Lincoln Dealer Agreement

[dwmaster]

Does anyone have an agreement with the local Lincoln Dealer to offer Unlimited Carwashes to their new vehicle customers as long as they own their new Lincoln car. I would imagine the average new Lincoln owner keeps it 2 years. What do you charge? There has to be a number that works. Win on some lose on others and all work out fine in the wash. Of coarse all Cost have to be adjusted for a region, I get that.

 

[robert roman]

Lincoln is following in the footsteps of other OEM’s like Mercedes Benz that require its dealerships to offer free car washes (exterior wash) to their customers.

For example, my local dealership built an in-bay automatic on the property.

South of me a dealership built a large facility to wash cars (short tunnel), oil change service, tires and rims, pre-delivery inspection of new cars and detailing for used cars and customer cars.

Strategy here is to keep their customers from going somewhere else for service, including car wash.

Broadway specializes in new car dealerships and has about 80 percent market share of this segment of carwash industry.

Given the size of most new car dealerships today, it makes more sense for dealers to install an automatic wash on the property than pay a 3rd party to do the cleaning.

Dealers cost for automatic wash maybe $0.50 per car.

 

[dwmaster]

I will respectively disagree, No way can a small dealership In a town of 10,000 put up the capital investment, depreciate and operate the wash for anywhere close to .50 a car while competing against the current establishments. Your number isn't even in the ballpark.

 

[MEP001]

I will respectively disagree, No way can a small dealership In a town of 10,000 put up the capital investment, depreciate and operate the wash for anywhere close to .50 a car while competing against the current establishments. Your number isn't even in the ballpark.

Most dealers aren't attempting to compete. They run at the lowest cost possible, friction, barely enough soap and water to get the dirt from the last car off the brushes. 50¢ per car in this case is a high estimate.

 

[Randy]

There are a number car dealers here that have a lifetime unlimited wash package when you purchase a car from them. To help offset the costs they are also open to the public, they are busy all day long.

 

[rph9168]

From my experience most dealer operated car washes are not run very well. I know there are a few that do a good job but most would be better off cutting a deal with their local car wash rather than run a half-a$$ed wash that does a lousy job.

 

[hkim310]

We're in a smaller town and that might be the reason why but no dealerships in our area have car washes. That includes Ford, Mazda, Chevy, Honda, Volvo, Chrysler, Hyundai, Kia, Nissan, VW. Those dealerships are all within a 10 mile radius of our wash.

 

[MEP001]

From my experience most dealer operated car washes are not run very well. I know there are a few that do a good job but most would be better off cutting a deal with their local car wash rather than run a half-a$$ed wash that does a lousy job.

I've seen the same with car rental places - the last one I visited had a stationary N/S machine with all the brushes bungee-corded down against wooden stop-blocks so they'd have to practically ram the car through, then griped about the price of the flex coupling when it broke.

 

[splashngocornwall]

I guess we're pretty lucky then. Haven't seen that in our part of Canada yet. We sell codes to 3 dealerships at the moment. 50 at a time for $8 (S7.08 before taxes). Usual price is $11 ($9.73) so a savings of $2,65 on their end. We track the codes and reissue them if not used within a couple months so they like that they're not paying for unused washes.

 

[rph9168]

Does anyone have an agreement with the local Lincoln Dealer to offer Unlimited Carwashes to their new vehicle customers as long as they own their new Lincoln car. I would imagine the average new Lincoln owner keeps it 2 years. What do you charge? There has to be a number that works. Win on some lose on others and all work out fine in the wash. Of coarse all Cost have to be adjusted for a region, I get that.

If you have a club card program I would charge them the same as you do for that. If not, you need to figure they will average somewhere between 2 and 3 washes a month (although most club cards I am familiar with usually average 2 or less a month) and decide on a discounted price you can live with. The old argument that it is worth doing it at cost to bring in new customers to the wash that will continue using it after the program is over is bogus. The retention rate for these programs after they are completed is pretty low so you need to make some money on the deal.

You might also see how the dealer is planning to present the offer. I have seen some offer it as an add on to the cost of the deal and some that include it. Even many of those that offer it as an add on will sometimes throw it in to sweeten the deal. In any event make sure you can live with whatever you decide to do. To be honest I have seen very few of these deals really doing much for the operator and dealers will abuse it as much as you let them get away with.

 

[dwmaster]

I understand what everyone is saying. Of coarse their are plenty of Dealerships that it would be cost effective to have their own, I'm not asking about them and that's not the case here. Their are plenty of dealerships that it make the best $$$$ sense to make a deal with the local wash if it is a well run establishment that does a great carwash. RPH1968, the agreement I am looking for ideas on is at what cost per vehicle do I enter an agreement with the dealership to offer free unlimited washes for the time they own that specific vehicle. I am looking for someone that I can has experience with such an agreement. Its a win on some if they trade every year to lose on some if they drive them for 10 years kinda thing so whats the number???

