Technician Training Selling+Closing More Jobs Customer Service Research+Reports Trends+Analysis Technology Running a Shop Sales+Marketing Shop Customers Apps+Software Education+Training News

Breaking Down Length of Rental Trends

Order Reprints

COURTESY FRANK LAVIOLA

As the largest rental car provider in North America and one with a very large sample size, Enterprise publishes its quarterly length of rental (LOR) data for the collision repair industry as a tool to help repair businesses increase operating efficiencies, enhance customer service and streamline communications with insurance companies and customers. Frank LaViola has been with the company for 22 years, eight of which have been spent on the collision industry side, working with 20 Groups and customers on best practices, particularly as they pertain to reducing cycle time. LaViola breaks down what shops need to know about LOR data.

Why is it important for Enterprise to collect and publish LOR data?

First, LOR is the day a rental ticket opens and the day it closes. We’ve obviously had that forever. When a customer rents the car from us, we know the day they got the car and we know the day they returned the car. What’s interesting is that over the years, we’ve been providing copies of bills to insurance companies and they pay our bills, and that’s how they started measuring the length of rental, based on the bill days.  

It’s important to note that when we talk about LOR, were talking strictly about the bill days. If the customer decided to keep the car a couple days extra, that isn’t actually in our data.

We had this data out there and there was a group of shop owners who came to us and said, “We know we outperform the shop down the street, yet my insurance company tells me that they performed better than I do. I know I’m a better shop both from a quality and performance standpoint.” They wanted a way to measure their shop against their competition. They wanted a tool to go out and show insurance companies that not only am I repairing cars properly, I’m also repairing cars quickly. So, they asked for reporting on LOR.

Our initial thought was that they had a management system. Doesn’t that measure it for you? While it does measure cycle time, the problem was that management systems require manual input. During a 20 Group meeting, I posed a question: When do you say a repair starts? I had several different answers from repairers on what day a repair starts. Is it the day the customer gives them the key? The day vehicle enters production? What we found was that even if shops had management systems, because everyone had a different methodology, it could end up with a different cycle time. That really explained a lot. It’s not always apples to apples. With the Enterprise system, shops can actually compare apples to apples: How am I doing compared to my market?

All of our reports are free and shops can get the length of rental for their location through our ARMS software.

What are the current trends in LOR?

For the first time since we started publishing the data, LOR actually showed a decline in Q1 2015. It was the first time in two years. I think we’ve all been expecting within the industry that cycle time would begin to shrink. But it really hasn’t done that yet. You would think it would shrink because of fewer accidents; there are still 34,000 shops out there, and because of capacity, things should be getting done quicker. But that hasn’t happened. Whether the reason is weather related, if it’s the technology involved in repairing these cars, or the materials used, LOR hasn’t really changed that much.

Down the line, I think every shop in the world is looking for efficiencies. I think we will see that but it really hasn't decreased as much as we would have thought by now. It’s not a trend yet. If we see a few months of this, then I would say there’s a trend. At a 0.1-day difference, it’s not significant. It’s a very slight difference. But the trend has been that it’s been increasing.

I think one of the factors if you compare it to Q1 last year to Q1 this year, last year we got killed, weatherwise. There was still some bad weather this year but it was really in the Northeast. There weren’t any real significant weather patterns nationwide.  

What are some factors that can impact LOR?

There are several factors. It could be the capacity of a shop. Again, if you think about the Northeast where shops were getting backlogged, it could be that backlog. It could be parts delays, or material differences. Every insurance company has a different process for how they inspect those vehicles. Are they sending adjusters out, and how quickly are they getting out there? There are a lot of factors that came impact length of rental.

If you look at the types of vehicles, one thing we noted is the difference between the domestics, European and foreign vehicles. We know there’s a higher volume of high-end European vehicles. Those vehicles take longer to repair. It could be due to parts, technician training, certifications—a lot of different things. I-CAR recently released a white paper that showed, based on their data and our data, that I-CAR Gold Class shops performed exceptionally well compared to the market. I think they were 1.3 days better than the market.

How do LOR times change across the country?

I’ve had a lot of different conversations about this. A really good example would be the state of California. We see, month after month and quarter after quarter, that Southern California’s LOR is typically higher than the middle and northern parts of California. It’s very difficult to explain because there are a lot of shops in the southern portions of the state, but my thought process is that there’s probably a capacity issue. Whereas if you go to a Minnesota, typically Minnesota has a lot of pickup trucks and things like that. Those will be fixed a little quicker than sedans. I imagine if you looked at Manhattan, where they’re all high-end vehicles, there’s going to be a difference in the LOR. We could look at that today with shops that repair high-end vehicles; their LOR is on average going to be higher than those folks who are fixing Ford, GMs and Toyotas.

What do shop owners need to understand about LOR?

The amazing thing that’s happened is that it becomes an awareness piece. If you think about any sort of KPI, when we put a focus on that KPI, we must make sure we talk about it with our staff. When all of them are aware of what their LOR is, they set a goal and focus on that goal based on historical data and where they want to get to. As long as they all know the score of the game, we’ve seen the significant improvements. I don’t think that’s an industry secret, but it’s been proven true.

I think the biggest thing I see is that people will ask me why people are using the Enterprise LOR as the industry standard for cycle time. Again, it’s a good apples-to-apples comparison. Even though management systems are a must-have for shops because it helps you from a financial and workflow standpoint, it really isn’t a good help to compare to your competition. If, for instance, you want DRP business. You can use that to go out and use it as a selling tool that here’s my shop’s LOR compared to the market. You can’t really do that with data from your management system because there’s no comparison there. It’s just your individual shop.

Related Articles

Breaking Down Length of Rental Trends

Mitchell Report: Average Length of Rental Continues Upward Trend

Breaking Down Trends in Consumers, Vehicles and Repairers

You must login or register in order to post a comment.