Ed Bobit's Publisher's Page

"We ought not to be over-anxious to encourage innovation, in cases of doubtful improvement, for an old system must ever have two advantages over a new one; it is established and it is understood." --Caleb Colton.

 

Anyone who does not think that there are a lot of important things happening within our industry today is simply not with it. There is one hell of a lot happening.

And most of it surrounds the attempts to get rid of the used standard size cars. You can refer to the daily headlines that cover the energy crisis, the ineffective dictums out of Washington or the impending recessional trend for midyear, but it still boils down to the fact that the big cars are not selling.

It is shocking to learn that one of the largest fleet wholesalers from Kentucky isn't buying any more standard size cars. Why should he? He ran 11 of them through the Indianapolis auction and none of them sold. He then ran nearly 60 through one closer to home and sold only seven.

A sharp Mark IV of '72 vintage with 22,000 actual miles went through the block in Michigan for $4,100. The same day, a '73 Grand Ville that was sharp and loaded went through for $2,100; and was followed by an equally sharp and loaded Nova, also a '73, that went for $2,200.

McCullagh is working with ways in which to get the public into their centers for any kind of a decent bid on their used units. Hertz Leasing is setting up used car centers across the country trying it on their own to get greater value and residual. PH&H is advising some clients to hold off replacement for 60 to 90 days where a trade-in is involved, hoping and planning that the market is going to be better.

There are a lot of dealers and independent individual lease lessors who simple are not going to be around in six months and they now sense it. It just isn't easy to ask the man to cough up another size or eight hundred bucks because the bottom has fallen out of the standard size car market. How are you going to get that same man back into a new car?

Amazingly, there are a goodly number of people in our field who still have not caught up with the facts of life. In December I ran a mini-survey to give Mac Wilson and the NAFA Chapter in Pittsburgh an insight on what is happening. The brief questionnaire was sent out to 25 key industry men; eight top fleet administrators, eight fleet dealer managers and 9 operational management men in leasing companies. These are the leaders in our business. When responding to "What is our biggest fleet problem?" only four mentioned 'selling high mileage cars' as their first or second largest problem; only two others mentioned it at all.

Now, I was pleased that I had 24 returns, but amazed by their responses. Their 'biggest' problem was conditioning reporting (eleven 'firsts' or 'seconds' out or 24); new car ordering hit them as the 'biggest' problem in their first four choices; similarly 14 in the first four for Field Service Problems, followed by 'Getting Paid' and 'Warranty' with a few other single mentions of individual problems.

I ask you, in light of what is happening and costing accounts dearly with the full size car resale values, how can there be any other 'big' problem facing us today? Why should we not be professional enough to figure out a solution to condition reporting, new car ordering, warranty and the rest. These are days of automation, sophisticated methodology and higher dealer inventories in a market that is not that hot for new car purchases. Surely we can develop the answers in the other areas but no one has the solution for the big car problem.

Also asked was, "What three fleet cars being ordered in today's market do you think will have the best resale value two years from now?" (Get your own pencil and paper out before reading on for the results.)

It was the intermediates by a landslide. Fourteen votes for Chevelle, twelve for Torino, eight for Monte Carlo and the Cutlass, six for the Luxus. Only seven votes for the standard size cars in total. A number of other mentions covered the compacts and 'others'. My whole point is that the leasing companies are sending out the gospel, industry leaders are talking personally with accounts, and auction and wholesale people are making the picture clear in a dramatic way. Still, some are not getting the message. Perhaps it is because no one has a secret answer that could save the industry from severe financial losses.

While it is fundamental that we do not panic, it is equally important that we have a knowledgeable awareness to attack the big car problem in a businesslike manner for the best possible solution.

There is a lot going on!