November 2009, Automotive Fleet - Department

AFLA 2004 Annual Conference Attracts 215 Attendees

By Staff

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CANCEL

September 2004 - AFLA's 37^th Annual Conference

Date: September 8-11, 2004
Location: Huntington Beach, Calif., Regency Hotel

The following is an article that appeared in the October 2004 issue of Automotive Fleet.

The Automotive Fleet & Leasing Association (AFLA) held its annual meeting and conference at the Hyatt Regency Hotel in Huntington Beach, Calif., on Sept. 8-11. The successful conference attracted 215 attendees, which included a cross section of representatives from major commercial fleets, factory fleet departments, fleet management companies, fleet dealers, and major auction chains.

The keynote presenter was Maryann Keller, president of Maryann Keller & Associates, who spoke on the state of the automotive industry and future trends in vehicle remarketing. According to Keller, in today's market, the preservation of market share is more important than profit per unit, which is putting downward pressure on resale values.

Keller said the current new-vehicle market is saturated. "In the pasted five-and-a-half years, almost 100 million cars were purchased. Without incentives, 2004 (sales) would have been lower than 2003," Keller said.

"Keeping people on the job producing cars with incentives was a cheaper alternative than laying people off, but this has wiped out pent-up demand. What should help to bolster sales in upcoming model years is the forthcoming barrage of all-new models. For instance, more than 50 new models will be introduced in 2005 and 2006 model-years," she said.

Among the concerns Keller cited for the upcoming model-year was the high price of gasoline and the high level of consumer debt. High gasoline prices are decreasing demand for large SUVs. "High fuel prices are not a temporary aberration," Keller said. She said the increased global demand for fuel will help keep fuel prices high in the future. In terms of future resale values, Keller said that the huge increase in pickup production capacity and the incentives offered on these vehicles will lead to lower resale values.

Keller also questioned the value of some optional equipment in increasing resale value. For instance, she cited in-vehicle navigation systems, which she said to not hold value and are fully depreciated in just three years.

Following Keller's keynote address was Lisa Whalen, director of global market and industry analysis for General Motors. In her presentation, Whalen provided an industry forecast and analysis of the U.S. auto market. GM's forecast for new-vehicle sales for the 2004 calendar-year is 17.1 million units. The best-selling vehicle segments in the retail market are trucks and luxury cars. She predicted that higher fuel prices will not impact large SUV sales. "Even at $40 per barrel, the high cost of oil is not affecting large SUVs. These vehicles are being bought by high-income individuals, who can best afford the higher fuel prices." Whalen anticipated that fuel prices will decline. "The oil industry is a cyclical industry."

Whalen predicted that new-vehicle price restraints and incentives are here to stay. "Since the mid 90s, there has been price deflation." Whalen also predicted that as the U.S. population ages, it will lost its "love affair with trucks" and move to crossover vehicles. "Trucks will continue to outsell cars for the next 10 years, but not at the same pace they have done so in the past," she said.

A major topic at the conference was vehicle remarketing. Dean Eisner, president and CEO of Manheim, gave a forecast of emerging trends in vehicle remarketing. "There will be a constant cascading marketplace for selling used cars." Eisner called this "Remarketing 360." According to Eisner, cascading remarketing starts with offering vehicles for sale to drivers, then at dealerships via online programs such as Manheim's Dealer Exchange, marshalling yards, the auction, and then at the retail level. Eisner says physical auctions will continue to be play an integral role in the remarketing of fleet vehicles, and new technologies , such as the Internet, will be incorporated as part of the "cascading marketplace." Among other new technologies Eisner cited were the use of Radio Frequency Identification (RFID) for quicker location of vehicles in auction marshalling yards, the use of biometric identification for dealer check-in, and the increase in remarketing over the Internet. "Currently, 15 percent of all cars are remarketed over the Internet," Eisner said.

Among the other speakers were:

• Kathy Marinello, president/CEO of GE Commercial Finance, Fleet Services, who spoke on "Create the Connection - Network with the Experts."
• Don Schaffer, senior VP/CFO of LeasePlan USA, who spoke on "The Standards and the Effect on Leasing."

In addition, the conference also included two panel discussions. The first discussion included remarketers who spoke on current trends in vehicle remarketing and the other featured factory representatives from GM, Ford, DCX, and Toyota who spoke on trends in commercial fleet sales.

The 2005 AFLA Annual Meeting and Conference will be held Sept. 7-10 at the Camelback Resort in Phoenix, Ariz. For more information, visit www.aflaonline.org.