Only a quarter of personal contract hire (PCH) agreements typically include maintenance despite the fact it can improve customer satisfaction and retention.
LEASING brokers have the opportunity to improve the customer journey, retain more customers, and potentially get an additional income stream by boosting their maintenance penetration.
“Including maintenance within a contract hire agreement is one of the simplest ways to deliver better customer outcomes, it removes uncertainty and creates a more positive and seamless experience. We consistently see that customers who take maintenance are more engaged and therefore more likely to stay with us at renewal.”
Richard Chadwick, Head of Indirect Sales at Alphabet agrees: “I’m a believer that a customer on a maintained contract is happier and more likely to renew so it’s better for the broker and the funder that the customer has had that experience.”
In some cases, maintenance provides an opportunity for brokers to enhance their brand. Leasing broker Rivervale began white labelling its maintenance offering to other brokers at the end of 2024 and now has more than 12,000 maintained contracts.
“As far as the customer is concerned, it is the broker that is managing their maintenance not Rivervale,” says Vince Pemberton, CEO of Rivervale. “We have a purpose built app which the customer can use to book their service and when they log on the broker’s name appears.”
These additional touchpoints – provided they’re positive – can help make the customer ‘stickier’.
What is a ‘good’ maintenance penetration rate?
Despite the benefits to brokers, maintenance penetration rates are typically low, especially with PCH, which are often around a quarter.
A ‘good’ overall rate is just under half. For example, 43% of all Rivervale’s contracts are maintained, with take up slightly higher for business contract hire (BCH) at 52%.
Central Contracts has worked hard to increase its overall maintenance penetration rate from 27.4% in 2019 to 46.4% now. See our case study below for how the team achieved it.
Alphabet’s aspiration is for about half of the contracts its broker partners sell to include vehicle maintenance.
“At times we hit that number and with some brokers it’s much higher, especially in the BCH space because they are selling a service rather than selling on price. If you sell on price the consumer can be resistant to an upsell,” says Richard Chadwick.
What incentives are there for brokers to sell maintenance agreements?
Salespeople may be guilty of focusing on selling the vehicle and not promoting maintenance but by doing so they’re missing out on financial incentives.
Major funders and third party maintenance providers often pay commission to brokers for maintenance agreements – although that shouldn’t be the prime motivation for selling maintenance.
Mike Lloyd, Managing Director of Central Contracts, believes it’s incumbent upon brokers to inform customers about maintenance because of the contractual risks they face if they don’t look after their vehicle properly.
“The end user needs to maintain their vehicle and if we have a solution for that we ought to share it with them,” he says.
He also sees it as a way to strengthen relationships with his funders, regardless of whether they pay commission or not.
For some funders, including maintenance helps them to construct a deal and they need brokers to achieve a certain level of maintenance penetration. That potentially means they may look more favourably on their broker partners who support them with that.
Why maintained contracts are ‘better’ for customers
Novuna’s Head of Associates, Chris Swallow, believes consumers should take a maintenance contract as, aside from fixed pricing for the duration of the contract, it gives “comfort that the maintenance schedule is in line with the OEM schedule and ensures the warranty is valid”.
Another key benefit is that the customer has “one point of contact”, according to Arval’s Head of Broker, Scott Glover.
This applies to both consumer and fleet customers.
Vince Pemberton says: “We’ve seen success where customers have taken vehicles across a variety of funders and they just add Rivervale maintenance, which means from the business perspective they’ve only got one number to call and one process to follow.”
For consumers, he believes maintenance contracts can provide “good value for money”.
“Maintenance contracts tend to have agreed better discount levels than you as an individual would get if you went into a garage requiring a vehicle service or new tyres so you’ve got a commercial advantage for using it, as well as spreading the cost over the length of the contract,” Vince says.
“It’s also peace of mind because garages are set up to do proper vehicle health checks these days.”
So why don’t more consumers opt for maintenance?
Scott Glover suggests that some PCH customers may not opt for maintenance simply because they have “maxed out” their budget on the vehicle rental.
Consumers may also fail to appreciate the benefits of a maintained contract.
For Novuna Vehicle Solutions, 22% of PCH contracts through its brokers are maintained compared to 26% with BCH.
“Novuna transacts a large proportion of regulated PCH tactical offers and as such they tend to be low mileage personal use vehicles, and customers do not necessarily see the benefit of a maintained contract for a low mileage vehicle especially at the lower end of price point vehicles.”
