Ed Bobit's Publisher's Page

"...the spirit of wisdom and under standing, the spirit of counsel and might the spirit of knowledge and the fear of the Lord." 11:1-2 Isaiah.

Biblical words sometimes are quite appropriate when applied to the recent combination of price-freeze at model change time, the increased import levy, and the expected reduction of the excise tax on cars. These 'happenings' directly affect everyone in our business and naturally most turn to the used car mavens for that effect it will have, and when, and what it means in dollars.

Amazingly, as knowledgeable as this professional industry is, we are still without the research and proven data to project an outcome of this sort.

We at AF receive and study the experts' viewpoints and their quotations on the expected change in car residuals; we talk to fleet mangers and the principals at fleet auctions. Yet, there remains definite divided predictions. Professionally calculated guesses range from no change at all, to over $200. Most do center around the $75 mark after all the dust settles.

My point here is that in spite of computers recording almost everything we know about costs and dealing with tangible initial capitalization costs for a definite period, we still find 'ambivalent tones', 'deleterious effect', 'disaster', and so on within the industry.

From our conversations within the industry there appears a strong need for better research to aid both the lessor in predicting the results of new elements that are introduced into the market area; and for the lessee and/or the fleet manager so that he can, with a greater degree of accuracy, advise his financial management of the dollar change a particular new element influences.

It might make a most interesting joint project that could gain the interest of groups like NAFA, AAIA and the National Auto Auction Assn.

Interestingly, in our recent search for accounts that have switched either to or from leasing in the last six months (we will be offering a feature on the reasons for switching) we found it relatively easy to locate some major fleets that have switched back to company ownership. More difficult to identify were those that have moved from ownership to leasing. In discussing it with a number of lessors, it was apparent that the bulk of 'new' leases on lessors' books were already leasing with another lessor, Perhaps we are closing in on the saturation point of conversion to leasing among the larger fleets, Or, perhaps, the market's economics dictate that the lessor's investment of time is better spent on switching an account from one leasing company to another; rather that the more difficult conceptual sell.

If your memory is functioning similar to mine, I seem to recall that when the oil companies added lead to their gasolines so many years ago, they were able to charge and obtain a premium price for this "no-knock" additive. Now that ecology has caught up with our people, and both the car manufactures and the oil companies have developed suitable and compatible engines and fuel, we find that the 'unleaded' gas also commands a premium at the pump for the elimination of the additive.

A check of the oil companies who have invested heavily in development of the low-leaded fuel, indicates that the bulk of Americans still strongly favor old standard regular with all its emissions. Like shoulder harnesses, it obviously will take some time.

One of the finest presentations I have seen is the one given to the Newcomer Society in April by president (and new chairman of the board) John Lalley on PHH. If you have not seen it in their colorful brochure, I recommend it.