By on March 5, 2018

keys car sale

You’ve just taken your vehicle to the dealership for servicing and find yourself in need of a loaner car. Fortunately, the vehicle is still under warranty and you should be able to get into something without too much trouble. This does not mean loaner vehicles aren’t a major stressor for the dealerships providing them, and it doesn’t guarantee you a car.

Small dealers likely won’t have a surplus of such vehicles and may attempt to bar you from access, especially if you didn’t originally purchase your automobile from that particular store. Luxury brands are more likely to fork over a loaner to keep customers happy. Of course, they want something representative of the brand, not some random hunk of junk sitting idle on the lot. Maintaining a loaner fleet is tedious and opens dealers to all manner of additional expenses they’d rather not have to deal with. It’s expensive and people tend to bring back the vehicles on their own time, not when the dealer needs it for someone else.

So what’s a high-end automaker to do when a customer needs a replacement vehicle while theirs is in the shop? Think laterally. It turns out there’s a multitude of loaner alternatives currently being vetted by dealers, some of which don’t involve providing a replacement vehicle at all. 

According to Automotive News, Mercedes-Benz Manhattan now employs the services of DropCar to transport the affected vehicle, rather than force the person driving it to come in and leave with a loaner vehicle. All a customer needs to is schedule a time to have the vehicle picked up, and one of the firm’s 250 drivers whisks it away to the service center. You’re updated on its progress via an app and it’s returned to you once repaired.

Founded in 2015, DropCar started life as a New York valet service that allowed people to rent personal drivers. It also provides a monthly services that stores your car when you don’t need it and drives it back to you when you do. This is a one-two-punch of convenience for city dwellers who often have to pay extra for a parking space that could be over a mile away from where they live.

For Mercedes of Manhattan’s purposes, the company simply eliminates the need for customers to borrow one of their cars. Sal Iacono, Bram Auto Group’s vice president of fixed operations, has also partnered with DropCar. He said since several of the North Bergen, N.J., group’s dealerships switched to DropCar more than two years ago, the program has not reduced the stores’ loaner total. But it has vastly improved the dealers’ ability to pick up and deliver customer vehicles as promised.

Toyota of Manhattan and Lexus of Queens, both Bram dealerships contracted with DropCar, claim they were unable to offer customer vehicle pickup and delivery until they joined forces with the valet company. Iacono isn’t convinced it has saved them money, but it has helped dealerships deliver on their promises, keep customers happy, and eliminate in-house headaches. “It’s not about saving money,” he said. “It’s more about the ease of managing the system, and the ability to satisfy customer demand.”

RedCap Valet is another valet service offering alternatives to dealership loaners. It offers services similar to the deal DropCar worked out with East Coast deale, while providing a rental vehicle for customers who need a car while theirs are being repaired. FlexRentals, an affiliate of the Warren Henry Auto Group, of Miami, uses RedCap software to oversee delivery of luxury loaner cars to customers whose vehicles need service in the hopes of streamlining the process.

Diana Rodriguez, business operations manager for FlexMotors/FlexRentals, claims moving to RedCap yielded an unexpected benefit for the dealer network, too. Roughly 80 percent of customers who use the service agree to additional customer-pay service work on their vehicles. The average increase in repair ticket revenue was around 40 percent higher than customers who didn’t use RedCap, she said.

“It’s a significant amount if you consider that it’s 40 percent more revenue on 80 percent of the RedCapped vehicles,” Rodriguez said. “We didn’t expect this. But it reflects the psychology of the matter. When a customer isn’t in front of a service adviser and not under pressure — and it’s convenient because they never have to leave their office or home to get a loaner — they’re more inclined to have more services performed on their cars.”

Rodriguez told Automotive News that around 20 percent of customers use the RedCap Valet service. But it and DropCar are far from the only games in town. Uber for Business has partnered with dealerships in the past to allow customers needing transport to take advantage of its drivers while their vehicle is in the shop. Lyft Business also appears primed for such a venture. But dealer networks will have to decide if these kinds of services can be rationalized from a financial standpoint. The majority of these loaner alternatives are not cheap and seem best suited for high-end nameplates located in urban environments. They may not play so well in Wichita, Kansas.

