Automotive Fleet's 45th Anniversary Commemoration
1950's - Prologue:
During this period, the term “fleet” either referred to a group of ships or to the heavy truck and bus fleets in the U.S.
Ed Bobit was working for McGraw-Hill’s Fleet Owner magazine, selling ad space in the Midwest. During a conversation with Al Fitzpatrick, Studebaker fleet sales director, Fitzpatrick commented that they didn’t make heavy trucks and he wanted to sell to car fleets. The light bulb lit.
GM, Ford, and Chrysler all had fledgling fleet sections and leasing for fleets was quickly growing. Already established were Wheels, PH&H, Emkay, Gelco (later GE), Hertz, and others. In ’55, AALA was formed and NAFA was formed in ’58. Car and light truck fleets were gaining recognition.
Bobit researched the market that offered few available statistics and found some encouragement among advertisers. In ’61 he presented the idea for Automotive Fleet to his employer, McGraw-Hill. The management team wasn’t convinced the market was viable. Bobit resigned June 30, and published his charter issue November 1961. With the blessing of Howard Cook, Ford’s fleet director, AF became a reality.
Fleet leasing grew along with consumer leasing through dealers. The Ford Authorized Leasing System (FALS) had 250 dealers with 93,000 cars on lease under Jim Larkin’s direction. Ford Fleet experimented with leasing direct and, in ’62, Chrysler followed suit. The IRS drew up a permanent regulation permitting a lessor to treat the lessee as the purchaser of equipment to claim the 1963 Investment Tax Credit. Later that year, with AALA’s intervention, the Court ruled against the IRS in the Motor Lease case, ensuring fleet leasing’s success. In ’68, Chrysler opted out of commercial fleet leasing. NAFA allowed affiliates in on a non-voting basis. In ’69, Ford’s Howard Cook retired. Bobit and a small group formed the Automotive Fleet & Leasing Assn.
NADA estimated that about 11,200 dealers were involved in leasing. NAFA’s study showed that the most commonly used chargeback for driver personal use was 4-cents/mile. PHH celebrated its 25th anniversary and McCullagh and Commercial Credit merged leasing units in ’71.
In ’72, the factories successfully fought a federal government investigation into fleet allowance practices. GM, with strong encouragement from Wheels, established the first Distant Delivery Program for fleets. AALA permitted banks in leasing as members and Gelco acquired Lease Plan Int’l. (LPI).
In ’76 the Financial Accounting Standards Board (FASB) required all finance/capital leases to be shown on lessee balance sheets as liabilities, effective Jan. 1, 1977. Bobit Publishing moved to California. In ’79 the average fleet car’s cap cost hit a record $6,343 and interest rates also hit a high of 14-percent. NAFA welcomed its 2,000th member. In personnel news, Jim Frank moved to president of Wheels; Gary Tepas to president of Emkay; Jerry Geckle to CEO of PH&H; Tom Pappert to general manager of Chrysler fleet and the same for Lee Whiteman at Ford fleet; and Bob Ward to president of Gelco.
Prime interest hit an all-time high of 20 percent. GM changed service card policy transferring the card to the delivering, rather than the selling dealers. Dart-Kraft acquired Gambles C & M Leasing as Bill Fleming was named president. Hal Barton moved from Lincoln-Mercury to fleet general manager at Chrysler. In ’83 DOT mandated a third brake light for all ’86 models. In ’85 Hertz was sold to UAL; Hertz founder, Walter Jacobs dies, as does fleet leasing pioneer, Sam Lee.
The 1990s were characterized by consolidation within the fleet management industry with numerous acquisitions of fleet lessors and divestiture of bankowned fleet lessors following the repeal of the Investment Tax Credit by the Tax Reform Act of 1986.
There was also a dramatic consolidation in the auction industry with the emergence of auction chains that grew through the acquisition of singlesale independent auctions. The 1990s was also a decade of government regulation of fleets through the Clean Air Act Amendments of 1990 and the Energy Policy Act of 1992 that mandated acquisition of alternative-fuel vehicles by covered fleets.
Safety also emerged as a growing issue with fleets as early adopters of airbag-equipped vehicles, which at that time offered supplemental restraint systems as optional equipment. The fleet departments of the Big 3 manufacturers also revised their fleet sales criteria by adopting dual FIN/FAN requirements for fleet lessors and their fleet customers.
The terrorist attack of 9/11 had a major impact on the fleet industry by causing a meltdown in residual values. Fuel prices through the first six years of the decade trended upward by first breaking the $2 per-gallon threshold and then, after Hurricane Katrina, breaking the $3 per-gallon threshold. The unanticipated increases in fuel costs played havoc with fleet budgets. Consolidation of the fleet leasing industry continued with GE acquiring the fleet portfolio of CitiCapital Fleet, PHH acquired First Fleet Corp., LeasePlan acquired Consolidated Service Corp., Emkay acquired the car portfolio of AMI Leasing, while Penske acquired AMI’s truck portfolio, as a few of many such acquisitions.
In an effort to be more reflective of its diversified communication business, Bobit Publishing changed its name to Bobit Business Media in recognition of its presence in Web-based media and as a producer of industry conferences.
Although still relatively few in number, large multinational companies were negotiating major global fleet deals, such as Pfizer’s global purchase agreement with GM. Also, pan-European fleet buys become more prevalent. Safety continued to be a concern as municipalities and a few states pass legislation banning cell phone use while driving.
OEMs decreased the number of CNG vehicles they produced. Biodiesel use grows among fleets, especially public sector fleets. Although constrained by product availability, hybrids grow in popularly among some major fleets due to corporate management’s decision to have a more “green” fleet.
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