Hardly a day goes by that AF isn't called upon for information of one kind or another regarding individual leasing. We do know, checking back on our own leasing survey, those figures provided by last year's dealer leasing survey conducted by the National Auto Dealers Association (NADA) and data given by AMA's Facts & Figures, that it is the fastest growing segment of the fleet market. In fact, based on the information of these sources we estimate that the total number of vehicles involved in individual leasing for the year 1970 will approach 803,000.

This figure, based on the total number of dealers and independent leasing companies now involved in the leasing of automobiles, shows that U.S. dealers now handle approximately 650.000 individually leased cars and that independent leasing companies account for about 153.000 of these cars. By contrast, the total census for fleet leased cars (25 or more totals about 1.2 million. According to AF's estimates this total figure is made up of about 11,000 cars from dealer-affiliated lessors with the balance from independent lessors. So, it may not be long before individual leasing catches up with this segment of the business fleet market!

In order to take a closer look of individual leasing and get a better approximation of how the business is developing today, AF recently contacted Service Auto Leasing, a young Chicago-area company, for an in-depth look into their operations. On hand to give us a personalized tour and the benefit of his 14 years of experience in individual leasing was affable Howard Rosenberg, Service's executive vice president.

Speaking of individual leasing in general, Rosenberg called it "the wave of the future," citing the recent success of such companies as Chevway, Genway, and Cad-A-Lease. "You better believe that the factories are very interested in this market," he commented to AF, "and we're going to see more and more involvement in it by the dealers and dealer-affiliated companies.

INDIVIDUAL LESSEE PROFILE

And what about the demographics of the typical individual lessee, we asked the knowledgeable executive. "Of course, I can only speak for Service Auto," he advised, "though I think our customer profile runs fairly close to that of the entire industry. What we find is that our typical lessee is an executive between the ages of 38 and 58, is married, has children in college, lives in his own home, and earns over $20-thousand a year."

Although Rosenberg was reluctant to cite actual figures regarding the total number of vehicles involved in individual leasing through the U.S., he did estimate that between 30 and 35 percent of the total lease market was handled on this kind of lease. "But this figure includes small personalized business fleets, as well as individual cars," he elaborated. "And, naturally Service Auto, as most other personalized lessors has quite a few of these for customers."

HISTORY OF SERVICE AUTO

With respect to Service Auto leasing, Rosenberg advised that it was started in 1965 by Nate Paul, who at one time worked for Executive Auto Leasing in suburban Chicago. "He began on a shoestring," Rosenberg commented. "For example, on his first lease, he took a train to the dealers to pick up the car he was to deliver to the lessee; and after delivering it, took a cab back to his small office."

But after that first transaction, business grew steadily. And in 1968, service acquired all the leases of Addison Auto Leasing, a small Chicago company with a select clientele. As a result of the acquisition and their own business expansion, service was providing its customers with over 600 cars per year by 1970.

At this point, service itself was acquired by Paul's old employer, Executive Leasing (in Sept., 1970). Executive in the meantime had become a subsidiary of Liberty Leasing Co., a Chicago-based concern that leases a variety of equipment throughout the U.S. As a result of the transaction, Rosenberg explained, service can better accommodate larger fleet customers and also avail itself of the servicing facilities of Executive.

COMPOSITION OF FLEET

At the present time the composition of Service's fleet is about 250 Chevrolets, 100 Cadillacs, 250 Buicks and Olds-mobiles, and 50 Fords, Pontiacs, and Mercurys. With reference to make and model selection by Service's customers, Rosenberg stated, "We don't necessarily let the customer lease the car he initially wants-after all, we're out to get him the best deal available. So he may end up with either another make or model than he planned on."

Commenting on trends in makes and models, he advised that during the last year Service had pushed Buick Skylarks and Oldsmobile Cutlasses. In addition, he noted that the intermediate models (especially Chevrolets) are becoming increasingly advantageous, as are such cars as the Cougar, the Tempest, and the Camaro.

