Service stations ending credit for petrol sales

Press, 25 May 1989, Page 5

Service stations ending credit for petrol sales

By

CULLEN SMITH

Credit for petrol purchases is fast running out in Christchurch as service stations move to cut the cost of running accounts.

The days of private motorists running a credit account for fuel with their local garage are on the way out, according to an informal survey by “The Press.”

Some garage proprietors say true credit arrangements may not last another 12 months. They blame a deregulated market, petrol discounting and the high overheads involved in the industry for the change in attitude to credit customers. For small business customers requiring GST numbers for expenses refunds, service stations are mainly asking for cash in advance, a type of reverse credit arrangement. Such customers must front up with their own credit first, depositing, say $4OO a month and then drawing their fuel supplies against the remaining balance. The practice appears widespread, with some garage proprietors refusing even a pre-paid system for customers spending less than $lOO a week. Customers, they say, have the option of using any of the major credit cards, including fleet cards, the Motor Trade Association card and the newer oil company cards. All stations contacted in the survey accepted credit of the plastic variety. But some proprietors expressed disquiet at the

two-to-three-week wait before the credit-card companies reimbursed their businesses. Most say the cost of carrying credit has proved too high for them and they point to the cash demands of the oil companies as a reason for forcing the change. “We’re not a bank. We have to pay for our fuel. If you want credit, you go to your bank,” said Mr Gordon Cox, manager of the Dallington Service Station, Ltd. His comment is typical of many of the proprietors contacted in the survey. Mr Cox said about twothirds of his account customers now paid first. “Either they pre-pay or we won’t have them,” he said.

The owner of the Aranui Service Station, Ltd, Mr Bruce Collins, keeps just three true credit customers among his 60-odd accountholders. One is a doctor and the two were inherited by Mr Collins when he took over the station. He is happy to carry on the arrangement, but insists his new customers adopt the pre-pay system. “It’s the only way to do it,” Mr Collins said. “I don’t mind sending out monthly accounts for workshop work, but with petrol the cost of carrying credit is too high.” Mr Collins said Mobil Oil (N.Z.), Ltd, which supplies his fuel, required cash on delivery.

“You may have $3OOO or $4OOO out on credit and that’s $3OOO or $4OOO you’re short when it comes to paying for a petrol delivery,” he said. The Barrington Service Station, Ltd, owner-mana-ger, Mr Gary Love, said most of his account customers pre-paid, but true credit was still available for “one or two” regular customers.

Some customers had complained but most accepted commercial reality, Mr Love said. “Basically, when you see the dollar value in gas — and there’s not much profit in selling straight petrol these days — we just can’t afford to carry the credit,” he said. Bruce Reid Motors, Ltd, runs a pre-paid credit system only. The manager, Mr Gavin Cochrane, said most people bought petrol with either cash or credit cards. With the station in

an industrial area, Mr Cochrane has no private account holder. Most of the garage’s commercial customers spent about $5OO a month, but Mr Cochrane said he did not impose a limit on how much a customer must spend to get an account. “It seems to work OK. We don’t charge an administration fee so there are no extra costs. We try to be as flexible but as tight as we can,” he said. The manager of the Edgeware Service Station, Ltd, Mr Noel Ward, said he believed he was one of the few city proprietors still offering true credit facilities. But he won’t accept small accounts and is not interested in giving credit to private motorists. “Credit is obviously tight these days and service stations have to tighten up to keep in line,” Mr Ward said. Two service stations

running against the trend shown up in the survey are at Lyttelton and Rolleston. The owner of the Lyttelton Automart, Mr Wayne Kennard, said he was happy to continue offering true credit accounts to his 80 regular customers. “They pay me when they get their wages. If they get paid weekly, I get paid weekly. I’m here for the customer,” he said. Credit cards were the real killer, Mr Kennard said. Garage proprietors had to wait two to three weeks for payment and then lost the 2.5 per cent commission charged by the card companies. The manager of the Rolleston Service Station, Mr Kevin Graham, said he was easing out of true credit arrangements but would keep such customers as long as he could afford to.