Ed Bobit's Publisher's Page

Equal treatment, is the law of the, country.

And NADA is striving to ensure that its members — franchised, new car dealers — get equal treatment, from auto manufacturers.

That's why we voted to undertake aggressive action to meet the growing threat of fleet, subsidy 'payments by manufacturer's to leasing companies and fleet operators.-National Automobile Dealers Assn. editorial commentary in their publication, Automotive Executive.

Hertz, Avis, and Budget are being subsidized 'with huge cash incentives, millions of ad dollars, special equipment packages, guaranteed, depreciation, and other freebies. Then they turn around and compete with the dealer for his fleet customer, his leasing and, rental customer, his used car customer. . . and are, able to underprice him all the way.-Ed Mullane, president, of the Ford Dealers Alliance and a Ford dealer, quoted at the Automotive, World Congress in, August,, 1982.

The H.R. 1415 bill was introduced by Congressman Gene Taylor (R-MO) and has been jointly referred to the House Judiciary and House Energy and Commerce Committees. Briefly summarized it: 1. Prohibits a manufacturer from selling an auto to any person, company, or auto dealer at a price lower than it sells the same model to all auto dealers across the nation during a similar time period. 2. Prohibits a maker from imposing restrictions on some auto purchasers that are not imposed on all purchasers. 3. Prohibits a maker from providing cash rebates, discounts, free options, refunds, or other incentives to some auto purchasers that are not offered to all other purchasers of the similar model during the same time period. 4. Provides an exception for sales of units of federal, state, or local governments, so that they may purchase autos at a lower price than other purchasers.

Militant dealer groups, with the cooperation of NADA, have been instrumental in pressing for the introduction of H.R. 1415, and their mounting attack on "fleet subsidies" deserves examination. Most importantly, I object to the term subsidies. Fleets earn their volume discounts just as you do when you buy a case of booze or detergent instead of buying the units individually. Proctor and Gamble doesn't market or set a comparable price for the large family size of Tide the same as the small single box you buy in a laundromat. Car dealers sell a retail customer at list when they catch a sleeper but also sell an identical car at invoice to other customers, or may retail that same car well under invoice late in the model year when factory incentives are in effect. Dealers pay a different rate called local for Yellow Pages advertising compared to a national rate for other users. If you are a dealer in a particularly competitive area like southern California, you may receive extra advertising support from the factory which other areas may not receive.

GM just recently offered 9.9 percent financing for its subcompact and compact cars. The catch is that it's only available to GM's dealers; it is not available to fleets; they do not qualify. Now that is a subsidy.

Congressmen, dealers, fleet people, and consumers alike should bear in mind that every fleet purchase is made through a dealer. Some dealers obviously must not agree with their association's stand. The only reason the proposal excludes governmental sales is that most of those are to their local gentry and they love to say "those are 'our' police cars" or "the major is driving one of my cars."

Mr. Mullane and NADA's leadership fail to recognize that while one of five cars sold today is fleet, fleet sales remain the factory tail, and it will never wag the dog (predominate retail sales). Yearly fleet sales exceed 1.1 million. Nearly 75 percent of those purchases are represented by leasing and rental companies where the old "80/20" rule applies, i.e., some few hundred leasing/rental firms are buying over 800,000 cars each year. Compare that with Ford Division's 4,800 dealers who averaged 197 cars sold for the full year of 1982. These dealers (any maker's) order in dribbles throughout the year when compared to fleet buyers who order as early as July by the hundreds and thousands for fall deliveries. Who's kidding whom?

H.R. 1415 is not a good bill; it does not deserve to become law, and we're working actively against it. Hertz bought just under 100,000 cars last year; a dealer in Shelbyville, IN, probably bought 100. It's ludicrous to believe that they both should be charged the same price.