KINDS OF LEASES

At the present time, 95 percent of all service's customers are on a closed-end net lease. Of these, about one-third to one-half are written with a full-maintenance proviso. Most of these net leases are written with an open-end with respect to unreasonable wear-and-tear; and some (depending on the needs of the customer) contain a mileage limitation. On those leases containing mileage limitations, Service usually spells out a 3-cents per mile escalator charge.

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Discussing the types of leases generally sold to individual lessees, Rosenberg commented that this was determined mostly along regional lines. "The closed-end lease is really a Chicago invention," he stated. "So, you'll find most closed-end leases in the Midwest area." By contrast, he stated that the stand west-coast areas favor the open-end finance lease. And a relatively new development on the east-coast that he noted as an interesting innovation is the leasing of used-cars on a finance lease.

SERVICE'S UNIQUE APPROACH

Since Service Auto is not a dealer-affiliated company and cannot compete for individual leases on the basis of price alone with either of these kinds of companies or with larger lessors, we asked Rosenberg what his company can provide that these others could not do as well. "As our name implies," he replied, "Service is the answer. We take the trouble and headaches out of owning or leasing a car. Not only do we make available service facilities and insurance, we also provide loaners, handle titling and licensing and negotiate the trade-in."

Not all the services the company offers, however, must be taken by Service's customers. With regard to insurance, for example, only about one-half of the company's lessees take advantage of its ability to provide them with coverage.

SERVICE & MAINTENANCE

Under all of Service's leases, they have the right to inspect the vehicle at any time during the term of the lease. In most instances, this is not done; for the lessees know that they will be charged for undue wear-and-tear at the termination of the lease. But aside from the fact that it is to the lessee's advantage to have their cars properly maintained, the success of Service in obtaining clean cars at turn-in time is also due to the ease with which their lessees can obtain servicing.

Not only does Service maintain a standing fleet of about 125 loaners for their lessees (who can use them when their cars are tied up for repairs) in addition they now have (since their acquisition by Executive) a large service facility in suburban Chicago that formerly housed one of the area's largest dealers.

This facility employs a service manger, a general manager, three service-writers, five mechanics, five hikers, and about five body-and-fender men. Typically, a service customer can set up an appointment for servicing at the facility, pick up a loaner there, and be on his way with no loss of time and no red-tape hang-up.

In addition, this facility serves as a make-ready station for customers who are receiving a new car. In most instances, the customer merely drops off his old car picks up anew one. The old car is then held in the facility until bids can be obtained on it. In most instances, Service is able to obtain satisfactory bids through regular dealer-buyers. But in some instances, when the bids appear to be too low, Service advises its customers to hold off selling until additional bids can be obtained.

OTHER DELIVERY METHODS

Since a number of the vehicles that Service handles are marked for out-of-states drivers, not all the prepping is done at their service facility. Sometime sales are handled through fleet-minded dealers that are scattered throughout the country. And on occasion, Service will drop-ship vehicles to a spot close to their lessee's driver or drivers.

STAFF

At the present time Rosenberg has six salesmen under him which canvas for new business and service already established accounts. Most of these men have had considerable experience in both retail car sales and car leasing.

Rosenberg himself, who graduated from college with a degree in architecture, and whose interests range from acting in community theater to sculpting and sailing, began in the used car field. From this point he moved into retail sales and finally into auto leasing. He has worked for Executive Auto Leasing, Addison Auto Leasing, and (after a brief fling in the recreational vehicle market) for his current employer.

Summing up the service story, Rosenberg commented on individual leasing in general and the role of his company in particular:

"This business is going nowhere but UP! And we at Service Auto are going to provide a substantial portion of the thrust that will make leasing one of the nation's most important in the decade ahead.

"Not only will we provide tax and financing advantages for our customers; we will take all the trouble of owning and operating a car off their backs."

When asked if the success of Service was dependent on how well they were able to provide their customers with things that they simply didn't want to do for themselves, he replied:

"That's it-it all depends on our ability to get it all together for our people. And for those that can afford it, there's really no other way to go."

 

 

 

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