As a daily rental operator, you work long hours trying to find ways to drive more customers to your counter and keep more of what you earn. Your dilemma is to cut costs and, at the same time, continue to provide the services necessary to maintain and grow your customer base. Can you achieve both?
With most of your expenses somewhat fixed —depreciation, insurance, interest, concession and franchise fees, labor costs, etc.—it might not look like there is much room for savings. However, there are ways to better control the monies spent on these costs.
By analyzing these areas of car rental operations, you can retain real savings. Keep in mind that once a bill is paid, the money is gone. Every penny you save, however, falls to your bottom line.
When was the last time you examined the cost of washing a vehicle?
If you are washing vehicles in-house, do you know how much you are paying for the chemicals used? Most operators don’t. The industry average is 30-50 cents per application, yet some major car rental companies do it for less than a nickel. If you wash 500 vehicles per month and you can reduce your cost of materials by as little as 10 cents per wash, you can add $600 to your bottom line. How many additional rentals do you have to generate to bring in $600?
If your in-house washing involves an automatic car wash and you see soap bubbles either on the vehicle or on the ground, you are wasting product. The purpose of soap in an automatic system is to lubricate the brushes. By reducing the soap flow, you’ll literally stop your money from pouring down the drain.
To understand how you can reduce costs further, you have to know what you are spending. Divide the cost of the product by the number of vehicles washed per reorder to determine your cost per application.
Once you have this number, talk to your chemical supplier. As commissioned salespeople, it is not in their best interest to sell you their most cost-effective products. Ask for a less expensive product that can do the same job. If they will not work with you, reply to some of the dozens of cold sales calls you get from chemical companies each month.
If you are using an outside service to wash your vehicles, now is a great time to either renegotiate your existing program or find alternate vendors who will do the same job for less money. In this economic climate, businesses are hurting and cannot afford to lose existing customers. You might find your longtime supplier more than willing to accept less money to keep your business. If not, there is someone else who wants to work with you.