The Car and Truck Fleet and Leasing Management Magazine

Buying vs. Selling: A World Apart

April 2002, by Ed Bobit - Also by this author

The better work men do is always done under stress and at great personal cost.--William Carlos Williams

 

All the best work is done the way ants do things-

by tiny but untiring and regular additions.-Lafcadio Hearn

 

People who work sitting down get paid more than people who work standing up.-Ogden Nash

 

We don't exactly sit around the fire with our feet propped up, a drink in our hand and a cigar hanging from our mouths (it should be like that) but either talking or e-mailing, we ferret out what's behind the smoke.

I'm talking about my long-time friend, ex-fleet manager and current confidant. Terry Flesia. He helps me see (and shoot) straight. Or, gives me reasons why there's a flaw in my limited knowledge.

Terry was commenting to me about my recent editorial, "It's Always the Money." Yes, my pet topic, depreciation and resale costs. We boiled it down to some basic traits and why many fleets don't have the in-depth management in this area that they need; and should have.

First, it's easy to be a "buyer," and not too tough to be a good buyer. As a fleet manager you get a lot of attention when you are ready to buy. We love to be coddled, have the open bars at the fleet shows, talk big dollars in private, and personally hold the power to make a decision that the factory appreciates all year long.

We all love that new, shiny car with the new car smell and there's little to complicate the transaction, since everyone of the models will come out identically at the same price to your company. It's clean, fun and certain rewards are properly accorded.

Moving used vehicles is a lot of hard work and requires a mountain of knowledge and work to do it effectively.

The driver is usually delighted to get the new one, so he or she won't be complaining for months. They know it (the new one) is coming so they don't pay much attention to the condition of the old one. That's someone else's headache.

Even some of the company-owned fleets choose to outsource the remarketing as well as other functions. It takes getting involved, knowing a complex marketing strategy, and often using a variety of sources. It's work.

Even though the auctions and wholesalers (the new car dealers gave up on actively acquiring or bidding on used fleet trade-ins years ago) have seen the spiritual light and are now professional and back up their services.

The National Auto Auction Association (NAAA), as well as the National Association of Fleet Resale Dealers (NAFRD), both adopted strong codes of conduct to assure every client of straight dealings.

Incredibly, even today, there remains some of the residual whispering talk about malfeasance (they're all thieves and cannot be trusted) but it's usually from some self-serving motive. NAAA and NAFRD members are solid citizens today; and can be trusted.

So it's easy to see why fleet managers don't stick their necks out to increase their residuals. When the new one is delivered, their outsourcer magically makes the old one disappear. An invoice comes in a month or so later and it's no sweat. Not too cost-efficient, but easy.

Maybe some make an effort with employee sales but most fleet managers I talk with shun the subject of how they price them out. Then under my pressing, they will allude to management policy or try to defend a faulty formula.

Getting your head into the used-car marketing aspect of your job, and you should, by all means, is difficult; and more work than you may need. It's easy to understand the reluctance.

It's a whole new segment of knowledge, of people to deal with and to a large degree, subjective. No two used cars are alike; mileage and condition vary with individual drivers and different parts of the country bring in differing values. It's tough if you want to squeeze out the extra significant bucks for the company.

As my friend Terry says "Buying a thousand new ones is a 'cookie cutter.' Selling 1,000 used ones, if you want the extra dollars, it's one at a time.

 

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