Fixed Ops Journal - August 2021 - F17

FIXED OPS JOURNAL
TO SELL OR NOT TO SELL?
Dealers with loaner fl eets could cash in but risk service retention
JIM HENRY
foj@autonews.com
T
loaners
he shortage of new- and used-vehicle
inventory has created a lack of
at dealerships. And those
stores that have them are faced with
the choice of whether to keep the cars for service
customers or take advantage of red-hot
used-vehicle prices and sell them.
Russell Lemmer, president of Dealerware, a
software provider that helps dealerships manage
their loaner fl eets and other courtesy vehicles,
says the average dealership has about
40 vehicles for use by service customers, but it
varies a lot between luxury and mass-market
brands.
Typically, mass-market dealerships have
around 15 to 20 loaner cars. But dealerships
for luxury brands such as BMW and Lexus
might have 100 or 200, Lemmer says. With the
inventory shortage, loaner fl eets for luxury
brands are down " a few percentage points " in
size, he says.
" Mass-market brands,
however, make that choice
[to sell] more actively, " he
says.
Selling some
Tom McCollum, CEO of
McCollum: " It's a
long game here. "
Forbes Todd Automotive
Group, of Dallas, which
has one dealership each
for the Audi, Honda and
Acura brands, says he may
take advantage of the market to sell a few of
his 100 or so loaner cars - but not many.
" Th e OEMs I represent, and most that I am
familiar with, allow dealers to repurpose a
certain percentage of loaners to for-sale inventory, "
he says. " We'll do a little of that. One
brand I know of has said it would allow up to
40 percent of inbound loaners to be converted
to ground stock. "
McCollum won't sell a lot because he believes
that in his market, loaner cars are critically
important to create service retention and
repeat customer-purchase loyalty - for
mass-market brands as well as for luxury
brands.
" I really don't see a scenario where I would
abandon the loaner fl eet for the short-term
gain, " he says. " It's a long game here. "
John Kiefer, president of Kiefer Automotive
"
" I have none. We just
don't have the new
inventory to transfer
into fl eet. "
PETER LANZAVECCHIA, president,
Burns Buick-GMC, on service loaners
Group, says customers for mass-market
brands have high expectations for loaner cars,
too.
Th e group, in Eugene, Ore., has two Kia
stores in Oregon and two in California. Th e
group also has Mazda, Nissan, Volvo, Hyundai
and Subaru stores.
" Some luxury brands provide a loaner car
for every service visit, no matter what, " he
says. " Mazda does that, as well. For Kia, it's
just for warranty repairs. But if people are
used to being provided a loaner car, they feel
like they are owed it, and they absolutely expect
it. "
Lack of loaners
Peter Lanzavecchia, president of Burns
Buick-GMC in Marlton, N.J., outside Philadelphia,
wishes he had some service loaners so
he could even consider whether to sell.
" I have none, " he says. " We just don't have
the new inventory to transfer into fl eet. "
To make up for the lack of loaner cars , Lanzavecchia
says he's off ering service customers
ride-sharing transportation.
" We kind of navigate [it with] Lyft rides
home for the customer, running them home
in our shuttle, whatever we have to do, " he
says.
" And the customers understand that. Th ey
know we have no inventory. Th ey can drive by
and see the bare blacktop. "
Normally, the dealership would have a fl eet
of loaner cars numbering " in the low 20s. " He
said General Motors has been fl exible about
the loaner car shortage.
Lanzavecchia says maintaining an adequate
fl eet of loaner vehicles is normally part
of a dealership's requirements under GM's
Essential Brand Elements facility standards.
But he says dealers were recently notifi ed GM
would waive that requirement for the third
quarter.
Renee Ketels, a spokesperson for Buick and
GMC, says it's up to dealers whether to put
new vehicles into loaner service.
Th e dealer can choose to sell a loaner vehicle
once it reaches a certain
mileage or time-inservice
metric, which she
would not disclose.
" Th ere have been no
changes to the normal
Buick/GMC process of
courtesy transportation vehicles
and their potential
use for sale, " she says.
Kiefer: Customers
expect loaners.
'No chance'
Lanzavecchia also owns Burns Hyundai and
Genesis of Cherry Hill, also in Marlton.
He wouldn't comment on the Hyundai
brand, but he said he could never deplete the
loaner fl eet for Genesis because all models
come with the Genesis Service Valet program.
Th at includes scheduled maintenance at no
extra charge for 3 years/36,000 miles, including
pick up and delivery, and a loaner car for
every service call.
" We certainly have no chance to thin out the
loaner fl eet, " he says. " I don't think any Genesis
dealer would consider it. "
Kiefer says a shortage of loaners is just the
latest challenge for service departments to
overcome.
" Th ere's lots of stresses out there, right? " he
says. " But we're striving to maintain the same
level of service we off ered pre-pandemic. " 
AUGUST 2021 PAGE 17
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Fixed Ops Journal - August 2021

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