Maintenance penetration also tends to be lower with electric vehicles (EVs). At Rivervale, for example, 36% of all its contracts for EVs include maintenance.
That’s usually due to customer perception.
“Because EVs are more ‘straightforward’ there is an expectation that maintenance is not necessary,” says Steve Cocks.
Chris Swallow adds: “Some customers do not see the value on EVs due to the lack of moving parts for servicing. This is shortsighted as service costs for EVs are comparable with ICE vehicles and EVs may use more tyres than an ICE equivalent due to the increased weight and performance.”
Vince Pemberton suggests that brokers should always send a maintained and non-maintained quote to customers so they can see the difference, and they can ask customers more than once if they would like maintenance – even after the point of delivery.
Beware of differing maintenance agreements
There are sound reasons why brokers might prefer to use a leasing company for maintenance.
“Firstly you have the comfort of a major leasing company and expertise, financial stability and no worries of your maintenance provider going bust,” says Chris Swallow.
“The maintenance packages are comprehensive and, as the asset owner, it is in the leasing company’s interest to ensure a vehicle is properly maintained. Most major leasing companies will include a ‘no quibble’ tyre policy and third party providers often have too many restrictions.”
Richard Chadwick points out that “not all maintenance contracts are the same”.
“For example, a BMW with us will be serviced at a main agent with BMW parts and if the tyres need replacing they will be replaced with the premium tyres that were on the car originally.
“You’ll see some providers who accept punctures, some who refuse. There are some who won’t allow you to use a main agent. And the bigger leasing companies have got proper downtime management with engineers doing the approvals. Some leasing companies can even command slots to get the work done faster at a particular site.”
Relationships with OEMs pay a part too as leasing companies will have more knowledge about part delays than a typical consumer and their buying power means they are “a bit further up the queue”, according to Richard Chadwick.
Mileage restrictions can also differ between providers.
“If you have a fixed price maintenance agreement on a 10,000-mile a year rental and you go over that mileage some providers won’t cover you,” says Ben Faulkner, Sales Channel Lead – Broker at Arval.
So it’s worth comparing different providers’ offerings, whether they are a leasing company or a third party maintenance provider such as Rivervale, CLM (part of Santander) or Autoserve.
Vince Pemberton says that Rivervale has a “comprehensive” tyre policy with a scale of charges that make it “fair” for the customer.
“Maintenance is a great product whether you take Rivervale maintenance or leasing company maintenance. It makes the lifetime experience that much better for the end user,” he says.
How Central Contracts has boosted its maintenance take up
Stoke-based Central Contracts has grown its maintenance penetration from 27.4% in 2019 to 46.4% now.
The vast majority of maintenance agreements are with leasing companies although Central Contracts does utilise CLM and Autoserve for dealer finance.
“My first choice is to use the leasing company because it’s simple for the customer - they have one direct debit, one telephone number and one name to remember. And having good maintenance penetration helps make me a more valuable partner as far as the funders are concerned.”
Both Central Contracts’ BCH and PCH take up are at a good level (48.8% and 43.1% respectively), earning it recognition in Arval’s monthly broker partner awards.
Mike admits that selling maintenance has been “a conundrum for years and years”.
“We’ve tried all sorts of things – training from external agencies and finance companies, carrots and sticks, cajoling and begging – and the only thing that works is consistently reminding sales consultants that we feel obliged to tell the customer about it because the customer needs to maintain their car,” he says.
Central Contracts links each salesperson’s maintenance penetration to their quarterly bonus. The level they need to achieve is “not onerous”, according to Mike, and he has not needed to penalise any staff.
The next step is to use Word cloud technology and AI. An AI bot will detect if certain key words such as ‘maintenance’ are not used during a sales conversation with a customer. This will trigger a report which will be sent to the head of sales as a method of getting greater engagement around maintenance.
Image of woman smiling in car: Photo by Stephan Louis on Unsplash
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Sarah Tooze has been an automotive journalist for more than 15 years, specialising in the fleet and transport sectors. She has held senior positions at industry-leading B2B titles Fleet News and Smart Transport, and led campaigns championing motorists as consumer editor for online used car marketplace Heycar and motoring advice website HonestJohn.co.uk. In 2017 she won the Newspress Automotive Business Journalist award.
