As Automotive Fleet celebrates its 60th anniversary, we look back on the major milestones that have influenced fleet management. The fourth edition of the Top Fleet milestones covers events that occurred between 1980 to 1989.
Below is a sampling of more than 60 key milestones that helped shape the fleet industry in its more than 80 years of existence.
Prime Interest Rate Increases to 21% in 1980: The Prime rate rose from the mid-1970s to hit an all-time high in 1980 at 21%. Car sales virtually halted, and manufacturers began issuing rebates to get the market moving. In terms of fleet, this added increased impetus to developing alternative fleet funding mechanisms, which evolved to the system employed today.
Higher-Content Fleet Vehicles: In the early days of fleets, companies had a choice of three models: Ford, Chevrolet, or Plymouth. The typical fleet car was the standard model with minimal equipment.
The biggest selector deliberations were over the economies of installing a radio or adding air conditioning for vehicles located below the Mason-Dixon Line. The “Plain Jane” fleet car became a historical footnote as OEMs bundled options into packages, allowed free-flow option ordering, and proved that higher-content fleet vehicles sold better in the resale market.
K-car Fleet Sales Save Chrysler: Chrysler’s K-cars were compact-to-midsize cars designed to carry six adults on two bench seats. Models included the Dodge Aries, Plymouth Reliant, Chrysler LeBaron, and Dodge 400.
Lessors were supportive of the Chrysler K-car. In 1981, Xerox acquired 4,500 Chrysler K-wagons. The following year, the company bought 3,000 more and in 1983, it purchased 3,500 K-car wagons. These and other early fleet orders were credited with helping save Chrysler from insolvency during the recession of 1980-1981.
Development of OEM Incentive Programs: In the early days of fleet, the standard fleet discount was a dealer-negotiated 10-percent-off list. As competition grew, OEMs developed more complicated incentive programs, such as guaranteed depreciation protection and “rifle shot” programs offering tiered volume pricing.
Also, OEMs introduced holdback for dealers, which were often rebated to fleets. In the early 1980s, OEMs started negotiating unique and substantial incentive programs directly with individual end users. Prior to this, fleet programs were identical for all fleets.
In the daily rental market, OEMs developed special buyback programs. These rental vehicles were depreciated at a set monthly rate and then bought back by the OEMs for resale after a minimum in-service period.
Creation of Fleet Accident Management Programs: Accident management programs have been available since the 1970s as a supplemental service offered by independent vehicle mechanical repair companies.
Fleet leasing companies began offering collision repair services in the early 1980s, although they did not yet have a managed network of body repair shops. Around this time, companies specializing in accident management emerged, and they formed national networks of independent body repair shops, expanded services to fleet and leasing partners, and acted as a single-source provider.
In the late 1980s and early 1990s, use of accident management programs by fleets increased significantly. By 1992, there were at least 17 major accident management programs offered by fleet management and accident technology companies.
Creation of Fuel Management Programs: Initially, fleet fuel cards were issued by large fleet lessors, but they were more program identification cards than true credit cards, and their use was often cumbersome.
Wright Express (WEX), founded in 1983, was the first entry in the fleet fuel card business. Fleets began setting up cobrand relationships with WEX. Other companies were founded that offered fleets fuel card management programs, including Voyager, Comdata, Fleetcor, Pacific Pride, and Fleet One. In 2010, there were at least 23 major companies offering fleet fuel cards.
Successful Defense of Fleet Incentives Against Dealer Litigation: In 1983, H.R. 1415 was introduced in the U.S. House of Representatives by Congressman Gene Taylor (R-MO).
Besides prohibiting manufacturers from selling autos to leasing companies and fleets at a price lower than to dealers, the bill would bar manufacturers from offering cash rebates, free options, or other incentives unless the same incentives are offered to all purchasers.
The bill was defeated. In 1990, another price discrimination lawsuit was brought against the Detroit Three by Ron Tonkin, then NADA president. In 1991, Tonkin dropped the lawsuit.
IRS Creation of Personal Use Requirement: The Tax Reform Act of 1984 made changes to the withholding requirements on personal use of employer-provided vehicles.
The IRS issued regulations explaining the provisions, stating that company automobiles would not be considered business use unless the amount of such use was included in the employee’s wages during that year and taxes were withheld, or the employee reimbursed the employer for personal use.
As of 2020, more than 82% of fleets surveyed said their companies allowed personal use of fleet vehicles. As any fleet manager will testify, this change in the tax code created a monumental fleet “headache.”
Introduction of Minivans into Fleet: Chrysler introduced the minivan in 1984-MY, creating a new market segment. Minivans, also marketed as “multi-purpose vehicles” (MPVs) around the world, gained popularity in European commercial fleets to move both cargo and people.
In the U.S., Xerox and Tupperware were early, high-volume buyers of minivans for their fleets. The popularity of minivans escalated in the last half of the 1980s. However, the increase in crossovers and SUVs in fleet, along with some OEMs discontinuing popular fleet minivan models, resulted in a decline in minivan registrations.
Creation of NAFA CAFM/CFM Programs: The original Certified Fleet Manager (CFM) program was a partnership between the NAFA Foundation and the Wharton School of Business at the University of Pennsylvania in 1984. This was the first-ever fleet certification program. There were 41 graduates of the Wharton CFM program.
While the CFM program is no longer offered by the NAFA Foundation or Wharton, those who graduated from the program retain their CFM status. The CFM program was brought in-house by NAFA as the CAFM program in 1989 primarily due to its prohibitive cost when offered by Wharton. There were more than 300 active CFM or CAFM graduates.
