Tips for Launching a Rental Operation
 Judy Farcus Serra, controller and assistant general manager of Headquarter Toyota, offers advice for dealers who may want to launch their own rental division.  Track your spending meticulously.
Serra developed an accounting program to help monitor all facets of the rental operation.  Have a a detailed balance sheet, a profit report and a management information system (MIS) report.” Most dealerships’ rental department financial statements average only four lines you want to watch every penny you spend and make.
 Treat it like a business.
Treat and operate the rental department as a company. Do no look it as an expense like a lot of dealers do. Many dealers are under the impression that they will lose money with rentals. So, they turn to other rental companies, which pay about $1,500 per month to the dealer, and then slam them with inflated rental bills.
 Hire the Right Manager.
Find an experienced rental manager from one of the larger rental agencies, with vehicle rental management experience. The job is not easy. Before coming to Champion, Montanez had worked with companies like National Car Rental, Budget and Agency Rent-A-Car.
 Keep a sensible utilization rate.
As your business booms, watch that the percentage of cars being used does not climb too close to 100 percent of your rental inventory. Some operations get a little too aggressive and want their utilization rate to be way up in the 90-plus percent range, but then you end up with angry customers because you don’t have the cars available. In 2007, Champion’s utilization rate averaged 77 percent. The year before, they were at 80 percent.


Helpmates: Stronger CSI Scores

“Our CSI scores are the highest in the nation of the high-volume stores,” added Judy Farcus Serra, controller and assistant general manager for Headquarter Toyota. “We finished 2007 ranked 16th in the U.S. for CSI and 15th for volume vehicle sales, out of 1,200 Toyota dealerships.” Since not all dealerships offer rental companies, and even fewer offer retail rentals, customers tend to prefer dealerships that do, she said. The added service from the rental staff makes a positive impact on customers. “If we had the resources, I would clone the six gentlemen [at Champion] and put them in the front of each of our departments,” said Serra. “When we incorporate the rental into service jobs that the margins allow, it in turn adds value to our services for our customers.”
 
Double the Money
“We see profit in our units as both rentals and later as pre-owned cars,” said Montanez. Each Champion rental unit is eventually purchased by the dealership at payoff, plus a small profit for the rental company. The service department re-services and details the car, then welcomes it into the dealership’s pre-owned lineup. “We supply the dealership with a clean, certified used car fleet,” he emphasized, “as opposed to buying something at an auction that they’re not familiar with and don’t know where it’s been, then paying the transportation fees to bring it from Tampa or Lakeland, [etc.]…and then take the chance that this car might have been involved in an accident or a problem in the past.”

The complete vehicle history, maintenance and service records of all units are stored at Headquarter. Even after a unit is sold, the new owner may opt to keep servicing the car at Headquarter indefinitely. The ‘tit for tat’ relationship becomes a rather solid profit cycle.

The Midnight Patrol: Online Revenue
Two and a half years ago, Montanez paired with a computer-savvy Headquarter employee and designed www.championautorental.com. Last year, after sampling several retail Web systems, Montanez re-did the site with Car Rental Solutions. “They took the template of my Web site and made it come to life,” he said. “The cars rotate in front of you on the homepage.” Car Rental Solutions’ reservation system lets browsers pick their own car and rental date. “The system adjusts the prices so you can see exactly what you’re paying,” he said. “You can add insurance, supplemental liability insurance (SLI), a collision damage waiver (CDW) and additional drivers. You can even add a child seat and navigation system.” The rates adjust immediately online and deliver the total price, with no hidden fees, within seconds.

Online reservations are nothing new for national rental companies. Montanez, however, insists that his rental agents contact each customer by phone the next business day to confirm the reservation and respond to any questions. “We believe in that personal service,” he said.

Bacon Grabbers: Car Rental Products
Montanez recently bought a handful of portable GPS navigation units and began renting them out at $8.99 per day. “They’ve already paid for themselves,” said Serra. “Now, whenever he rents them out, it’s all profit.”

Serra confirmed, “Rental products can be a huge profit center. Our CDW sales account for 11 percent of our total revenue.” Last year, Champion added SLI to their product list. “I am also considering personal accident insurance (PAI) as well as additional GPS tracking for our rental cars,” said Montanez.

Unfortunately for Laurel and Hardy, their dreams of an all-profit fish business ended in minutes when their boat crashed into their car. Champion, however, by carefully monitoring progress, aims to open satellite locations in southern Florida. Together with its franchise store, Champion is steadily catching (and selling) more fish each year.

Vol 5, Issue 4