Director JGMcClintock Discusses Role Of GM Corporate Fleet Section

J.G. McClintock has been director of fleet and government sales at Gen­eral Motors for four years. A 29-year veteran of the automotive industry, he had also served as national car dis­tribution director for Buick as well as zone manager for that division in Houston and Los Angeles.

AF: What are the functions of the fleet section within GM?

McClintock: The fleet section is part of the marketing staff of General Motors. We're in the sales section and our primary responsibility is to coordi­nate fleet activities with the five car divisions and the truck division and maintain communication with fleet customers to determine what is hap­pening in the fleet business. Also, we work in conjunction with the divisions to develop adequate fleet marketing policies to be competitive. We also keep our management advised as to what is happening in the fleet business and how General Motors can maintain its share of the business. It's a staff function. However, we go a little further than the ordinary staff function in that we have eight field representatives, seven of whom are regional passenger car directors. They are located geographically across the United States who call on fleet cus­tomers to find out how our products are faring in their fleets: are they satisfactory, are the divisions contact­ing them and working with them, is there anything we can do to help them, etc. We don't actually sell a product, we work with the divisions and the accounts in developing busi­ness and turn it over to the divisions to complete.

AF: How do sales contacts differ between the divisions and the cor­porate fleet section?

McClintock: The contacts are basically the same in that our people are sales­men, but we don't have the authority to complete a sales transaction with a customer on behalf of a division. We work up to the point of putting the order together and then we get the division man, if he's not there with us at that time. At that point it is turned over to the division to complete through a dealer.

AF: So, in effect you have double coverage by having both division and corporate representatives out there looking for fleet sales.

McClintock: Yes, you can say that. The divisions have their individual fleet departments and fleet representa­tives who call on customers and actually sell their individual products. And we call on the same customers periodically and sell all General Motors products and promote their use. From informa­tion we get from the fleet customers and other people involved in the fleet industry we can, if necessary, make recommendations to our management for fleet marketing policies that all the divisions can operate with and which will at least maintain our share of the business or improve it, depend­ing on what the situation is.

AF: How would you describe GM's fleet policy from the marketing standpoint?

McClintock: We define a fleet custom­er as a company that buys and registers 10 or more vehicles a year in its com­pany name and uses those vehicles in the conduct of its business. Obviously there are some customers that are much larger than others, and the natural inclination on the part of any salesman is to spend a little more time with them. That's basically what we do. We don't arbitrarily select custom­ers to work with. When someone has a problem, we'll see him, and meet with the division to try to solve it for him. Again, as a natural course of events in sales work, the larger the customer, the more attention he has to have from the divisions. So we do find ourselves spending more time with the larger accounts than we do with the companies that barely qualify as fleet customers. But we certainly don't ignore them if they come to us and ask us questions, ask for help or ask us to put them in contact with divisional representatives who can satisfy any need they have at the time.

AF: How do you account for GM's fleet sales leadership position without industry allowances or resale incen­tives?

McClintock: We don't offer fleet allowances since we feel the strength and stability of our products will speak for themselves in the market­place. We don't subsidize national car and light truck sales at all. We do have finance programs that are competitive with other finance programs in the marketplace, and they are generally geared to volume and money costs. The fleet distance delivery program is available on sales to qualified commer­cial companies and leasing companies ordering 500 or more vehicles where delivery is required 100 or more miles from the selling dealer. This program is administered by the divisions in­dividually. I don't consider it to be a fleet subsidy because it's available to the selling fleet dealer in order to arrange adequate service of the vehicle for its actual delivery, to register the unit and to contact the individuals who are going to drive it. It does take time to deliver a car to the ulti­mate user so we don't feel it's a subsidy.

AF: What has been your policy and success in government fleet business over the past five years? Does GM look to actively pursuing an increase in business in this area?

McClintock: No, but we obviously stand ready to help the federal govern­ment and the local municipalities or political subdivisions, if we can. We don't subsidize the sale of passenger cars and trucks to any fleet customer and the political subdivisions are con­sidered a fleet customer. We think our products offer sufficient value and quality to justify their consideration by a political subdivision or govern­ment agency.

AF: What is GM's share of total government sales?

McClintock: It's probably 25-percent of the business. In the 1977 calendar year through September, the govern­ment proportion of the business was running about 10-percent of total fleet business.

AF: Is there any particular trend indicating that this figure might increase?

McClintock: No, it's pretty stable at that level. The renting and leasing segment is the largest portion of total fleet business and you can't distinguish between rental sales and lease sales, particularly because of the way cars are registered. Many of the major rental car companies have leasing operations and, unfortunately, R.L. Polk, the authority on registrations in the industry that most manufacturers obtain official data from, can't dis­tinguish between a rent sale and a lease sale. So that category of the fleet business in passenger cars is about three-fourths of industry sales. Sales to commercial companies that buy and own their own fleets run about 10-percent. The balance would be government sales, or about 15-percent.

AF: How do you account for the fact that GM's fleet share of the mar­ket is about 45-percent while the corporate retail share is almost 60-percent?

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McClintock: That's not an accurate analysis because right now, according to the way we measure fleet business, in the 1977 model year through June, General Motors was drawing 47-percent of fleet business and 47-percent of total industry sales. That's an im­provement in fleet business over pre­vious years but, as a general rule, our share of the business has been a little less than our total share simply be­cause some competitive makes have fleet sales assistance programs still in effect, while we do not.

