Every minute counts in the automotive service industry—both for the dealership and the customer. The Length of Loan (LOL) is one key metric that directly impacts profitability and availability of loaners at the dealership. The longer a loaner vehicle is out, the higher the costs for the dealership and the more strain on fixed operations wait times on new appointments. Reducing the LOL is a constant struggle for any dealership looking to optimize its operations. Enter myKaarma’s ServiceDRIVE — a collaboration between myKaarma and Logitrac transforming how dealerships manage their loaner vehicles and drive significant reductions in LOL.
Why the Length of Loan (LOL) Matters
The Length of Loan (LOL) refers to the amount of time a loaner vehicle is out with a customer. While this might seem like a simple metric, it has profound implications for a dealership's operations and finances. A longer LOL means more vehicles are unavailable at any given time, necessitating a larger fleet to meet customer demand. This, in turn, increases costs related to vehicle maintenance, depreciation, and insurance.
Moreover, a longer LOL can lead to customer dissatisfaction. If a loaner vehicle is not returned on time, it can delay service for other customers, create scheduling conflicts, and even result in unexpected charges that frustrate customers. By reducing LOL, dealerships can minimize these issues, ensuring a smoother, more efficient service process.
Case Study: Mercedes-Benz of Arlington’s Success with LOL Reduction
An excellent example of the benefits that reducing LOL can have for a dealership is the case of Mercedes-Benz of Arlington, Virginia. When this dealership implemented myKaarma’s solution, they were able to reduce their LOL from 3.1 days to 2.3 days. This seemingly small reduction had a significant impact on their operations.
Before reducing their LOL, Mercedes-Benz of Arlington had a fleet of 210 loaner vehicles. By reducing LOL, efficiency improved, and they reduced the number of loaner vehicles needed to meet customer demand. The dealership calculated that with an average LOL of 2.3 days, they needed just 156 vehicles to handle the same volume of service appointments. This reduction translated into substantial cost savings—about $60,821.28 per month—by cutting down on loaner vehicles and related expenses such as insurance, maintenance, and depreciation.
How the myKaarma ServiceDRIVE Reduces LOL
The partnership between myKaarma and Logitrac streamlines and automates the loaner car process, directly contributing to a reduction in LOL. Here’s how:
- Automated Notifications and Alerts:
- One of the key advantages of the platform is its ability to send automated notifications to both customers and dealership staff. For example, when a customer’s service is complete, they receive an automated message reminding them to return the loaner vehicle within a specified time frame. This proactive communication helps ensure that vehicles are returned on time, reducing unnecessary delays.
- Real-Time Tracking and Geofencing:
- Real-time tracking and geofencing capabilities allow dealerships to monitor the precise location of their loaner vehicles at all times. If a vehicle crosses a predefined boundary or remains out longer than expected, the system can automatically alert the dealership, enabling them to take timely action to retrieve the vehicle. This reduces the likelihood of customers keeping vehicles longer than necessary.
- Streamlined Contract Processes:
- The integration between myKaarma and Logitrac also streamlines the contract process for loaner vehicles. By capturing and verifying customer information upfront, the system reduces the time it takes to issue and close contracts. This efficiency not only speeds up the checkout process but helps ensure that vehicles are available sooner for the next customer.
The Financial Impact of Reducing LOL
The Mercedes-Benz of Arlington case demonstrates that even a small reduction in LOL can result in significant cost savings. For many dealerships, the cost of maintaining a large loaner fleet is one of the biggest expenses, second only to payroll. By reducing LOL, dealerships can maintain a smaller fleet, thereby lowering their overall expenses.
In addition to reducing fleet size, myKaarma ServiceDRIVE helps dealerships recover costs. Automated notifications for late returns, geofencing triggers for unauthorized travel, and integrated payment systems for tolls and fines all contribute to improved cost recovery, enhancing the financial impact of LOL reduction.
Conclusion
Reducing the Length of Loan is a crucial objective for dealerships looking to improve operational efficiency and customer satisfaction. The partnership between myKaarma and Logitrac meets this challenge, leveraging automation, real-time tracking, and streamlined processes to drive significant reductions in LOL.
Reducing LOL, as shown by Mercedes-Benz of Arlington, can lead to substantial cost savings and operational improvements. Dealerships adopting myKaarma’s ServiceDRIVE powered by Logitrac can expect similar benefits and position themselves for improved profitability, greater efficiency, and higher customer satisfaction. For any dealership looking to optimize their loaner car operations, it’s a game-changer.