rental car expense-where to charge?

[btk]

Debate between myself and GM -if a rental car is given to a customer because of a high dollar job or free rental with major service type of deal where do my fellow service managers charge the rental expense.

My stance-it goes to service advertising
GM stance-it goes to service policy

It all comes out in the wash -but my point is that if we screw up a car and have to provide a rental-we charge that rental to service policy. Would like some thoughts.
thanks

[Art_Mopar]

If the car is needed to sell the job or "close the deal" then it should go to service advertising. If the car is to cover a shop comeback or screw up then it should go to service policy.

[Mike Vogel]

It should go to the cost of sale just like a discount should. It is a cost associated with gettin the job. Policy should be used for shop comebacks and write offs.
Advertising should include direct mail, service reminders and any other item(s) used to get people to your dealership.

[texaslp]

Mike I was thinking the same thing, but didn't want to be the 1st one to say it.

[btk]

Dont you guys feel if you put it to cost of sale labor-you are messing with your gross profit percentage, I like the fact that you dont see rentals as a dead expense, but you also dont get a true gross profit percentage.
In the big picture it is all the same, and I had a feeling that it is going to personal choice/preference-just seeing what everyone else is doing with them
thanks

[btk]

Found the correct answer to my own question, according to NADA guidelines-my GM is correct-rentals are charged to service policy, damn I hate being wrong!

[Mike Vogel]

According to Toyota any discount given whether dollars off or a rental to get/sell a job is the cost of doing business and should not be charged to policy or advertising.

[Old Irish]

It ain't advertising, that's for sure

A rental is a rental is a rental. I charge 'em off to Acct 92D, which in GM parlance is.....get ready..."rental expense". But, that arrangment was in place long before I ever showed up at the door of my present dealership and ...ahem...I've never altered it.

Lacking that, cost of sales, as Mike said, seems most appropriate to me....perhaps even the most appropriate, really. If it alters your gross % then so be it. If everyone was less concerned about tweaking things around just to save that statistic we'd all have some meaningful benchmarks. I know, cuz I've done plenty of tweaking in my time.

Our GM and dealer just had me make some changes which serve no purpose whatsoever except to make a couple particular percentage measurements look better.

Cheers
DD

[oldsfan]

I was wondering where anyone pays for loaner cars? I think you would charge any rentals to the same account. Like Irish we charge them to 92D. I allways try to use loaners for c/p work and if we need a rental, we try to use them on warranty jobs the factory will pay for.

[scotstrong]

"According to NADA guidelines":

Oh how I detest that phrase. Sometimes, in order to really drill down into the effectiveness of something, it needs to be broken into seperate elements. As with many "guidelines", they only see it in black or white; not that there can be more than one possibility for a given scenario.
Seperating rentals used to "sell" a job versus rentals for comebacks or screw-ups just makes good business sense.

Keep this in mind: "guidelines" are merely "suggestions". You might "suggest" to your GM that the importance of tracking the rentals seperately has far more value and importance than following an arbitrary "guideline".

Scot Strong