Starting in 2009, NAFA began offering fleet certification in two tiers: the higher CAFM tier, covering all eight disciplines, and a lower Certified Automotive Fleet Specialist (CAFS) tier. The CAFS is a subset of the CAFM program rather than separate from it. One pre-approved set of four disciplines must be completed to attain the CAFS.
Creation of Fleet Advisory Boards: The first fleet advisory board was created in July 1984 by D&K Financial Services (D&K Financial was acquired by GE Capital in 1987).
Ultimately, most OEMs, fleet management companies, and fleet service providers followed suit with the creation of their own advisory boards.
Creation of the Low Cab-Forward Class 3-4 Truck Market: The import of Japanese-branded low cab-forward Class 3-4 trucks produced by Hino, Isuzu, Mitsubishi Fuso, Nissan UD, along with Italian-brand IVECO trucks made inroads into vocational fleets, such as those in the heating and ventilation, plumbing, landscaping, and construction industries.
In addition, low cab-forward Class 3-4 trucks also gained market share in urban fleet applications, such as parcel delivery, due to tight turning radius and maneuverability.
Creation of AF’s Fleet Manager of the Year Award and the Fleet Hall of Fame: Automotive Fleet magazine began its Professional Fleet Manager of the Year award in 1985, and Jack Lamb of Exxon was the first fleet manager honored.
The award recognizes experienced and proficient fleet managers who demonstrate special business acumen in developing and executing key management policies in all areas. The Professional Fleet Manager of the Year award has become a sought-after prestigious industry award. In 2021, it enters its 36th year.
The Fleet Hall of Fame was instituted in 2008 by AF with the Automotive Fleet & Leasing Association (AFLA) as the exclusive sponsor, to recognize fleet industry leaders and pioneers who have contributed significantly to the commercial fleet management profession with fleet careers spanning 10 or more years.
Established with 20 founding members, nominations for each year’s inductees are submitted by fleet professionals for voting by industry peers using an online ballot. Currently, there are 88 inductees in the Fleet Hall of Fame.
Emergence of Women as Fleet Managers: From its beginning, fleet was a male-dominated industry.
Early women pioneers in fleet included Betty Natoli, a pharmaceutical fleet manager, Marie Loehrner of Yale & Town, both members of the Round Table Group (a precursor to NAFA), and Helen Bland, fleet supervisor for Hallmark Cards, who became the first woman president of NAFA (1985-1987).
Helene Kamon of Wendy’s became the first female president of AFLA from 1988-1989. Patsy Mance of Bristol-Myers Squibb became the first female AF Fleet Manager of the Year in 1991.
OTD Status Alerts by OEMs: In the 1980s-1990s, OEMs set out to improve order-to-delivery (OTD) times for fleet vehicles. One development was the creation of OTD status alerts by OEMs using Web-based tools to track vehicle ordering. These tools were also used to optimize production scheduling and allocation.
In 1999, AF inaugurated its annual OTD survey for popular fleet vehicles. Another report provided by Bobit Business Media to OEMs is a confidential fleet sales report that documents monthly fleet sales by manufacturer, broken out by commercial, government, and daily rental fleet segments.
Introduction of 1986 Ford Taurus: Originally introduced in the 1986 model-year, the Ford Taurus remained in near-continuous production for more than two decades.
The Ford Taurus was one of the dominant cars in the fleet industry since its introduction.
Providing a mix of package, performance, and styling, the original Taurus was in production from 1986-2006 and became an icon in the fleet industry.
Repeal of the ITC/Lessor Consolidation/GE’s Entry into the Fleet Leasing Market: Prior to the Tax Reform Act of 1986, significant tax benefits prompted companies such as Dart & Kraft, PepsiCo, and Xerox to acquire existing fleet leasing companies.
However, as a result of the repeal of the Investment Tax Credit (ITC), many corporate entities sold off their fleet leasing business units.
Around this time, GE entered the market as a ready buyer and initiated a series of rapid-fire acquisitions that coalesced the industry into 10 major fleet management companies.
Truth in Mileage Act: Passed in 1986, the federal Truth in Mileage Act (TIMA) required sellers to provide actual, truthful odometer readings and to disclose any known inaccuracies. Unfortunately, odometer tampering was very prevalent in the 1960s-1970s, especially with out-of-service fleet vehicles.
TIMA made odometer fraud a felony. Failure to disclose that an odometer had been changed or repaired (altered in any way) and/or falsifying mileage documentation would result in fines and/or imprisonment.
If mileage was unknown, the vehicle would be labeled TMU (True Mileage Unknown). In addition, the shift to digital odometers sought to curtail “clocking,” but succeeded only temporarily. Ultimately, harsh prison sentences were the best deterrent.
Outsourcing of Fleet Management Services: In the 1980s, the trend to outsource non-core services swept corporate America. In 1989, PHH created the first-ever total fleet management program with Eastman Kodak.
In-house fleet departments witnessed staff reductions as administrative services were outsourced to third-party vendors. Outsourcing also changed the skill set required of fleet managers.
In the profession’s early years, most fleet managers had technical or automotive backgrounds. As these fleet managers retired, a new generation of fleet managers emerged, whose backgrounds were financial, administrative, or managerial.
One reaction to total fleet outsourcing was the introduction of “unbundled programs” for commercial fleets by some fleet dealers.
From the 1990s to present, there has been a steady introduction and implementation of technology solutions in fleet operations. Also, during the period there was an evolving change to the fleet manager position as procurement and strategic sourcing gained a greater voice in fleet acquisitions and supplier selection. Also, during this period, sustainability gain a greater prominence in fleet considerations and decisions.