Stay Financially Savvy with Your Fleet
Scott Milan, owner of Scott’s Fort Collins Auto Repair in Fort Collins and Loveland, Colo., began building a loaner fleet into his business in 2012. According to Milan, the venture kick-started when two customers lost interest in their vehicles after they both needed transmissions.
“We saw the need,” Milan says. “Today people are all about the ‘now’—they need their car now and they can’t be without transportation.”
Since 2012, he’s grown his fleet to 21 vehicles, a majority of which are located at the Fort Collins store.
“I do think it’s a huge value for a business and that’s why we do catch a lot of customers,” Milan says.
Although loaner fleets can be a huge customer service perk, they can also be a drain on finances, if a careful eye isn’t kept on expenses.
Milan says his total monthly expense for loaner vehicles is $2,500 per month, which includes licensing, maintenance and insurance. According to Milan, the most costly components of having a loaner fleet are typically tied between the vehicle’s insurance and its maintenance. In recent months, the shop has moved away from the previous routine of purchasing older vehicles that needed work, to now bringing newer models into the fleet.
“I always try to figure out a way to minimize our loss when it’s time for a car to go,” Milan says.
In order to avoid financing woes, Milan walks through his experience with the business’ loaner fleet over the years, as well as how he avoids overspending on vehicles.
As told to Kiley Wellendorf
Before you make a decision on a loaner vehicle, take a look at the vehicle’s current condition. When we started with our loaner fleet, we had two vehicles that were older and cheaper cars that we bought from one of our customers.
Today we’ve changed our focus from purchasing cheap, old vehicles to investing in newer vehicles that won’t require as much maintenance. Some of the newer vehicles were bought at vehicle auctions that came with hail damage, or had loss-salvaged titles. Outside of the shop, I often purchase rental vehicles at auctions, repair them at my shop and later resell them, so I see a lot of vehicles that would work well as a loaner, and that’s been a really easy way to grow the fleet.
It’s worked out because you’re not buying an $18,000–$20,000 car that you have to finance. We don’t finance vehicles either, so if we’re interested in purchasing a vehicle for the fleet, we buy it in full.
We found that, in the past, repairs can quickly add up when purchasing an older vehicle. Throughout the years, we’ve noticed that the older vehicles we purchased became more costly as they required maintenance more frequently. With all of our cars right now, our expense is $1,500 total for maintenance work on our fleets.
Be cautious of which customers receive your loaner cars. It’s important for you to identify who is able to receive a loaner vehicle—whether that’s customers with an oil repair or those who come in for higher repair.
In the beginning, we didn’t give loaner vehicles out to oil change customers, but now we give them out to both oil change and higher repair customers.
When you give your vehicle out, establish a contract ahead of time that lays out all the ground rules for your customers—and that keeps cost in mind. To avoid overpaying on gas, we have an honor system set up where when a customer gets a vehicle with half a tank, he or she has to refill it to the half before bringing it back. For the most part, customers will bring vehicles back with more gas than they left with, and we rarely have to fill any cars up.
Finally, to keep maintenance costs down, try to consider any habits that should be monitored. To maintain the vehicles’ upkeep, we ask that customers do not smoke in the vehicles. Shop owners should also be wary of situations where customers go through tolls; it will come back to you. Be cautious of customers possibly parking somewhere they aren’t supposed to; you’ll receive a ticket from it. At our shop, we’ve chosen to absorb the cost of the parking ticket, because it’s possible to later receive a bad review from the customer charged with the ticket on top of their repair, and then you lose that customer.
You really have to navigate the service the best way for the shop, and also ask yourself if it’s worth losing a customer over when it comes to additional fees. As you work on your loaner fleet, pay attention to what your customers are really looking for, in order to be successful.