19 December 2011

If you were a delegate at our aftersales profit seminar in November then you might not be surprised to learn that the Office of Fair Trading is launching an investigation into the cost of courtesy cars provided under accident management schemes.

At the seminar, Paul McDermott, the man behind Ford’s new accident management programme, highlight precisely this issue and produced some truly shocking statistics. Of the average £4583 cost of an insurance claim, just £1100 goes on the repair work; the balance (£3483) is personal injury and credit hire costs.

Under the prevailing system (where the ‘at-fault’ insurance company picks up the tab) there are no incentives to keep costs down and plenty of opportunities to inflate the bill. As a result a whole industry has grown up around accident management and credit hire cars.

Ford’s accident management programme aims to bring transparency to the process and is having dramatic results. Claim costs are down to an average £2404 with repair costs slightly up but personal injury and credit hire costs down by 66% to £1194.

Most car brands, especially in the premium sector, have accident management schemes in place and, of course, there are lots of sound commercial reasons for them. But, as an industry, we have to tread a very fine line between profiteering and genuine customer care.

One major accident management provider used to claim it could add 20% to 30% to the profit line and it paid £35m annually in commission to its dealership partners. So, now the regulator is going to take a look at the whole process – and we shouldn’t really be surprised.

McDermott’s presentation happens to be topical right now, but it was just one of many fascinating business-critical seminars during a busy year for Auto Retail Network. We have lots more planned for 2012.

So, whether you are already a member or somebody discovering Auto Retail Network for the first time, do please explore this site and what membership has to offer. Our mission is to make sure you are Better Informed – so the next OFT investigation won’t come as such a surprise.

Rupert Saunders

If you’ve a view on this you’d like to share, drop me a line at rupert@auto-retail.com

Tags: accident repairs, charges, Courtesy cars, hire charges, investigation, Office of Fair Trading, OFT, pays