Discussion:
Rentals

Like many other dealerships, ours has a rental fleet. I would like to know if anyone is paying their Service dept. a flat rate percentage of revenue for maintenance and repairs. If so, I would like to get more details on how you do this.
I have been approached by my team to look into this as a viable way of breaking down silos and providing better control on maintenance and customer damage.
I look forward to your input.
  • Posted 1 May 2015 04:54
  • Discussion started by rick_k
  • Alberta, Canada
Showing items 1 - 3 of 3 results.
Our Rental fleet was losing money for years on the service side. In the past, a tech had carte blanche to fix any rental. No customer authorization needed, so hours were poured on the bills to make up for lost time if a tech was short on their 40 hr week. Now, other than basic Scheduled Maintenance, a tech must call service manager or account manager for approval on any repairs over $100.
The rental manager knows what is warranty and what's not covered. They often trim a work order's hours if deemed excessive.
It was common to see a "paper Clip" installed with 2.5 hrs labor, or drive unit gear oil changes with only one litre of oil.
Your avoidable repairs have to be well defined, sort out what is normal wear and tear from abuse.
  • Posted 25 May 2015 00:18
  • Reply by EasiTek
  • Ontario, Canada
How we do this is we just break the rental down into two parts the first the cost of the truck the second the service cost to get the rental price.

so a example might be a truck is on hire for Twenty dollars per week out of that say the lease cost is eleven dollars then this goes to pay for the truck and then the nine dollars goes to the service company. The service side will always depend on the working conditions of the truck and hours the more service needed the higher the service cost then the hire rate is graeter. you will find the lease cost will always be around the same. so if the truck is in a high usage tough environment then the service will be hire than if in a low level environment. also always add just a little extra just in case.
  • Posted 24 May 2015 22:51
  • Modified 24 May 2015 22:52 by poster
  • Reply by exalt
  • Dubai, United Arab Emirates
I did it in my previous company (Yale dealer) and my actual company too. The issue is a little complicated.
Practically the LTR (Long Term Rental) rate consists of two parts: financial and service. Of course the customer is invoiced only for the total rate. The division of the rates is an internal issue.

Of course, everything depends upon the rental conditions, but our LTR contracts include the full service (maintenance, repairs, sometimes tyres and forks). Excluded are only after accident repairs and misuse.
The service part of the LTR rate is based upon the presumed costs.

That's why it's very important to geat all the necessary and detailed info before calculating the rate. These are the yearly/monthly working hours, application, enviromnent, operators skills etc.

We use the detailed tables which show the costs of the different trucks manitenance and service costs basing upon the lenght of the contract, application, yearly working hours etc. And of course the resiudal value of the trucks at the end of the contract.
Then we add some margins and add the values to the financial part of the rate and we get the total rate value.
The service coordinator participates actively in the service rate evaluation.
This service part of the rate is treated as the service income.
The "financial" part of the rate is a sales dep. income.

At the end, if the service guys use too many parts or service hours, the service dep. is on minus.
We link the costs to the trucks (a costs centers) and to the individual technicians. So we can get the plain view of the contract efficiency.
  • Posted 7 May 2015 23:03
  • Reply by Karait
  • Poland
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