Should your auto dealership run its own rental/loaner car program?

Although dealership groups are bringing in more money these days, inflation is now over 8%, and a recession is causing many dealers to investigate increasing the bottom line. So, should you pivot to running your branded loaner fleets for increased customer goodwill and retention? Instead of offering space to a rental car company, would it be better if you rented your used vehicles?

In the past three years, many dealerships learned how to increase profits by offering customers as many services as possible. As a result, more and more dealers are considering a strategy to operate their own rental and loaner fleets. And why not?

IBISWorld says the car rental market revenue size will be 54.2 billion dollars in 2022. This strategy can offer several benefits to your business, but it’s essential to weigh the pros and cons before deciding. So, let’s explore the benefits or drawbacks of running a dealership loaner and rental fleet and how you can determine if it’s the right move for you.

Rental and loaner fleet ownership benefits 

In a recent survey, half of the consumers surveyed said they would likely look for an on-demand vehicle rental from a dealership. Buyers also said that, if given a choice, 97 percent of customers would choose a dealership that offered loaners over one that didn’t, according to a Dealerware survey. 

However, the report also says that only 26% of dealerships provide alternative transportation as a component of a service experience. If there isn’t an option, the customer will consistently choose a dealership with loaners or an independent mechanic closer to work or home. 

Several benefits come with operating your rental fleet. 

• It can help to increase sales and leases at your dealership. 
• Offering a rental option can attract new customers who may have yet to consider buying or leasing from you. 
• It can upsell existing customers by allowing them to test drive a higher-end model they might not otherwise have the chance to try. 
• It can help to build goodwill with your customers. If they have a positive experience with a rental car from your dealership, they’re more likely to come back and do business with you in the future.

Of course, there are also some potential drawbacks to consider:

• Operating a rental fleet takes up space on your lot, which you could use for selling or storing vehicles.
• It requires staff to manage the fleet and handle customer inquiries, which can add to your overhead costs.
• You’ll need to invest in fleet software to help you keep track of all the vehicles in your fleet and manage reservations.

Suppose you choose to run your rental fleet. In that case, you can control the customer’s whole experience and keep the customer in your vehicle and not a competitor brand. With today’s fleet management tools like those from Dealerware, costs, contracts, and fleet management get simplified. Also, managing your fleet could allow you to rent used vehicles that might be sitting idle on your lot. 

Is it time for dealers to operate their own rental and loaner fleets?

So, what’s the verdict? Should auto dealers consider operating their rental fleets? Ultimately, it depends on your dealership’s specific needs and goals. For example, a rental fleet could be a good option if you want to increase sales and attract new customers. However, it might not be the right fit if you’re concerned about the costs and logistics of managing a fleet. The best way to decide is to speak with your team and carefully consider all the pros and cons before planning.

Do you operate a dealership rental fleet? What have been your experiences? Let us know in the comments below!