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49 Comments on “Dealerships Looking at Loaner Car Alternatives...”


  • avatar
    Cactuar

    Most (all?) dealers sell used cars; why not loan them to customers who have cars in service? It would keep the fluids running and prevent the cars from rotting on the lot. I’d identify the cars that would take the longest to sell and use them as loaners in the meantime.

    • 0 avatar
      87 Morgan

      Several reason for not using used cars: used car inventory, if managed correctly, turns very quick. Again, if managed correctly, have a far greater profit margin and need to be on the lot.

      The factory typically subsidizes loaner cars for the dealer, they will not offer subsidies for preowned inventory.

      • 0 avatar
        PrincipalDan

        Local GMC/Buick dealer uses used cars as it’s loaners mostly.

        Back in 2009 when they were replacing a few gear-sets in the manual transmission on my then girlfriend (now wife) Vibe they threw me the keys to a 2004 Chevy Impala with about 70,000 miles on it. Base model, bench seat, mouse fur interior, 3400 V6. The interior trim was in awful shame and falling off but it was quiet and floaty. I ended up doing most of the driving of it because it put her to sleep. I couldn’t drive her the 10 min to work without her dozing off.

      • 0 avatar
        highdesertcat

        87 Morgan,

        You beat me to it!

        But I would add the blanket insurance required to put used cars under the insurance umbrella, as a big obstacle to using them as loaners.

        It’s great if the client has total comprehensive coverage on the car they put in the shop, but it’s another thing if the dealer-loaner gets totaled while the client is driving it and the dealer has to claim the loss from the client’s insurance company, even if the client is not at fault.

        Sticky wicket, that.

        • 0 avatar
          87 Morgan

          Most collect insurance information for any loaner car as you (borrower) are liable for damages.

          I have seen a handful of cases where this has occurred. Generally not fun for all involved. Dealership just wants to be paid, as they have no emotional investment in the car, borrower generally thinks the dealership is made of cash and should comp them a one time only trash their car free card.

          • 0 avatar
            Kyree S. Williams

            Right. All Volkswagen, BMW, Lincoln, Chevrolet, et al, wanted was a copy of my driver’s license and a current insurance card.

            But when I had to rely on CarMax *itself* for a loaner, they actually called my insurance carrier and made sure the policy hadn’t lapsed, and that it had the necessary coverages. Methinks they’ve been burned one time too many.

        • 0 avatar
          Kyree S. Williams

          It’s kind of understood that your insurance becomes primary if anything happens to a loaner or rental car. This is why rental agencies can go after you for, say, hail damage on a car, even if the car would have inevitably been dinged up whether or not you’d been driving it. It was in your care; therefore, you (or your insurance company must pay).

          Of course, if you book a car with a major credit card, it will usually have coverage that protects you from having to pay for damage on a rental car, and some membership discounts, like USAA, even offer to pick up the tab…but none of that applies to a loaner.

          • 0 avatar
            highdesertcat

            “like USAA”

            Yeah, USAA is a great Association, but not everyone can become a member.

          • 0 avatar
            Kyree S. Williams

            Right. By definition, most of those associations are exclusive. But they do offer discounts, so if you’re a member, it’s worth looking into it. I got a significant USAA discount on top of the added protections when I booked a rental car for this coming weekend.

          • 0 avatar
            highdesertcat

            Kyree, I’m retired military so I have been a member forever. Have everything with them, life, home, car, credit card, etc.

            So have my three sons and my grandson, ex-USMC and retired Army. They had autoloans with USAA too, like at 1.5%, zero down. My grandson got his wife’s 2013 Honda Accord V6 Automatic through USAA as well.

            And we’re all connected by the matrix on the USAA website.

            Cool!

  • avatar
    Astigmatism

    Call me shallow, but I was willing to take a flyer on a brand with an, ahem, less-than-stellar reputation for reliability based in part on the knowledge that, if my car ended up in the shop for a few weeks out of the year, I’d just spend those weeks driving another Alfa Romeo rather than mine. I’m sure it’s different in Manhattan – if someone had offered to take our car off of my hands for a few days back when I lived in the city I would have viewed it as a welcome vacation from alternate-side-parking juggling – but for those of us who need our cars on a daily basis, I want to drive my car or something very much like it all the time, and would look for another dealer if mine wasn’t able to provide a similar loaner.

