Bob Cerullo

bcerullo@motor.com

Trade Secrets

Many of your customersmay feel as if they’refriends as well. With sec-ond- and even third-gen-eration families, it’s un-derstandably hard for

them not to feel closer to you and your staffthan the average customer going into a cardealership or franchise shop. There are lotsof pluses to that kind of relationship, butsome disadvantages, too. One of the majornegatives relates to loaner cars.

For many years I had to disappoint someof our closest customers who wanted to bor-row my car when their car had to stay over inthe shop for extensive work. We had received

some pretty stern warnings from our insur-ance company about lending our cars to cus-tomers. At one time there were all sorts ofrumors about a particular shop that lent a carto a customer, only to have that customer getinto a major accident. Since the shop was notsupposed to lend out their personal cars, theinsurance did not cover the costs. To makematters worse, the wife of the customer driv-ing the loaner car was seriously injured andsued the shop for personal injury, which wasnot covered.

One day, after having to say no to a valuedcustomer, it dawned on me to call the insur-ance company that was providing my garageowner’s policy and find out if there was a way

I could offer one ofour cars to a cus-tomer who neededsome wheels whilehis vehicle was in theshop. Frankly, it cameas a surprise whenthe agent told methat it was entirelypossible for us tohave a car to lend tocustomers either freeof charge or for amodest daily fee.

It didn’t have to bea new car, but itwould have to be onein good condition andserviceable. Theagent emphasizedthat the insurance hiscompany offered asan addition to thegarage owner’s policywe already had wouldnot put us in the carrental business, likeAvis or Hertz. What itwould do is simply al-

Customers appreciate the convenience of a loaner car if their

wheels are tied up at the shop. If you’re considering this service,

make sure you and your customers are adequately covered.

8 January 2009

continued on page 10

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Before you start handing over the keys to a shop vehicle—or evenyour own personal set of wheels—to your customers, make sureyou’ve done thorough research on setting up a loaner car program.

Trade Secrets

low us to offer loaner cars to cus-tomers who had to leave their vehi-cles in our shop for repairs.

The agent told me we’d have tofill out some paperwork each time acar was loaned. It would not be amatter of just handing the keys toour customers. The customer wouldhave to fill out a loaner form, show avalid driver’s license, sign a creditcard form and do all the other thingsa driver would have to do if he wererenting a car. And before we couldlend a car, even free, to a customer,we’d need to determine who wouldbe driving it. If, forexample, the cus-tomer was a 45-year-old male, he’dhave to understandthat he could notturn the car over tohis 18-year-old son.

The insuranceagent said that wecould lend or rentcars only to peoplewe thought wouldbe good risks. Inother words, if thevehicle the cus-tomer has in theshop is a brokendown wreck, itwould be wise notto offer a loaner car.

The rate for hav-ing insurance cover-age for a loaner carvaries with a shop’slocation, so it’s impossible to state herewhat it would cost you in your shop, inyour town, to offer a rental or loanercar. I can tell you that it turned out tobe a lot cheaper for us in a big citythan I had expected.

You could set aside a good usedcar as a loaner car, but you’d have toweigh the costs of obtaining, main-taining and insuring it. It’s also possi-ble, we were told, to have more thanone loaner car, with additional costfor each car, of course.

The big question is whether or notyou have the need for loaner cars.While it’s an excellent addition toyour services, if you only occasional-

If you have a question or comment for Bob Cerullo, e-mail him atbobcerullo884@msn.com, or write tohim c/o MOTOR Magazine, 50 CharlesLindbergh Blvd., Suite 100, Uniondale,NY 11553.

10 January 2009

ly get requests for a loaner car, thecosts could be prohibitive. Theremay also be restrictions about yourusing the loaner or rental car as youwould other shop vehicles. Ask yourinsurance agent for the rules set upby his company.

If you’re considering the feasibili-ty of offering loaner or rental cars toyour customers, contact your insur-ance carrier before you make the fi-nal decision.

An alternative to a loaner car pro-gram is to contact a local rental carcompany and discuss with them the

possibility of di-recting their wayany of your cus-tomers seeking arental car. In anyagreement youcome to, makesure you talk abouttheir picking upand deliveringyour customers soyou’re not runninga shuttle servicefor the rental com-pany. There maybe a number ofrental outfits inyour area thatwould be eager tohave your busi-ness. See whichone offers the bestdeal.

The Trade Se-cret is that offer-

ing loaner cars can be an attractiveservice that will make it possible foryou to say yes when valued cus-tomers ask to borrow a car. The im-portant thing is that you do yourhomework and make sure you andyour business are adequately pro-tected in the event a customer getsinto an accident while driving a caryou lent to him in good faith.

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Circle #8

A loaner carprogram might be an excellentenhancement to

your service menu,but if you get

such requests onlyoccasionally, thecosts could be

prohibitive.