Auto Dealer Test Drive Risks

Manage an auto dealership? Ways to manage test drive risks & more…

Managing an auto dealership involves managing multiple risks. From supply chain management to employees to occupational hazards, automobile dealers face many day-to-day risks. In fact, according to a Risk Insights by Zywave, “test drives are a key ingredient to any successful auto dealership. If a prospective customer is on the fence, test drives can be that extra push your staff need to make a sale. However, test driving also opens dealerships up to risks of theft, property damage or even personal injury. As such, it’s important to arm yourself with some best practices in order to avoid losses.”1

Before the ignition starts – managing the risks of auto dealer test drives…

“Before you allow potential customers to get into the driver’s seat, there are a number of procedures for you to keep in mind. These will help you gather all the necessary documentation in addition to prepping the customer, your salesperson and your test vehicle itself.”2

When preparing for the test drive, take time to:

  • “Review the customer’s licence to ensure that it is not expired or fake. You should also make a copy for your records.
  • Record and retain the customer’s insurance details. It’s a good idea to mark down other relevant information, like name, age, date of birth, address and telephone number.
  • Ask for the keys to the customer’s personal vehicle as collateral. Holding onto a credit or debit card can have a similar effect.
  • Run a background and or reference check if possible.

Having all of this information on file is not only important for record keeping, but it can also help police or insurance professionals if an investigation is needed after an incident. While most customers are trustworthy and are simply looking to buy from you, it’s important to take the proper precautions to avoid financial losses.”3

You’ll also want to ensure that the driver is familiar with the vehicle they will driving. Take time to review all functional and operational features (e.g. mirrors, lights, turn signals, etc.) of the test auto.

Risk 101 – prep your staff and the test drive vehicle 

“In addition to screening and preparing the customer, you’ll want to prepare the vehicle and your staff before the test drive takes place. Every test drive should be supervised by a salesperson or staff member. Additionally, the dealership should be aware of each test drive taking place throughout the day.

Prior to test drives, check that the following tasks are completed:

  1. Ensure the vehicle has enough fuel for a routine test drive, but not a full tank. The closer a tank is to empty, the less likely a thief will try to drive off with a vehicle.
  2. Inspect the vehicle’s systems to confirm they are functioning properly and are not in need of attention.
  3. Equip all salespeople with a cellphone. These will come in handy in case of an emergency.

It’s also a good idea to keep an eye on the weather, avoiding rain, snow or other potentially dangerous conditions. Together, all of these tactics limit the risk of theft, vehicle damage or personal injury.”4

4 ways to manage risk during and after the test drive 

There are many things to consider during the actual test drive. You can help to manage risk by:

  1. Creating a standardized route that all test drives must follow
  2. Having the salesperson demo all vehicle features, provide tips and begin the test drives behind the wheel
  3. Implementing a safe driver changeover procedure and confirming the potential customer follows all traffic laws
  4. Retrieving the keys immediately after the test drive and parking the vehicle in a high traffic and visibility area

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If your auto dealership is making changes to its commercial property or looking for new insurance options, our experts can line up more value for your coverage investment. We understand the latest auto dealership insurance products and risk management techniques and can line up the best commercial insurance options. Our insurance brokers can help you get an auto dealer insurance quote that keeps your business rolling.

1-4 Adapted from Risk Insights © 2016 Zywave, Inc. All rights reserved.  This Risk Insights is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.

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