  • avatar
    krhodes1

    I used BMW loaners a few times while my cars were in for service, but mostly I didn’t bother. I live 2 miles from the dealership, and I own a bunch of cars. Easier to just get a ride home then a pickup when the car was done than have to worry about a loaner. Did it a couple times just to try different cars – call it an extended test drive. Shuttle service and a decent waiting area with good Wi-Fi is all I really care about.

    I would not be keen on anyone else driving my cars – bad enough that the lot porters got their mits on them.

    • 0 avatar
      highdesertcat

      Many dealerships have courtesy vehicles that drive you home if you are local, after you drop off your car for service, and pick you up when your car is ready to go.

      It’s not ideal, but then MOST people own a bunch of cars, usually a minimum of two cars and the ride to/from home suits them fine.

      • 0 avatar
        Kyree S. Williams

        Yeah, I was fine with the shuttle.

      • 0 avatar
        S2k Chris

        I own multiple cars but we also have multiple drivers. A loaner vehicle is pretty much a necessity for me at this point of having kids, jobs, etc to shuffle around. It’s a monumental PITA to be without a car.

        • 0 avatar
          highdesertcat

          S2k Chris, I always thought it a good rule-of-thumb to have one more car than there are drivers in the household.

          Even an old beater in running condition, duly licensed and with the minimum required insurance coverage mandated by the State.

          • 0 avatar
            SaulTigh

            THIS. Totally how I live my life, and while my current third vehicle is no beater, she’s super cheap to maintain and insure, and I’m just a couple years from getting a “never needs renewed” classic car plate in my state.

          • 0 avatar
            S2k Chris

            I have one more car than driver, but that car is a silly two seat sports car on sillier hi-Po tires rendering it useless half the year, and useless all year as a family vehicle.

            Space constraints mean there won’t be a fourth car. If one of the two DDs goes down in summer it’s annoying. If one goes down in winter it’s a gigantic PITA, except for the shiny new MDX Techs that acura always seems to give me for anything more than an oil change.

  • avatar
    Kendahl

    My Infiniti dealer has loaners which I use because they are 17 miles from home. In return for a couple of gallons of gas, they save us the time and expense of two trips to the dealer in a second car. I had hopes that the loaner might be one of the more interesting vehicles (e.g. Porsche 911 Targa) I saw on their lot. No such luck. The loaners are base Infiniti models, usually SUVs.

    • 0 avatar
      Astigmatism

      My old BMW dealer used to do the same thing with nothing but stripper X3s and 328s, back when those were the cheapest cars on the lot (and de-optioned versions were penalty boxes). I’ve always thought that dealers who did this were missing out on selling customers on possible upgrades: look at this zippy new M240i! Isn’t your old 3-series getting a bit long in the tooth? Come talk to our sales reps…

      • 0 avatar
        Kyree S. Williams

        The BMW dealer I used had a loaner fleet that run the gamut. I once got a 320i. I also once got an X6 xDrive50i. But even the 320i had navigation and several other options.

        The one time I saw a dealer visibly try to make a sale with a loaner was when I had my Golf SportWagen TDI when the buybacks were in full swing, and they deliberately put me in a Golf Alltrack equipped just like mine.

      • 0 avatar
        W.Minter

        @Astigmatism: 2 scenarios: a) dealers are not smart enough to strategically invest into upselling through service loaners, b) dealers collected data and calculated if there is a positive effect on customer loyality (i.e. sales in the next years) and found out that nice service loaners are a bad invest without ROI. My assumption: dealers are dealers and not data scientists. Any Baruth idea on that?

        • 0 avatar
          Astigmatism

          I share your assumption. The amount of seat-of-the-pants nonsense in every buying experience I’ve ever had gives me the heebie jeebies, and makes me wonder how any of them stay in business.

