By the end of July, sales of fleet units in the US have regained some modest ground. Cox Automotive reports that year-to-date fleet sales – a combined tally of commercial, large rental, and government vehicle purchases – account for 1.09 million units. That figure represents an increase of just 6% over YTD at the end of July 2020 and a huge 40% drop over the same period in 2019.
Though the numbers aren’t surprising given the financial impact the pandemic has had on businesses and government spending, it is a problem for auto dealers. As it relates to retail auto, the commercial fleet customers are where profits aren’t coming in as they once were. Of course, it can be attributed to two overriding factors: increased costs and depleted inventory from the chip shortage, as well as efforts for commercial companies to financially recover and regain a position to purchase new fleet vehicles.
Fleet managers may be pounding on doors and bending the ears of previous fleet customers, but the lower fleet sales could remain until prices return to some semblance of normal. Economists expect prices to remain high until the normal flow of new vehicles resumes, likely early in 2022.
A window for unexpected business in the service department
The slow return to fleet sales provides an unexpected opportunity for the service department. Fleets are notoriously strict regarding the services performed and at the intervals required, as any service advisor can attest to. What normally amounts to an impatient driver waiting for an oil change in the express service lane might now have the potential for contributing extra revenue to the bottom line in the service department.
Fleets are holding onto their vehicles longer with average unit mileages creeping higher than normal. Many are reaching service territory they don’t normally see such as front-end work, tire replacements, transmission services, and timing belt replacements. It’s valuable income that dealers don’t often see from fleets who turn over their units regularly or turn to aftermarket service shops for faster, low-priced work.
It’s this window that dealers are uniquely positioned to capture if they play their cards right.
Offer loaner vehicles and valet services
For most customers, the real killer isn’t the service cost It’s the downtime associated with a vehicle that can’t earn them income and meet their own customer demands. For dealers looking to maintain excellent relationships with fleet owners and build a positive reputation among fleet vehicle drivers, providing loaner vehicles that can handle the workload of your average tradesperson is an important detail.
As well, strive to interrupt their day as much as you can. Provide drop-off and pickup services so vehicle servicing doesn’t cut into their productive hours.
Earn the work
While every customer expects their vehicle’s services or repairs to be completed in a timely fashion, fleet customers are even more demanding. Most will tell you it’s a history of slow work that turns them away from dealerships. If you plan to seek out the valuable fleet work, you must get it done on time. That often means prioritizing fleet work over retail customers, and that’s a fine line to walk.
Keep costs in line
Especially for fleets that employ a fleet management company like ARI or GE Fleet, it’s imperative that costs are in line with other options in your area. This is where it’s critical to have comparison pricing on hand, especially from a third-party provider like InteliChek. Otherwise, your service advisors risk losing profitable service work when the fleet management company pulls the vehicle from your shop in favor of a cheaper option.
Ask a service advisor – it’s hard work to keep fleet customers satisfied. But keeping commercial customers happy until it’s convenient or possible to turn over their aging vehicles is foundational or your fleet sales staff may lose them to another dealer.
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