Chevrolet Stresses Fleet

Robert D. Burger, vice president of General Motors and general manager of the Chevrolet Division (after moving over from Cadillac in mid-January), addressed the large group of key fleet management buyers in Detroit in May. George Frink, director of fleet sales, hosted the gathering featuring the new model lineup for 1985.

We hope that you will realize how important you are to Chevrolet because your business accounts for over 350,000 Chevrolet sales a year.

Through the first seven months of the 1984 model year, Chevrolet passenger car fleet sales were up 42 percent. Chevrolet truck fleet sales were up 48 percent. That's strength in a strong market, and we expect that strong market to continue for some time. In fact, we are forecasting for the calendar year 1984 that the total U.S. auto industry will sell about 10.5 million cars and 3.5 million trucks. That's 14 million units and represents an increase of 14 percent over 1983. At Chevrolet we expect to do even better than the industry. We're forecasting a 23 percent increase in Chevrolet car sales and a 31 percent increase in trucks. We'll have even a larger increase in our fleet business. One key area that will help us, and certainly influence you buying preference, is the price differential we at Chevy have over our sister divisions. You'll find a stronger, and ever increasing, Chevrolet price/value relationship both against our sister divisions and our other competitors.

The new GM organizational structure you've heard so much about has a lot to do with our new attitude. It's more than a change in business practice. Out quality improvement, market share improvement, customer satisfaction, and a lot of our other goals depend on something even more; they depend upon a change in basic philosophy. Eventually, each of our two new integrated car groups will be responsible for its own products, including engineering manufacturing assembly and marketing, and each will be accountable for its quality, performance, and profitability. Under this plan, business decisions will be moved closer to the centers of operational responsibility and car divisions will have greater control over their own cars, with a greater differentiation between car lines. Eventually we'll be able to move our products into the market more quickly and will be less dependent upon what our sister divisions are doing.

There's another new approach that excites me; the so-called Japanese connection. A connection unique to Chevrolet. Here, we've got two objectives; one short-term and one long-term. First, we need those lower-priced cars today! and, secondly, we need to learn how to build them in the U.S. so we can compete in that lower-priced arena.... and still make money. We are already working with three Japanese auto firms: Suzuki, Isuzu, and Toyota. The purpose is to add three new cars to he Chevy lineup all within the coming year.

Our West Coast dealers begin offering the Sprint, a U.S. version of Suzuki's new subcompact with a sticker price below $5,000 that marks the Sprint as the lowest-priced car in America. The Spectrum is being built for by Isuzu in Japan and will be available this fall. The third car is a product of the GM-Toyota joint venture to be produced in California, and we're excited about this new product since we'll have up to 250,000 units a year for availability throughout the nation. These three new cars, along with Chevette and Cavalier models, will give us a much stronger position in the small-car market segment that is growing by leaps and bounds. In 1976 subcompacts accounted for only about 20 percent of total sales in the U.S. but by the end of last year, they accounted for 35 percent, and we expect that trend to continue.

But we're really here to talk about things closer to the present ...1985. And one of our present challenges is some of the various legislation confronting us in the fleet portion of our business, I'm referring specifically to national and state legislation such as H.R. 1415 and H.R. 5305 I'm sure that you don't find it necessary for me to talk about their details.

I do want to make it quite clear, however, that General Motors has taken a very strong position against such legislation. Jim McDonald, our president, outlined that very clearly in a letter recently sent to each of our dealers. Many dealers do not necessarily agree with our position. And, as you know, they can muster a very effective and powerful lobbying force supporting this kind of legislation. In all honesty, there are some practices in the fleet industry which are just adding fuel to the fire.

Retail dealers are understandably upset when they find rental operators..... located across the street....taking advantage of fleet incentive programs to turn around and sell a new.... or nearly new supposedly used rental car'....at a lower price than the retail dealer can. Fleet management companies who offer to sell our products at prices below what a dealer can effectively compete at, are obviously another problem.

You are not dealers...but management companies. You do not sell cars and trucks. You purchase vehicles from dealers on behalf of you clients. The are many situations like this, all with good intent of taking advantage of certain kinds of legislation more ammunition. I mention this, with all good conscience, because it is an area of deep concern. We at General Motors feel very strongly about the rights of free enterprise. But, we are very cognizant of the feelings of our dealers. They are our lifeline in the market.

There are several reasons why we have to oppose this type of legislation. First, it would limit the number and the financial support of many of the retail incentive programs we are presently offering to our dealers. Secondly, it could be the initial stage of governments control of pricing and the opportunity we presently have to price out products competitively. It is not in the best interest of our industry to have government dictate policy at any level, wholesale or retail.

As you are probably aware, efforts to control prices in other industries have been counterproductive. I mention this because I want to encourage you to look very closely at you business and the profit opportunities if offers. The fleet business is a strong business. It's one that will get even stronger in the future. We at Chevrolet will be doing everything in our power to help you realize the potential of this business and to support you in you efforts. I want to leave no doubt in your mind of the important role you play in our business. We thank you for considering and buying our products. And we look forward to being a member of your team in the years ahead."