The program-available to qualified leasing companies and their customers-guarantees depreciation ranging from 3 per cent per month for a vehicle on a 12 month lease to 1.9 per cent per month for a vehicle on a 36-month lease.
It marks the first time that any auto company has offered guaranteed depreciation on a sliding-scale basis. Previous depreciation plans-including those still in effect-were flexible only to the extent that the resale value of a vehicle was guaranteed not to depreciate at a rate higher than a comparable competitive make.
To qualify for the Ford plan, leasing companies must detail their previous depreciation experience. For example, if a fleet can statistically prove; a 2.1 per cent per month depreciation for a car, Ford will guarantee a 2.1 per cent depreciation rate.
Another qualification is that cars must he capitalized for purposes of depreciation at dealer cost plus $75 plus 2 per cent.
As part of the package, Ford dealers will repurchase the cars at replacement time, offering a better control over reconditioning expenses.
Ford introduced a "guaranteed resale" program in 1961 and carried it over to the 1962 but discontinued it with the 1963 models. It was a matched depreciation plan based on prices of the best resold comparable models as reported by Automotive Market Report.
GREATER EQUITY
Lawrence E. Domagall, general fleet and leasing manager of the Ford division, told Automotive Fleet that the new program is a "logical and sensible" extension of the old guaranteed resale plan.
"The new program offers greater equity since it is based on known factors and predetermined dollars," Domagall said. "It eliminates the variable factor of fluctuations in the price of used cars."
Domagall emphasized that since there, has never been a plan like this before, it should be considered an experiment.
The sliding-scale depreciation program is an alternate to the rebate on accessories that Ford made available to leasing companies last fall.
Under the program, leasing companies and their customers can receive a $125 rebate for accessories purchased with Galaxie models and $80 for accessories purchased with Fairlane models. There is no accessory rebate for the Falcon.
Ford uses a manual transmission, six-cylinder car as the base for figuring the rebate. Thus, if a leasing company ordered an eight-cylinder model with an automatic transmission, it would receive a rebate for the first $125. The rebate is based on dealer cost.
Chrysler Corp. will also continue its guaranteed depreciation program "at least through 1964," the company told Automotive Fleet. The program maintains the depreciation of each 1964 Chrysler at a level no greater than that of a comparable make. Any model that is sold alter six months of service in leasing is eligible for a subsidy if its depreciation is greater than that for any comparable ear as determined by auction reports.
In other leasing news, Automotive Fleet has learned that Chevrolet has set up quotas on early deliveries of 1964 models to leasing companies. Starting Oct. 15 and until dealer pipelines are full, leasing companies arc allotted cars-based on the cars that they ordered last year. The move is a reaction to growing pressure from dealers to restrict the high volume of cars normally channeled to the dealers during the early months of the model year.
As a result of the possible shortage of Chevrolets, leasing companies are recommending that customers accept and designate alternate comparable models so that regular replacement cycles can continue uninterrupted. Hertz, for example, recommends that customers specify Ford as an alternate choice during the last quarter of 1963 and "the first month or so of 1964."
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