The AA is charging customers as much as £186.50 for its breakdown and recovery service – yet similar cover can be found elsewhere for just £35. Patrick Collinson asks if the traditional providers are just laughing all the way to the garage
When Peter Ludlow from Gelligaer in south Wales received his AA membership renewal documents last week, he was taken aback by the cost, which had risen steeply from the year before. The AA wanted £186.50 for joint membership for Ludlow and his wife, to cover roadside assistance, home start and relay, compared with £136 last year.
So Ludlow started digging around. On the AA’s website, he found that, if he was a new customer, the motoring organisation would charge him just £120.19. He rang the AA to ask if he could have the same rate as shown on the website. The year before, he had done the same thing, and the AA had agreed. Yet not this time. It offered him a “loyalty discount”, as he has been an AA member for 19 years. But as this would bring down the cost to just over £130, not the £120 quoted online, he decided to cancel his membership.
Ludlow has now used his Tesco Clubcard vouchers to buy membership of the RAC, with the same level of cover he had at the AA, for £49.
“I wonder how many people just renew their membership automatically without checking on the web?” says Ludlow. “Probably quite a lot, otherwise they would not give these high renewal quotes.
“I can’t understand the logic of having a higher renewal rate for existing members than is advertised on the web for new members. The administration costs to renew an existing membership must be much lower than processing a new application.
“Also, as more and more people check the prices on the web and realise how much more they would pay if they just automatically renewed, they would have to deal with more queries, taking up staff time, or more people will do as I did and leave.”
We asked the AA why it was charging long-standing loyal customers more than new customers. It said: “The size of our membership is important in controlling the overall cost to all members. Periodically we run introductory offers to new members in order to increase our total membership. Over time we seek to equalise pricing for all members.”
Critics of the AA, including former patrolmen, say the organisation became too profit-focused after it was sold to private equity owners in 2004. This was followed by 3,500 job losses, including 500 patrol staff. A debt-heavy merger with Saga in 2007, at the height of the private equity bubble, netted a paper profit of £1.6bn, including around £40m for its then-chief executive, but has left the combined organisation burdened with billions in personal loans.
The RAC charges approximately the same (without Clubcard vouchers) as the AA, but drivers facing £180-plus renewal bills can save nearly £150 a year by switching to alternative providers that promise to match the service of the big recovery specialists.