  • avatar
    Kyree S. Williams

    I bought my X5 from CarMax and had the MaxCare warranty, but always got a loaner from the BMW dealership, so that wasn’t a problem. The loaners suspiciously got nicer after I gave the dealership an excellent review on a public forum.

    Meanwhile, my best friend bought a ’17 Volt from the local dealer, and the two times it’s had to go into service (once for a faulty headlight, once for a faulty throttle position center), the dealership was completely out of loaners and had to rely upon an Enterprise agreement, which was actually a GM account. However, General Motors stipulates that customers under that account must be given a GM product as a rental if one is available. So even if all they had was, say, an Escalade or a Corvette, that’s what they’d have had to give him. Of course, you usually don’t see either of those at non-airport locations, so there was a fat chance of that.

  • avatar
    White Shadow

    No thanks. That’s just one or more additional yahoo that I don’t need driving my car.

  • avatar
    Carfan94

    I’m 23, And Lexus of Memphis (They’re the only Lexus gamer in town) Are always happy to give me a loaner. The only time I’ve Ever taken my car there was to have major parts replaced (one of which was the dashboard which was free!)Even though my car was bought used at another dealer. If they are out of loaner cars, You have a choice: You can wait in the waiting room until another customer returns a loaner(usually not long), Or they will drive you to enterprise and rent a car for you. My only complaint is the loaners are somewhat dirty, given that they usually don’t clean them between customers.

    • 0 avatar
      highdesertcat

      My state won’t let you rent a car unless you are at least 25 yo. Had that problem with my grandson when he was still in the USMC.

      • 0 avatar
        Kyree S. Williams

        At least last time I checked, which was yesterday, USAA members booking under either Enterprise or Avis/Budget get the minimum driving age lowered to 18, and without an underage driver surcharge. Of course, if there’s a state law, I bet they can’t do that.

        I turned 25 very recently, so I appreciate this.

        • 0 avatar
          highdesertcat

          State Law.

          But I got around it. Rented the car using my credit card and my name, then let him drive it to where he needed to go, one way, and drop it off at the rental agency at his destination.

          They didn’t say anything since he dropped it off blind and full of gas (park the car at night and drop the key into the agency’s mailbox)

          I haven’t checked lately so maybe the law has been changed by now in my state.

      • 0 avatar
        Carfan94

        Hertz in Memphis, You have to be at least 25 to rent a car. I don’t know how enterprise works out the agreement with Lexus. But I do find it ironic that Lexus will let me drive their $53,000 luxury cars, But Hertz think doesn’t think I’m old enough to drive their crappy rental cars! lol Also the Lexus loaners have no gas refill policy, The rental car company’s charge $500 if the gas tank is not overflowing with gasoline.

        When I was In high school, had an 18 year old classmate. His 1998 Mountaineer was totaled by a drunk driver and his Insurance company rented him an Edge. I don’t know how insurance policy’s work for underage drivers, I think the minimum age that most rental car companies have is at least 21.

        • 0 avatar
          Kyree S. Williams

          My Lincoln was totaled in December, at which time I was still 24 (I have since turned 25). The rental company would have tried to charge me an underage fee if I had originated the rental just for personal use, but didn’t do any such thing for an insurance rental.

          I’ve also had insurance rentals prior to turning 21. I think it depends upon the state.

    • 0 avatar
      Kyree S. Williams

      Was it the cracked dashboard thing? A friend of ours has a 2004 Lexus GX 470 whose dashboard cracked rather dramatically; Lexus replaced it for free once the recall was issued (probably after a class-action lawsuit of some sort). And of course there was a loaner.

      I think Lexus has some of the best customer service in the industry.

      • 0 avatar
        Carfan94

        Yes, 2007 RX. Dash was sticky, shiny and had a small inch long crack next to the gauge cluster. It was so shiny that when the sun shined on it, It would create blinding glare. And then a reflection OF THAT glare on the windshield. It Was very difficult seeing during certain times of the day, Especially driving from a sunny area to a shaded area, like a grove of trees.

