The Car and Truck Fleet and Leasing Management Magazine

The Start of Fleet Dealers

Fleet vehicles have always needed to get quickly from “point A” to “point B,” and a handful of pioneers made some significant changes to how it was all handled.

January 2013, by Lauren Fletcher - Also by this author

In the beginning of “fleet,” vehicle purchasing was anything but uniform. Before the advent of manufacturer fleet departments around the late 1940s, company vehicle administrators purchased units from individual dealers.

Policies, paperwork, and warranties varied widely. With fleet orders subject to allocation, six- to 12-month waits for factory-ordered units were not uncommon. The manufacturers’ allocation practices, which required fleets to request allocations based on prior-year purchases in the late 1950s, lasted until the early 1960s.

Each new model-year, large fleets met individually with Detroit automakers to research new offerings. Scant printed information was available and pricing was kept confidential early in the new-model cycle. Smaller fleets relied on obtaining new-model information from local dealers.

“Dealer holdback,” a concept introduced in the 1940s, increased the difficulty of establishing a vehicle’s price. To beat competitors, many dealers gave away most of their mark-up, while tying up capital in used-vehicle trade-ins. Dealers asked manufacturers to protect them from themselves.

Around the 1940s, Ford instituted a three-level holdback. The automaker paid smaller dealers $7.50 per vehicle; “principal city” dealers received $12.50 per vehicle; and dealers located in larger markets, such as New York, were granted $17.50 per vehicle. Plymouth and Chevrolet offered a flat $15 or $20, with payments made after vehicle sale. This practice soon evolved into a 1-percent holdback of the vehicle’s cost, and rarely was passed on to the purchaser. Market conditions slowly pressured dealers and manufacturers into first refunding half the holdback to fleet buyers. Today, the holdback refund is almost a “given” in vehicle pricing.

The Start of Fleet Dealers

Ford was a pioneer in establishing a fleet section in 1947. Around this time, another factory innovation was the introduction of fleet previews to provide new-model specifications to facilitate vehicle replacement planning.

In the 1940s, 1950s, and 1960s, lease companies began using regional dealers to handle the delivery of vehicles to their drivers. PHH, GELCO, and others ordered vehicles from a dealer in an area, and that dealer might handle delivery to drivers in a two- to three-state area.

McCullagh (later acquired by GE), went so far as to set up regional offices where it would take delivery from dealers, then drive the vehicle to the receiving driver.

This was the norm until the 1970s, when manufacturers began allowing drop-shipping of vehicles. Drop-shipping changed the fleet dealer landscape dramatically. A few dealers took the initiative to begin shipping vehicles across the country. These dealers became the major fleet dealers in the 1980s — Long Chevrolet, Piemonte Ford, Dale Oldsmobile, Ray Oldsmobile, and Weil Oldsmobile, among others.

Before the advent of OEM fleet departments, companies purchased vehicles from individual dealers, who usually only handled one model. Use of dealer ordering codes in the 1980s by non-dealers, such as fleet lessors, allowed factory-direct orders.

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