AF: Can the fleet section offer any special assistance to the buyer that the divisions cannot?

McClintock: As a general rule from an operating standpoint, no. We are still a staff function while the divisions are the operating organization of the cor­poration. We do not want to be put in the position of making decisions for the divisions which we think would be stepping on their prerogatives. But if we got into a very difficult situation where it appeared to be a toe-to-toe struggle with a customer, we'd make a decision and go back and explain it to a division. We'd say, "This is what the situation was, we felt in our own best judgment that this ought to be done, we were unable to get in touch with your representative immediately, so in the division's best interest we told the customer that General Motors and the division will do this or that." That would be an unusual case. We would make a decision for a division in the area of customer relations, but not as a matter of practice. What we would do would be to get the division involved in it, and then, if there was a problem, get them to settle it, whether it involves products, services they're offering the customer or whatever. If it's a matter of availability of a pro­duct, such as when a group of orders cannot be scheduled to be shipped as early as possible, certainly that's the division's responsibility. We can't do that for them because we aren't in­volved on a day-to-day basis with the individual car divisions and really aren't in a position to answer this kind of question.

AF: How competitive are advertising allowances in the daily rental industry?

McClintock: I really don't know how competitive they are. We have some advertising agreements with some of our customers, and they're exactly that - advertising agreements. We feel the company has a quality adver­tising program and we participate in it with them and that's the extent of it. As to how competitive they are, I'm not prepared to say.

AF: Looking down the road, what percent of the total market do you foresee for 1985 or even 1990?

McClintock: I think that's pretty far ahead to determine. It depends on the national economic situation. The total industry, as all industry, has continued to grow and the demand for commer­cial vehicles slowly increases. Fleet sales have averaged approximately 11-percent for several years, and are cur­rently running about 13-percent of 1977 passenger car sales. I don't fore­see any drastic jump in the next several years. As total industry sales grow, fleets should grow in propor­tion and maintain a 12 to 13-percent share.

AF: Do you see GM's total share of the market growing as far as fleet sales are concerned?

McClintock: There again, the main influence is in the market. We've been able this year to increase our share of the business by a couple of points strictly on the acceptance of our product in the marketplace and on the strength and stability of our cars competing without sub­sidies against other products. And, knowing what our forward product program is for 1978 and 1979, I'm confident that we are going to main­tain that share.

AF: How do the restyled interme­diates fit into future fleet business?

McClintock: I feel that our new intermediates have had an excellent reception by our fleet buyers. We showed them to our customers back in March on a limited basis and held our annual fleet show in June. Our new intermediates have had an excellent reception as far as executives and fleet customers are concerned and at this point I'm very encouraged by it. The intermediate type of car as we know it in 1977 runs about 38-percent of fleet sales. With the emphasis on economy, there is a good possibility that this can increase. Compact and smaller cars have actually decreased in fleet sales as opposed to an increase in total indus­try sales. This is simply because the traveling man spends an awful lot of time in an automobile. First of all, he has to be comfortable; he has to be fresh when he calls on clients, and he has to have room in the car to carry his materials. So the use of an intermediate- or large-size car still is more appropriate in the fleet business than in total industry sales. I think intermediate car sales probably will grow in the next couple of years. Every in­dication of what commercial users think about our new models points to that direction.

AF: Do you see the fleet mix of the future consisting of more intermediates as opposed to full-size cars?

McClintock: The major commercial leasing companies publish lists of fleet car recommendations for their clients. Most of the fleet car recommendations I've seen so far include specifications that will include all our new inter­mediates - Chevrolet, Buick, Olds-mobile and Pontiac. They're not tailored to them, but they include them. As I said before, the reception and the impression of our new cars by our fleet customers certainly fits in with what they're recommending to their clients as the most logical car to use in their individual business activities, so I feel confident.

AF: How big is the corporate fleet section?

McClintock: In total we have about 30 people. We have three people in the Washington office who deal pri­marily with the General Services Administration and governmental agen­cies on federal fleet requirements.

AF: You mentioned earlier that GM gets 25-percent of government fleet sales. Does the federal govern­ment take a large proportion of that figure?

McClintock: No, it's not included in that at all. We don't include total federal government sales in the recap of fleet statistics; it's a separate entity altogether. We have a man in charge of federal government sales who works with the divisions in General Motors along with the government in many different things - not only with auto­motive products, but with the space program, navigation and space guid­ance systems, and ordinance programs, to the extent that recently we was competing with other companies on the bid for the Army's main battle tank.

AF: How big is General Motors' share of the total federal government fleet market?

McClintock: We have a fair share of it. The government is slow to purchase. First of all they have to get authoriza­tion from Congress for a budget, and the bids have certain requirements. However, we get a fair share; we're satisfied with it, and we hope the government is satisfied with our ef­forts to help them get what they need.

AF: What are the major challenges facing your departments today?

McClintock: We don't subsidize fleet sales of passenger cars and light trucks and our main job is to continue what we have been doing and work with the divisions, be sure we satisfy our customer requirements, be fair and competitive in the marketplace and con­tinue to serve the fleet industry.