car and GE Capital Fleet Services, which is the world's largest fleet leasing company. Dale Nicholson, manager of vendor relations for GE Capital Fleet Services, said his company makes recommendations as to where a customer should take a vehicle, but it's ultimately the customer's choice. "It could be a dealership, an independent shop, or some company with which we have a national account, like Firestone," Nicholson said. Asked what percentage of business goes to dealers and what percentage goes to independent shops, Nicholson said it varies. "Some shops in a particular area may only get maybe 10 percent of the business, but in another area, 90 percent of the work may be done by an independent shop," he said. "We'll work with any vendor who is willing to work with us," Nicholson said. Simply put, Nicholson says shops get on the firm's recommended vendor list by doing a good job for the customer. "If they do the job right, treat the customer fairly, and get them back on the road in reasonable time, then they are a good candidate for GE Capital Fleet Service's vendor network," he said. Being knowledgeable about your customers is also beneficial, says Nicholson. "A shop should get to know their leased-vehicle customers, and if a customer is pleased with them, he or she will be glad to give them a telephone number with which they might contact GE Capital Fleet Services," he said. The independent shop will need to tell GE Capital Fleet Services its name, location and capabilities. Once the shop is approved, it will go on GE Capital Fleet Services' vendor list, and will be recommended if a customer in that shop's area calls needing repair or maintenance work. "They take their leased vehicle to the independent shop, the shop bills us, and we in turn bill the company leasing the vehicle," Nicholson said. Enterprise Rent-A-Car is known for its short-term rentals, but does a lot of long-term leases to businesses and consumers. Again, if a leased vehicle is still under warranty, the customer is most apt to take it to a dealer for that make. But if the vehicle is out of warranty, the customer may rather take it to an independent facility. And many of Enterprise's long-term lease vehicles are out of warranty because some long-term leases are for five years or more. Enterprise's customers may take their leased vehicles wherever they desire for service, but - like GE Capital Fleet Services - Enterprise maintains a recommended service facilities list. "We're willing to do business with any shop that wants to do business with us," an Enterprise representative said. "Most often, a customer will tell us about a shop that the customer thinks does a really good job." Is leased-vehicle repair and maintenance work good business for shops? Mark Moses, AAM, owner of Moses Automotive in Toledo, Ohio, thinks so. About 20 percent of his shop's business comes from maintenance work on fleet leased vehicles. Although the fleet leased business is profitable, Moses says one of the biggest drawbacks in doing work on leased (and non-leased) vehicles is getting paid. His shop usually bills the firm leasing the vehicle and that firm, in turn, bills the customer. It can often take a while for paperwork to go through a firm's accounting department, thus payment can be slow in coming. Moses Automotive combats that by offering discounts. If the customer brings a check when he or she picks up a vehicle, they get a 10 percent discount. If they pay by the tenth of the month, they get half that - a 5 percent discount. "Most smaller businesses opt for the 10 percent discount because that's a substantial savings," Moses said. "Many companies these businesses deal with offer a 1 percent to 3 percent discount on their services, so that 10 percent looks mighty attractive. It gets their attention." Moses added, "You've got to be creative. Most all of our fleet accounts opt for the 10 percent program. It keeps our cash flow high and offers them a substantial discount." The Ohio shop owner said great care must be taken in controlling profit margins when offering a discount of this size. One control, he said, is to use actual time vs. menu-rate pricing on common jobs, like brake repairs. "We're not in business for the fun of it and great care must be used to control margins, while still offering real value for our fleet customers." Although the discounts are attractive to fleet owners, Moses is of the opinion that customer service is far more important to his fleet customers than the prices. "And no one does it better than us," he said. "We go as far as presenting a written forecast of the cost of maintenance for the life of the vehicle for our customers. It really helps them budget over the service life of the vehicle and it also helps them see that the fleet managers have the required services performed on time." Moses Automotive doesn't do OE warranty work on fleet leased vehicles, just maintenance work - such as oil changes, servicing transmissions and brakes. "It's good business and we like it," Moses said. "Other ASA shops may want to tune in to it too." How do you go about getting such business? Moses' formula for getting preventive maintenance work echoes the suggestions of both GE Capital Fleet Services and Enterprise Rent-A-Car. "From your customer base," Moses said. "Just getting to know your customers. You're probably doing work for someone who is the president of a firm, or the financial vice president, or treasurer or whatever ... and if you have done a good job for them and have a good rapport with them, you can approach them about maintaining their firm's fleet of vehicles it has leased. The next step is to get in touch with that firm's fleet manager and tell the manager what you can do for them ... how you can help them. You need to come up with a written program."
Lease Stat
Lease Stat
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