Fleet News

Courtesy cars a major cause of bodyshop bankrupties

A CHIEF cause of plunging profits and bankruptcy among bodyshops is courtesy car fleets according to new research from the London School of Economics' consultancy company, Enterprise LSE. It claims that the real cost of providing courtesy cars is far greater than many bodyshop operators imagine because they do not take into account staff time, maintenance and valeting costs.

Enterprise LSE has calculated the average real cost of a basic small courtesy car to be about £370 per month, or almost £12.50 per day - more than twice the average monthly contract hire rate of £158. The inflated daily rate is due to the 60% utilisation rate of a courtesy car, which means the monthly cost is divided by 20 days when the car is working, rather than a full calendar month. Industry estimates suggest there are between 30,000 and 40,000 courtesy cars managed by approximately 6,000 UK bodyshops, with fleets varying from five vehicles to about 50.

Bill Mayon-White and Bernard Dyer of Enterprise LSE conducted the study as part of their ongoing research into supply chain management in the insurance industry. Mayon-White said: 'The courtesy car issue is one example of how motor insurance companies have used their size to compel bodyshops to provide a service which it does not make sense for them to supply, either in terms of skill set or cost savings. We believe bodyshops should be focusing on their primary business - which is repairs - rather than on secondary services, such as fleets of cars.'

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