The Car and Truck Fleet and Leasing Management Magazine

Reporting with a Fervent Passion

November 2006, by Ed Bobit - Also by this author


What got my attention was not necessarily the headline, “Detroit 3: $2,400 profit per vehicle…gone.” Now, I feel very badly about the people who supple 90-plus percent of our vehicles suddenly finding out that some $2,400 in lost profit (compared to the leading “import” maker’s manufacturing efficiencies) has been reported through the Harbour’s study. It can’t be good for your business or mine.

Equally disturbing is confirming that Toyota’s warranty repairs only cost them $348 per vehicle compared to $512 for GM, $585 for Ford, and $595 for Chrysler. Just how much competition can the domestics take when the odds are set that strongly against them?

But that’s not what got my ire up the most. It was how the editor had composed his/her leas sentence’ “Everyone knows that the high cost of incentives, unprofitable fleet sales, and legacy costs are killing the Detroit 3.”

Wait just one cotton-picking minute. “Everybody” does not know this! Au contraire as my young and mythical French maid used to say to me in my slumber. Last night, I was reading the latest issue of our sister publication, Business Fleet, which serves the small (10-50 in fleet size) fleet market, and in the “Letters” department was a question from David Knudsen of Hackensack, N.J., who mused that fleet incentives “never seem to match or exceed the retail rebate.” 

We receive dozens of that kind of letter each year. Why? Because it’s true. Retail factory-supported deals are fairly competitive or better than many fleet deals.

And who says that fleet sales, as the AN story opined, are not unprofitable; especially commercial fleet sales? I talk to the domestic fleet directory and everyone tells me that commercial sales are both profitable and have the blessing (and no volume limit) of top management to sell.

It makes sense. Most factory fleet departments consist of a skeleton group compared to their retail counterparts. Last year, Ford sold nearly 30 percent of total business with probably less than 300 fleet support personnel. This compares favorable with probably thousands on the retail side.

Rental sales are different and no doubt thinner in the profit area. While it only takes a few factory people to sell thousands of vehicles and it’s nice that they can be shipped in volume to a few destinations, there are other factors. One is that they are returned on buy-back (guaranteed resale) deals. Remarketing can be quite expensive, even after eight months in use. Plus it influences the corporate residual values when you sell too high a percentage.

So, help me out here. When some Detroit (or other) reporter states that “fleet sales are unprofitable,” set ‘em straight. It ain’t the truth.

Another flag caught my eye this past week. At my previous years at Mc
Graw-Hill, many of us would watch the new yearly report on how much an average sales call costs a company. Oh yeah, in those days it was less than $100. The new one just out pegs it at $324 per call. That should be a flag for every fleet manager and their bosses as well. To begin with, you, as a fleet manager, have a challenger to try to beat this cost with a better-than-average prowess of vehicle selection that also covers cost of operation (i.e. gas, tires, etc.) and resale values down the road.

It also calls for establishing good PM practices (now, if you don’t know that it stands for “preventive maintenance,” maybe we should start over) and for executing these recommended practices. Downtime for the sales force will only escalate the $324 cost.

I hope you agree with my reasoning; if not, e-mail me at [email protected].

Twitter Facebook Google+


Please note that comments may be moderated. 
Leave this field empty:

Fleet Incentives

Determine the actual cost of owning and running a vehicle in your fleet. Compare vehicles by class and model.

Sponsored by

A vehicle commonly built on a car platform but with features of a sport-utility vehicle.

Read more


Market Trends

Mike Antich
It is Critical to Get Out of Your Office to Assess Vehicle Usage Issues

By Mike Antich
Many view fleet management as being a desk job, but it is more than that. When trouble-shooting fleet problems, such as increased costs for a particular user group, it is important to identify the root cause, which often requires on-site visual inspection of fleet assets and how they are being utilized.

Why the Fleet Manager Should be the Gatekeeper to Procurement

By Mike Antich

View All

Driving Notes

Chris Brown
2017 VW Golf Alltrack SEL

By Chris Brown
The 2017 Volkswagen Golf Alltrack is a Golf SportWagen, but brawnier, with VW’s 4Motion all-wheel-drive as standard.

2017 Mercedes-Benz E300 4Matic

By Chris Wolski

View All

Nobody Asked Me, But...

Sherb Brown
Five Unpredictions for 2017

By Sherb Brown
We may not be able to predict the future here at Automotive Fleet, but we can confidently predict that 2017 will be very interesting.

Fleet Success Comes From Sticking to Just the Facts

By Sherb Brown

View All

Data Points

Dylan Brown
Does Telematics Branding Translate to Adoption?

By Dylan Brown
We asked over 750 fleet professionals questions about the prevalence of each provider in the market and their brand recognition.

How Fleet Size Dictates Telematics Needs

By Dylan Brown

View All

In Memoriam: Coach's Insights

Ed Bobit
Thinking of the Newbies of the Future

By Ed Bobit
A lot has changed in the past 10-15 years, so we can only imagine this momentum will continue into the next decade-plus. How will this change impact the fleet manager of tomorrow?

Managing a Car vs. Work Truck Fleet

By Ed Bobit

View All


Up Next

More From The World's Largest Fleet Publisher