Do Limited Choice Selectors Cultivate Driver Receptivity to Reimbursement?
Market Trends • March 04, 2003
In the early years of fleet, company drivers were typically given a selector allowing them to choose between a Ford, Chevrolet, or Plymouth. It remained that way for many years. Then, additional makes and models started appearing on fleet selector lists such as Buick, Oldsmobile, Dodge, and Pontiac. Later, import-badged companies, such as Toyota, Nissan, Mazda, and Subaru, began to seek a presence on pages of fleet management companies' selector guides. It was a time when fleets offered a broad choice of vehicles in their fleet selectors.
However, the pendullum has been swinging in the other direction, especially as more fleets negotiate multi-year sole-sourcing agreements with individual auto manufacturers. At an increasing number of fleets, the only choice drivers have is selecting the color of their new company vehicles. The make and model of vehicle has been predetermined based on a sole-sourcing agreement. As the auto manufacturers compete with increasingly appealing rifle shot programs, fleets will continue to take advantage of these lucrative, multi-year sourcing agreements. Each year, the new-vehicle acquisition study produced by NAFA shows that initial cost is the number one consideration by fleet managers in making vehicle selection decisions. As drivers are restricted to a specific make and model of vehicle, the long-term concern is driver morale. Will drivers become more receptive to a reimbursement program at some time in the future, especially if they find themselves with no selector choice and driving the same model of vehicle year after year?
Fuel Price Volatility is the Achilles' Heel of Fleet
Thanksgiving Day in 1973 was a crucial day in the history of the fleet management industry. On this day, the Arab oil embargo of 1973 was announced. This event profoundly influenced the fleet industry and its residual effects are still with us. The oil embargo prompted fleets to downsize their company vehicles and to move away from V-8 engines and migrate to six- and four-cylinder models. It also ushered in a new era of fuel-efficient vehicles.
Next to depreciation, fuel is the second greatest cost to fleet. What makes fuel expenditures so difficult to control is the volatility of fuel prices. For instance, it took loess than an hour-and-a-half after the terrorist attacks of Sept. 11 before reports began to surface of price gouging by gasoline stations in California, Illinois, Indiana, Michigan, North Dakota, and Oklahoma. Some stations were charging as much as $5 a gallon before the state attorneys general stepped in and threatened to sue for consumer fraud.
As a war looms in the Mideast, it prompts us to look again at the unpredictable volatility of fuel prices. Wars in the Mideast have been the sources of four of the five major esclatations of gasoline prices from 1973 to 2001. They were the Arab oil embargo in 1973 following the Mideast war of that year; the Iranian revolution in 1978; the Iran and Iraq war in 1980; and the Gulf War in 1991. The fifth run-up in gasoline prices occurred in 1999, and was not the result of a war. It occurred following the oil production cuts by OPEC and the simultaneous increased demand for fuel from Asian economies that were recovering from a severe recession.
In today's uncertain economic and political environment, now more than ever fuel management needs to be a top priority with every fleet manager. With today's escalating fuel prices, and war clouds threatening, every fleet manager must have a comprehensive fuel management program in place to ensure his or her company is receiving its money's worth for each fuel dollar expended. Let me know what you think: email@example.com