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With retail sales shaky, this opportunity can be a lifesaver

A slowdown in new auto sales the past few years has had dealerships opting to rent out the vehicles they have on showroom floors as a rental stream. And with the Coronavirus affecting with the automaker market, it’s not surprising that vehicle retailers are relying more on rentals to meet the bottom line.

Given the uncertainty over how the pandemic will further manifest itself and its effect on a shaky economy, it won’t be surprising to see more dealerships jump onto the rental bandwagon. Auto Rental News, the house organ of the American Car Rental Association, recently unloaded a tip sheet for dealers wanting to exercise that rental option.

For openers, vehicle retailers will have to realize the car rentals is a seller of services, and not of products, which is the traditional model of dealerships. It’s for that reason that rentals be treated as an entity unto itself and not part of how dealerships do business, from customer service right down to the car rental software programs being used.

Managers of new or used cars shouldn’t be calling the shots here; rather, that should be under the domain of those with rental experience. With that should be the appropriate resources, from floor space and experienced staff to car rental software to track fleets and get proper accounting of financial activity.

Accordingly, because platforms for rent a car software are different than that for auto sales, revenues and expenses should be tracked separately from the rest of company activity. Payment according to level of profitability is recommended and to that end, free loaners for customers, a perk for some dealerships, should be discontinued.

More streams of revenue open up

If a dealership has invested in a car rental revenue center, a rental car department should take advantage of every opportunity of servicing a customer. If a client walks in to have a car serviced, use that as a chance to get that person to book a vehicle until the work is done. Create incentives like a competitive or lower market rate as well as the convenience of booking and returning a vehicle at the same location the client’s car is being serviced. And to create more fleet options, make sure the dealership has a wide variety of potential rentals available on the lot.

Eventually, even a potential rental on the showroom floor, if not already sold, will need to be replaced, which is a pure enough motive to encourage car rental staff to sell the vehicle. Here’s where overlap with the rest of the dealership would be necessary to cover such areas as the sticker price, the allocation of costs incurred on the rental and any other costs incurred that would be added to the sale price.

With a combination of policies that determine department autonomy and coordination with other areas of the dealership, as well as the right resources in place, adding a rental car revenue stream could provide more profitability to the business.

Better software. Better support. Better value. For over thirty years, Bluebird Auto Rental Services has been supporting its many, many happy customers around the world. Our flagship product, RentWorks, provides all the tools you need to run every aspect of your car rental business or service loaner department from the front counter to the back office.

Call us today toll-free at 800-304-5805, or email us at sales@barsnet.com and we will be happy to walk you through Bluebird’s Auto Rental Services.

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