The Car and Truck Fleet and Leasing Management Magazine

If You Can Be Patient, Rewards Will Come!

January 2004, by Ed Bobit - Also by this author

Journalism is literature in a hurry.-Matthew Arnold

A journalist is a grumbler, a censurer, a giver of advice, a regent of sovereigns, a tutor of nations. Four hostile newspapers are more to be feared than a thousand bayonets.-Napoleon Bonaparte

Nothing less than the highest ideals, the most scrupulous anxiety to do right, the most accurate knowledge of the problems it has to meet, and a sincere sense of moral responsibility will save journalism from a subservience to business interests, seeking selfish ends, antagonistic to public welfare.-Joseph Pulitzer

 

One of my journalistic duties is to create this page. Our corporate editorial director tells me that ideally it should be "provocative" (whatever that really means), about something that's germane to the industry and not rehashing an old saw.

To those who may read my column with some frequency, you know my favorite whipping post is the utter disdain that so many fleet managers have for doing something to increase residuals on their used cars.

My preaching and recommended solutions on depreciation and getting more bang for the buck reselling the used units hasn't had many notable results; until recently, that is. (I checked and it was last April that I voiced my disappointment with our leaders; that's nine months.)

Well, it's my pleasure to relate that the mountain is moving. Just as it took research, chiding, and higher gas prices to get fleets to embrace fuel management, it's actually happening in remarketing.

It couldn't come at a better time with the incredible incentives at retail as well as with the fleet level. These "bribes" to buy hurt corporate America badly with major increases in costs. It's even more costly to those companies who do not capitalize their up-front incentives into the vehicles (just-let-me-get-this-check-cashed-and-de-posited-today syndrome).

There have been a relative handful of people who have led the way in recognizing where they could save real dollars through a professional knowledge of remarketing and a program to back it up.

One who comes immediately to mind is Theresa Ragozine who was totally new to "fleet" a half dozen years ago but has turned a good program at Johnson & Johnson into a great one. We've personally talked at length about how to save big bucks. She was an early supporter of "lifecycle costing," introducing Camrys into her fleet and buying them until competitive incentives began to outweigh the cost advantages.

Theresa always was innovative. A couple of years ago, she created "Deals on Wheels" for internally augmenting employee sales of the used units. Now, three years later, they just completed their most successful replacement of vehicles and gained the highest residuals with employee sales. Virtually every major fleet management company has had a base plan for any lessee to engage in employee sales. It wasn't too successful because the lessar probably made more profit managing the vehicles into the auction process. And the fleet manager didn't want to add driver interaction to his/her duties.

But again, innovation raises its beautiful head: a couple of the domestic makers are experimenting with online sales for Heels. Donlen teamed up with Adesa for a brand new employee online program that's already working.

Wheels has expanded its DriverView program which now includes an Internet resale program for its accounts' employees. In the pilot phase of the program, more than 65 percent of the vehicles sold were purchased by someone other than the driver.

Similarly, Lease Plan has an agreement with Driveit-away that uses private account-branded Web sites to market off-fleet vehicles to employees. Most major lessors have like plans working or on the launching pad to remain competitive.

Now, a caution. Don't think for a minute that you should hold a tag day for the auctions. They are doing fine (and will). But, as an ex-fleet guy. Jay Fahrendorff, who's now with the ABC Auction chain, recommends, a fleet manager should set up his or her employee sales program by setting the sale price of the used unit at $500 over wholesale. It's still more economical than off any used-car lot, plus you may have saved at least $200 in auction fees.

Another ex-fleet guy (and another dear friend), Pierce Walsh, now at Auto Driveaway, states that while he was a fleet manager at Dial, he strongly believed in "negotiating" every sale with the potential employee buyer. It worked for him and he still believes in it.

For years I've felt like that proverbial "voice in the wilderness," except for those many people who privately drew me aside and told me I was on the right track.

Now it's happening. And like fuel management, it's my hope that everyone gives it a try to increase residuals.

 

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