Special Coverage

NADA Convention & Exposition

LAS VEGAS – Few people worry about what could go wrong with that great auto dealership selling tool that connects customer to product: the test drive.

But Charles Arrambide worries about it. He advises dealers on how to prevent a simple test drive from becoming a problem, a disaster, a fatality or even a felony.

It’s his job to dwell on such dire possibilities. Arrambide is a risk officer for Direct Underwriters, a unit of Zurich North America Commercial.

He is a 24-year veteran of loss prevention and risk management, working with auto dealers to develop risk-improvement programs. One of them is making sure test drives don’t turn ugly.

“Test drives are necessary, but they are not without risks and exposure to dealers,” says Arrambide. “A dealer can get sued for something that happened on a test drive.”

A customer test driver could get in a serious accident. A criminal posing as a customer could turn a test drive into a car theft or worse. Such a thief could end up kidnapping the salesperson accompanying him on what was supposed to be a product demonstration.

“All sorts of things can happen,” says Arrambide, who conducts a risk management workshop with Indiana dealer Raymond Farabaugh at the National Automobile Dealers Assn. convention here.

Arrambide offers these tips to make sure all goes well when a customer heads out in a dealership test vehicle:

  • Follow an established route, one that avoids dangerous roads and intersections. A pre-set route also allows for an estimated time of return. It is a warning indicator if a test drive significantly exceeds that time.
  • Know your customer. An impaired driver should not be out testing vehicles.
  • A salesperson should always accompany the customer and make sure traffic laws are not flagrantly ignored.
  • The salesperson should be behind the wheel for the first part of the test drive. For employee protection, the driver switch should be at a non-secluded location.
  • When switching drivers, the salesperson should remove the car key from the ignition and keep possession of it until after both parties have re-entered the vehicle. That protects against a would-be thief speeding off, leaving the salesperson standing in the dust.

The main thing is protecting customers and employees from test-drive hazards, says Arrambide. “Car damage can be repaired.”

He and Farabaugh also warn against providing dealership vehicles for employees’ personal use. Many dealers give such “demo cars” to valued staffers. But that can lead to liabilities.

Arrambide cites a case in which a dealership employee was involved in a multiple fatality accident. The dealership was sued as the owner of the vehicle.

Farabaugh says an alternative is to set up compensation plans in a way that allows top-performing staffers lease vehicles from the dealership. That transfers risk from the dealer to employees.