The Car and Truck Fleet and Leasing Management Magazine

Fleet vs Retail! Is There an Edge, or Not?

September 2004, by Ed Bobit - Also by this author

 We are not created equal, and our differences are often greater than our similarities.-Carlton Fredericks

We will have equality when a female schlemiel moves ahead as fast as a male schlemiel.-Estelle Ramey

Before God and the bus driver we are all equal.-German Proverb

After death all men smell alike.-Italian Proverb

 

I've suddenly got a whole new hero! My heroes usually fit a certain mold; and now even that is over. Hey, maybe not all of you know about John Wayne, a local boy who made it good. All of us who met him called him "Duke." He didn't take crap from anybody.

Then Bruce Willis, an unlikely sort with an unlikely first name, got me snagged with his Die Hard series just like Mel Gibson reeled me in with his Lethal Weapon series. All macho and smart.

My new replacement hero is hardly who you or I might have expected. You've never heard of him and I didn't either before the end of July when the Wall Street Journal (of all people) ran a story about him.

Michael McGovern is his name; he's a 23-year-old from Foothill Ranch here in California. It's just across the mountain range and the valley from where I plod. He's not a movie star or a fleet manager. He's some average "Joe Consumer" who works as a waiter (and probably writes hopeful screenplays in off hours, like everyone else around here seems to).

Now all of us know that fleet managers are the professionals when it comes to buying cars and trucks. They buy a lot of them so they know how to negotiate and bargain well beyond what any consumer-type might hope to do. It's the classic "Fleet vs. Retail" image that often happens even within factory personnel.

Consumers are emotional with their purchases. Some are soccer moms who don't seem to have any problem climbing up on a running board rail and with yet another step can actually get into the cab of that SUV or truck with 17-inch wheels. They adore that "power view."

Hey, the experienced fleet manager isn't like that. He or she doesn't even want to hear about a turboed V-8 or V-12. No, they're looking for that less than spectacular mid-size car; or some van with hardly any windows, or rear doors that open sideways for the ladders on top with a 4- or 6-banger. How deliciously sexy is that?

All that doesn't matter though because every fleet manager worth his/her salt will tell you that they know how to buy, how to negotiate, how to wring every last factory dollar out of the seller and be so damned proud of the tiers set up for CAP incentives that they'd slake their job on it.

That's not all of it they're proud to say. When you consider early order incentives, getting a guarantee purchase price for every vehicle ordered all year, noshing with the dealer at invoice, and whittling away at his holdback, well no one can do more. Right?

Maybe, "wrong!!" My new hero just may have pulled it off. He actually purchased a loaded midsize domestic SUV with no leverage at all. He was able to systematically pile factory and dealer rebates on top of one another until he had an astounding $8,500 worth of 'em (I also wanted to find out if he qualified and received the 0-percent financing; the Journal didn't report on it).

I've been trying to find any of my fleet manager friends who can tell me that their factory deal is better than what my hero got. No one can believe what McGovern was able to do on a single, non-professional purchase. Of course they (the fleet mangers) all say that "we can always take advantage of tiny retail incentives like consumers if we see they're better."

My impression is that even the most affluent fleet managers don't monitor regional consumer incentives, so in many eases they simply wouldn't know about a McGovern deal. I also have a concern about those who signed a three-year single source deal without a floating incentive clause. Ouch!!

So there actually is some "equality" between fleet and retail from time to time. Kind of gets you back to the old saying, "let the buyer beware." Maybe the only way to keep the edge on for fleet managers is to have the factories guarantee the residuals (wink, wink).

 

 

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