 

[dwmaster]

I guess we're pretty lucky then. Haven't seen that in our part of Canada yet. We sell codes to 3 dealerships at the moment. 50 at a time for $8 (S7.08 before taxes). Usual price is $11 ($9.73) so a savings of $2,65 on their end. We track the codes and reissue them if not used within a couple months so they like that they're not paying for unused washes.

We've had a discounted bulk sale agreement for 30 years with the local dealerships. They have asked for and What I'm trying to come up with for the Lincoln dealer is for ($$$.$$) price per new car you sell I will offer them unlimited washes for that vehicle for the life they own it.

 

[dwmaster]

I guess I was hoping someone already was doing it and I could avoid their mistakes. I am hoping for a cost how ever more importantly hoping someone had experience with what the multiplier is for average new Lincoln ownership life is. I could inject my costs into the multiplier then. In my mind its between 2 and 3 years.

 

[Mel(NC)]

According to this article, http://www.cnbc.com/2015/07/28/americans-holding-onto-their-cars-longer-than-ever.html , the average length of ownership for a new car is 6.5 years.

 

[robert roman]

“No way can a small dealership In a town of 10,000 put up the capital investment, depreciate and operate the wash for anywhere close to .50 a car while competing against the current establishments. Your number isn't even in the ballpark.”

There is no reason for “small” dealership to have automatic wash because there isn’t the volume to justify it. Dealerships with carwash have them primarily to compete against other dealerships.

Typical dealership sells about 900 new cars a month and might see 100 service customers a day. So, automatic wash makes sense. Friction in-bay at dealership can wash a car for $1.25. This includes $0.50 for water, electric and chemical and $0.75 for equipment.

Inventory is washed in the lot and new car dealers typically pay subcontractor $0.50 to $0.75 per car.

Small dealership might sell 135 cars a month and 400 service vehicles or 15 a day. So, they have porter to wash cars by hand with bucket and sponge.

Same dynamic applies for car rental business.

At airport, agency might rent 170 or more cars a day whereas a home-city location might rent an average of only two cars an hour. So, rental agencies at airports tend to have automatic wash and porters at home-city stores.

Dealership profit margin is like two to four percent of sales. So, most of them have a “what’s in it for me” attitude with respect to dealing with suppliers and vendors.

Carwashing is a cost not profit center for most dealerships. If you have an idea to save them money, it better be worth the change.

You might want to first build a relationship with the dealer.

For example, we used to offer a free carwash to customers who brought in a “same day” repair order from dealership.

This builds trust with dealership and creates opportunity to make new customers.

 

[dwmaster]

Thanks Robert,

I've got a 30 year relationship with the dealer. I'm not trying to create one and I'm not trying to Pitch something to them. They asked me. Your price is low for lot washing, more like $3.50, I've done that for 30 years as well. 30 years ago I did it for $1.50 per car.
We wash cars for all the dealership, body shops and so on for going on 30 years.

You Florida guys need to get out and see the rural world, My hometown dealership sells 40 Lincolns a year.

Thanks Mel, I will use google for further info.

 

[robert roman]

“What I'm trying to come up with for the Lincoln dealer is for ($$$.$$) price per new car you sell I will offer them unlimited washes for that vehicle for the life they own it.”

Ok, math problem.

40 customers a year, Edmunds pegs Lincoln trade-in at 7-years and assume unlimited wash 4 to 5 times per month and unit variable cost is $1.75.

One customer cost = 7-yrs X 4.5 washes per month X 12 months X $1.75 = $661.50 or 378 washes per customer

Add on $132.30 or 20 percent profit margin and cost becomes $793.80

40 customers = one-time profit of $5,292 and 15,120 potential washes annually for 7-years or 105,840 washes if everyone comes to the party

Year 2 generates another 40 customers, another one-time profit of $5,292 as well as another 15,120 potential washes annually for 7-years or another 105,840 washes

Year 3 and so forth until program is terminated.

So, in year three of program, there would be the possibility of 120 people showing up to wash on the same busy Saturday. None of these people has incentive to give you any more money for as long as they own and choose to wash.

Conversely, express sells unlimited for $19.95 X 12 months is $239.40 per year.

Lincoln program is priced at only $113.40 per year contractually committed for say 7-years.

$793 seems like a lot to add on to car price considering add-ons like paint sealant and fabric protection is $500 or so.

Also seems like a lot of potential wear and tear on equipment if redemption rate is high.

 

[dwmaster]

Thanks Robert, Hard to argue with Edmunds on ownership. The local dealer is pitching that it is 2 years, I lean closer to Edmunds. The rest is like you said just math. $29.99 is my basic wash Unlimited.