        Lexus got me on the waiting list at the end of August and had my new dashboard in May. I was very happy with the new dash, It feels softer than the original which I think hardened over time. It does not fit perfectly flush around the air vent trim, But then the original dash was not perfect in that area either.

        The Problem with the new dash is when the winter came, and the temperature started to dip below 60, It rattles like crazy! The colder it gets the rattles (there’s several) become louder, and more frequent. Now that it’s getting warmer the rattles have gone away again. Very annoying though.

  • avatar
    Menar Fromarz

    I thought this article was going to be about real alternatives to loaner cars. Bikes, scooters, taxi/uber credits, that Razor thingy Jack was talking about in Santa Monica….something novel. Guess not. Personally I just take my road bike and try to not get wound up au about being without my car. At least locally. And if I don’t have to get gravel or lumber that day.

  • avatar
    anomaly149

    Considering the number of dealer loaner cars that don’t get safety recalls performed on them on anything approaching a regular basis, this Uber at twice the price sounds not so bad.

  • avatar
    Rust-MyEnemy

    This all rather surprises me.

    Mercedes servicing in the UK is priced according to the arrangements you need. If you need a loan car, you pay a premium. You pay a smaller premium for your car to be collected (or for a lift back home) or for an ‘expedited’ while-you-wait appointment. Likewise, if you’re able to drop the car off at the beginning of the day, collect it later and make your own way home/to work, you get a slight discount.

    The arrangement works well – and the price premium can be a handy bargaining chip. A lot of people only take a loaner to drive to work/home, where it’ll just sit motionless for eight hours. They’re often delighted to just get a ride to their destination and back.

    • 0 avatar
      W.Minter

      This. In the end, someone has to pay for the replacement mobility (= you). MB drivers anticipate that the yearly service bill will be shockingly high, that’s why they demand a “free” loaner. Otoh, BMW drivers are more frugal (service every 2 years), that’s why in Germany you can kindly ask for a car at the Sixt counter on premise, at laughably high rates (for a loaner from a dealer). Some Toyota dealers will offer you a car from Enterprise down the street, but they do the paperwork and charge friendly rates. Vouchers for the subway (sometimes taxi as well, I suppose) or free loaner bicycles are also commonplace. “Service while you wait” appointments are also a great offer, but that crucially depends on a) all parts are in stock and b) a dealer that doesn’t want to screw you up (haha); in fact, the dealer will find something and will sell you a second appointment 2 weeks later, thus nothing won for the customer. AFAIR Lexus (?) offered some kind of valet service at the airport: park your car in a designated area close to the terminal, get your car serviced over the day, and pick it up at the airport when you return the same day. Infiniti has virtually no dealers in Germany, they offered “complimentary” car pick-up & return service.
      As I live in a DriveNow area, I am glad that I mostly don’t need a loaner.

  • avatar
    ThomasSchiffer

    Interesting. I have always wondered why this service is offered in the US but here in Germany you need to pay for a loaner if you need one while your car is being serviced.

  • avatar
    ManycarsNotime

    I’ve had two dealership services in the last few years, with slightly different experiences. The first time was about 5 years ago. The AC fan blower on my Subaru needed replacement under warranty. They needed to order parts and gave me a brand new CrossTrek to drive for a week.

    The second time at the same dealership last year was a Takata airbag replacement. They sent me next door for a free Enterprise rental car (actually a nice 2017 F150 with a turbocharged V6).

  • avatar
    HahnZahn

    When I was stationed in DC, I took my TDI to an independent shop called Euro Werks in Falls Church, VA, a couple times. I was gobsmacked that they had a fleet of loaner Passat wagons – probably a dozen or more. I thank god every day that I no longer live in the NoVA hellhole, but Euro Werks was awesome. Better by far than any VW dealership I’d ever been to.

  • avatar
    bobmaxed

    A loaner? Ha I was lucky to get a ride home from their go-fer after dropping off a Ford that was still under warranty.

  • avatar
    427Cobra

    here, I thought they’d be doing UBER vouchers or something…

  • avatar
    tankinbeans

    The Ford dealer in my area has a contract with Enterprise where they pay the rental charges during repairs. Keeps them from taking too long or artificially drawing out the repair process.


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