AALA-Midyear Meeting: Industry reports high hopes for 76.

American Automotive Leasing Association members met in Chicago recently to attend the 20th Annual AALA Midyear Meeting. While AALA has been largely comprised of fleet leasing companies, there seems to be a trend toward gaining new membership in the small fleet business and re­tail leasing business. There is also a growing trend on the part of fleet lessors to enter retail leasing. The consensus of the members is that had not new business been un­covered this year, there would have been a drop in the total number of cars which fleets leased. Fleet-size has diminished or remained static.

A panel discussion on "Length of Leases Next Three Years, Economics of Lease Patterns, Accounting for Longer Leases," included Harold Oshry, President, All State Ve­hicles, and John W. Salzer, President, National Equipment Leasing Corporation. Oshry stated, "You have to believe." He stated that changes come gradually in the automobile business, and that individual trends such as the move toward greater production of small cars tend to be mag­nified out of proportion.

Salzer noted, "In light of the problems now being ex­perienced by the auto industry, preliminary indications are that the automotive fleet segment of the industry should maintain its growth as part of the whole market and may provide some relief for the automobile industry as a whole. Many of our large lessees have changed their fleet policies and a lot of indecision regarding makes, models, and lease turnover time has curtailed ordering the past two years. We have seen a definite decrease in orders in the October - November period and a pick-up in the spring. Why? More than likely, fleet administrators are awaiting new car prices, rebate programs, information on makes and models, and a corporate decison regarding car replacement policies.

He continued, "Now I will relate (specifically) some of NELCO's actual experiences. We have one large lessee, 2,500 units, that has gone to thirty-six months or 75,000 miles. Another lessee in 1974 with 2,000 units went to thirty-six months or 60,000 miles and six cylinder com­pacts. This precipitated a strong adverse reaction by the sales force who are holding their old large cars and not ordering new units. Surely they will have to order this year; however, they do have the option of going to sales­man-owned cars with mileage reimbursement, thus many have already turned in their fleet cars. Still another with five hundred cars just went from twenty-four months to thirty months or 60,000 miles - up from 50,000 miles."

"I believe we are going to see a trend to smaller cars by more fleets with the introduction of the 109" to 114" wheel base cars, such as Monarch, Granada, the new Dodge Aspen and Plymouth Volare. This will probably take the heat off the corporate decision by the elimination of the term "compact" car and maybe the companies can gracefully get their people into smaller cars.

Now, I still think we are going to have a good year and the open end finance lessors don't have too much to worry about, however, net lease lessors (closed end) and main­tenance lease lessors will have to take a real hard look at their costs and the resale value of used cars."