Report From the Editor

"In the past five years the number of cars under lease has doubled to more than 600,000 and created a new industry that takes in $750,000,000 a year. The market for leasing is so promising that some 3,000 companies have gone into the business." Time magazine, Mar. 1, 1963.

AUTOMOTIVE FLEET couldn't agree more. For the past 18 months -- ever since its inception in November, 1961 -- AF has been reporting the growth of leasing as a major force in the fleet field.

We are heartened that other publications-especially a magazine such as Time-are beginning to recognize the importance of car leasing. What is even more heartening is that Time magazine recognized the contribution that AUTOMOTIVE FLEET is making to the leasing field. AF's editorial staff worked with Time staffers in developing their story. The figures in the Time article came from AUTOMOTIVE FLEET's January leasing survey.

The Time article said that "by far the biggest lease customers are corporations," which, according to Time lease one-fourth of their entire auto fleet.
 
"For them, leasing is almost always a saving," Time said. "For one thing, they do not have to tie up capital, The Denver & Rio Grande R.R. concludes that by leasing instead of buying a fleet of 150 cars, it frees $450,000 a year for other investments."

I agree that leasing frees capital for other investments, but I would like to emphasize that there is another side to the picture. Leasing companies are in business to make money. A company that leases cars is buying a service and it must pay for that service. If a company has no worry about capital requirements, or intends to keep its cars for a long time, it probably would save money by owning its fleet outright. Even leasing operators agree that leasing is not the answer for everyone.

Time further reported that "corporations often want to be spared the bother of buying, maintaining and keeping insurance on a fleet of autos and are able to write off their leased cars as a business expense rather than having to take a less favorable depreciation allowance on their own cars."

There no doubt is much truth in this statement. However it is unfortunate that many companies feel they can't be bothered with details about their cars. A sales company wouldn't think of operating without a sales manager. By the same token, a company that uses cars in its business shouldn't operate without a fleet manager or administrator. A fleet manager with the proper authority is just as valuable to a company as a top-notch sales manager.

One reason that leasing offers advantages is because the leasing company is run by professionals. They know how to squeeze dollars out their vehicles. Professional fleet managers can accomplish the same thing, Corporations should make an effort to attract such men.

Time noted predictions that auto leases will account for between 25 and 50 per cent of all new cars sold by 1970. While I believe that leasing will continue to grow, I feel that 25-50 per cent is too high of a figure especially in a 8,000,000 or 9,000,000 car year. The magazine also noted the profit squeeze in the industry as the industry as the result of all the newcomers, some pointed out in AUTOMOTIVE FLEET's January survey. Again, I emphasize that the leasing industry must police itself or it will be policed by the government.