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Own to Rent

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Jeff Lacombe had a really good idea. And now it’s allowing him to pull in an extra $60,000 a year. Thirteen years ago, the owner of J.C. Autobody in Veazie, Maine, switched from working with a rental car company to managing his own rental car fleet.  Today, the 23-year industry veteran—whose 8,500-square-foot shop takes in $2 million a year—has 24 rental cars on his lot.  While there are some definite perks to partnering with a rental car company such as Enterprise or Hertz, Lacombe believes there are some unparalleled benefits to having your own fleet. In addition to making some serious cash, he’s also ensuring his customers have a great experience from start to finish.

 

GETTING STARTED

Lacombe was prompted to start his own fleet by his desire to control his customers—in a good way. He likes overseeing everything from beginning to end, and he wanted to be sure customers didn’t have to wait around for their rental cars. “Being in an accident is a traumatic experience, so I wanted to hand them the keys to my [rental] car,” Lacombe says, instead of having to “deal with a rental car company being late.”

As he found out later, the extra money became a huge perk. “I can bill the rental to the insurance provider and collect income,” Lacombe says. “I keep the money in-house.”

“I can bill the rental to the insurance provider and collect income. I keep the money in-house.”
—Jeff Lancombe, Owner, J.C. Autobody

Lacombe first began building up his fleet by purchasing cars from customers. They were typically vehicles for which the cost of the repair outweighed the worth of the car. As time went on, he started to buy cars that were newer and nicer. He’d check out the vehicles that were traded in at local dealerships and buy those. He says his fleet is composed of mostly mid-size GM or Ford vehicles.

Sometimes, the vehicles he purchased had a little damage—which meant dealers were eager to sell them so they didn’t have to pay for the repairs themselves—and Lacombe would take the cars back to the shop and rehab them.

He’s mindful of scheduling regular maintenance checks on his fleet. “I take them to Quick Lube to get the oil changed, and we inspect them from head to toe.” Once a year, the cars are subject to a thorough inspection by the state of Maine. Any major mechanical problems are usually discovered at this time. “If there’s something wrong, that’s when we fix it.”

Despite the cost of maintenance on each vehicle, he’s still staying ahead. “It doesn’t cut into my profit,” Lacombe says.

Surprisingly, maintenance on his rental fleet isn’t the biggest expense—the initial purchase of the vehicle is. But even that cost isn’t through the roof. “My first car was $3,000,” Lacombe says, adding that starting with only a few cars is just fine. “Four or five can suffice, depending on the shop. It’s certainly a way to get started and to get your feet wet—to see if it works.”

Smart planning is important, though. “You don’t want to have 25 cars in the driveway and keep your fingers crossed. Don’t drop the rental car company right away!” Lacombe laughs.

NO PROBLEM PROCESS

For Lacombe, gathering and managing his own fleet was a relatively easy process. Another nice part of the deal is that the vehicles are tax deductible. “If you spend $10,000 on cars, you can certainly write that off,” Lacombe says. If needed, selling the cars is also no big deal. “They’re easy to sell. People will drive them for two or three weeks, and then the customer will buy it for their son or daughter,” he says.

“They’re in great shape.”

The only downfall to owning his own fleet is the associated busywork. “You have to baby-sit everything,” Lacombe says. “You have to call to get authorization from the insurance company.” If he’s waiting on a part, and the customer’s insurance company only covers a specific number of days for the rental car, he has to call the insurance company again. Once the job is complete, he is responsible for billing the insurer. Lacombe says the phone calls and paperwork can be tedious at times, but it’s just part of the process.

SAVVY SIDE BIZ

Having a fleet of rental cars has even turned into a successful side business for Lacombe, because his customers aren’t the only ones who need them. He pulls in extra business—up to 25 percent—from tourists. “Some people will just come in and rent a car,” he explains. “We’re near coastal Maine, so sometimes tourists come in and rent cars for two or three months. It helps in the downtime [during] the summer.” Being close to Bangor International Airport is also a perk. Lacombe says it’s not uncommon for him to run to the airport and pick someone up. He’ll then drive them back to his shop where their rental car is waiting for them.

Some good old-fashioned advertising has helped attract new customers, too. “I actually advertise in the Yellow Pages as a rental car company,” Lacombe says. “I get people that call me all the time.” Oftentimes, someone will call to say they’ve just been in a car accident and need a rental car but haven’t decided where to have their vehicle repaired. “I tell them I can do both here,” he says. Lacombe knows it’s a pretty nice situation he’s got. “I tell my competition not to do it so I can make money,” he laughs.

COLLISION FIRST, RENTAL SECOND

It’s not all about making money for Lacombe, though. He’s a fan of doing a little pro bono work sometimes, too. If a customer only has a $25 per day rental car coverage, and the vehicle Lacombe has is $35 per day, he’ll absorb the rest of the cost himself. “I just make up the difference. It’s great customer service. We want the experience to be easy and quick.”

Lacombe will also go so far as to simply give out free rental cars if the customer doesn’t have rental car insurance. He says it’s worth it to him to get the job. “If someone doesn’t have rental car insurance, I’ll just eat the cost of the rental, [because] I’ve captured the job.” His philosophy? “We’re a collision shop—the rest is a bonus.” For Lacombe, getting the job always comes before the rental car. He admits it’s also a great marketing move. “It’s been great for referral business—that’s probably why sales are up [here] when most peoples’ are down,” he says. Of the freedom he has in deciding when to give out free rentals, he adds, “You can’t do that with Enterprise.”

And what if a customer crashes a rental car he’s given him or her for free? Lacombe is unfazed. “If [they] wreck it, their insurance pays for it. I get the money back for it,” he says. “If I lose it, it’s not the end of the world. I’m ready to replace it anyway.”

TIPS AND TRICKS

The key to success is getting it right at the beginning. “Buy cars that are inexpensive to repair,” Lacombe says. “Start with lower priced cars, because sometimes you [may want] to give them out for free.” Knowing some legal ins and outs is also important. “Make sure you have a rental car agreement that is rock solid. Have it as a separate business for liability, so if a wheel falls off and kills someone and you get sued, you’re not going to lose your home and your shop, just the rental car business.” Not being fussy about your rental cars helps, too. “The prize is the repair,” he says. “Don’t get all bent out of shape over a scratch on a car.”

It seems this thinking has panned out pretty well for Lacombe. “The system works, so I’m not going to fix it.” With an extra $60,000 in his pocket, well heck, why should he?

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