Dealerships Looking at Loaner Car Alternatives

Matt Posky
by Matt Posky
dealerships looking at loaner car alternatives

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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  • 427Cobra 427Cobra on Mar 06, 2018

    here, I thought they'd be doing UBER vouchers or something...

  • Tankinbeans Tankinbeans on Mar 08, 2018

    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.

  • Jeff S We have had so many article about gas wars. A lighter subject on gas wars might be the scene from Blazing Saddles where the cowboys were around the campfire and how their gas contributed to global warming or was it just natural gas.
  • Jeff S We all have issues some big and most not so big. Better to be alive and face the issues than to be dead and not have the opportunity to face them.
  • NJRide Now more than ever, the US needs a brand selling cheaper cars. I know the old adage that a "good used car" is the best affordable transportation, but there has to be someone willing to challenge the $45k average gas crossover or $60k electric one that has priced out many working and middle class people from the market. So I think Mitsu actually may be onto something. Call me crazy but I think if they came up with a decent sedan in the Civic space but maybe for $19-20k as opposed to $25 they might get some traction there's still some people who prefer a sedan.However, I just compared a Trailblazer on Edmunds to an Outlander Sport. Virtually same size, the Trailblazer has heated seats, keyless ignition and satellite radio and better fuel economy for almost same price as the Mitsu. Plus a fresher body and a normal dealer network. This has always been the challenge off brands have had. Mitsu probably would have to come in $2-3k less than the Chevy unless they can finance more readily to the subprime crowd.
  • MaintenanceCosts At least on the US West Coast, Waze is perfectly happy to send cut-through drivers down residential streets or to disregard peak-hour turn or travel restrictions. I hope if it's going to be standard equipment the company starts taking a more responsible approach.
  • MaintenanceCosts I'm more curious about the effect (if any) on battery lifetime than range. Drawing current faster creates more heat and if that heat is not promptly drawn away it could affect life of the cells.I agree this sort of thing can make sense as a one-time option but is consumer-hostile as a subscription.
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