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Loaner Fleet Risks: What You Need To Know About How To Manage Them

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If you have a car dealership, offering service department customers, or even customers coming off the end of a lease, a loaner car can help build customer loyalty and drive sales. Customers will be more likely to come back to you for service if they can benefit from the convenience of a loaner car, and once word spreads, more people will choose to buy from your dealership for the same reason.

But loaning out cars to customers isn’t without its risks, especially when you’re doing it for free. You could lose money on depreciating loaner fleet cars, get stuck with incidental costs, end up paying for damage, and struggle to track down loaners after customers’ cars are ready. But when you take steps to mitigate these risks, you can grow your profit margin by building strong customer relationships.

You Can Lose Money On Depreciating Loaner Vehicles

Loaner fleets can add a lot of value for customers, but one of their biggest risks is that of losing money on depreciating vehicles in the fleet. If you have 50 loaner vehicles on your lot, those are 50 vehicles that you aren’t selling. And, as every dealer knows, the older a vehicle is, the less it’s worth, and the more money you lose on it.

You can mitigate the risk of losing money to depreciation by selling your loaner cars as loaners. In most jurisdictions, you’re allowed to sell a loaner car with dealer incentives as long as you keep the mileage low — usually, the mileage limit is 2,000 to 5,000. There will probably also be an age limit, usually 90 days, involved. Many customers are happy to buy a loaner car — they’re getting a practically new car, for the price of a used car. Just make sure to rotate cars out of your loaner fleet and into the hands of buyers quickly.

You Could Accrue Manufacturer Chargebacks for Loaner Cars

If any of your loaner vehicles are part of a manufacturer program, you could accrue huge manufacturer chargebacks if you don’t follow their loaner guidelines carefully. Most manufacturer programs will have strict rules about how long a car can be in service, and how many miles you can put on it as a loaner. Make sure you understand the rules and follow them to avoid chargebacks.

Customers Might Damage A Loaner While They Have It

Most customers will drive their loaners carefully, but you still run the risk of a customer scratching, denting, dinging, or otherwise damaging your loaner car while they have it. Some customers may even get into accidents in your loaner car.

In most jurisdictions, your customers’ auto insurance will offer at least some coverage for accidents in your loaner cars. For dings, dents, scratches, lingering smoke smells, and other damage, you can use dealership loaner fleet management tools to hold customers accountable. Make sure you’re clear with customers that they’ll be held financially responsible for any damage to the car.

Customers Can Keep The Loaner Car after Their Car Is Ready

If you’re offering free loaner cars to customers while their cars are in for service, you run the risk of them not bringing the loaners back in promptly after their cars are ready for pickup. Some customers may not feel any sense of urgency about returning their loaner car, especially if it’s a lot nicer than their car. 

You can manage this risk by charging customers a daily fee for each day they keep their loaner cars after their cars are ready. You can charge market rental car rates. Make it clear to customers when you hand over the loaner that they’ll have to pay to keep it after their car is ready, and most will happily turn it back over promptly. If they don’t, well, you’re at least making some money in the meantime.

Customers Can Nickel And Dime You To Death with Incidentals

Parking and traffic tickets, tolls, and fuel costs are just some of the incidental expenses that customers can incur in your loaner car. To keep from becoming overwhelmed as these small costs build-up, take a customers’ credit card information as surety when you hand over the keys to a loaner. Make sure customers know that any tickets, unpaid tolls, or refueling costs will be charged to them.

Loaner cars aren’t just for luxury brand buyers anymore — in a customer-centric market, more and more people expect the convenience of a dealership loaner while their cars are in the shop. Take the right steps to protect yourself from the risk of loaning out cars, so you can keep customers happy and boost sales.

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