Many business concerns have found that owning their own fleets of cars results in the diversion of too much executive time from the primary business interests of the company. This is the observation of Hubert Ryan, vice president of the Hertz Corporation and general manager of Hertz Car Leasing Division.
"Executives of such companies have reported that all too frequently they have to postpone or forego important aspects of other management work because of heavy demands on their time resulting from the need to keep their auto fleets operating satisfactorily" Ryan told AUTOMOTIVE FLEET..
"To begin with," he said, "not only must they make effective purchases of new cars, but they must also be prepared for the involvements of selling used cars. Extensive vehicle-usage records and other detailed reports must be kept. Proper registration and insurance procedures must be maintained. Arrangements must be made for necessary maintenance and repairs whenever required. Safety education activities for drives must not be neglected. Diverse parts and supplies may have to be bought and stored. Provisions for quick replacement of disabled or damaged vehicles must be established," Ryan observed.
"Executives whose companies own their own fleets thus find themselves involved in detailed matters which call for specialized expertise they usually do not possess," said Ryan. "Consequently, they cannot obtain the highest efficiency and economies from their auto fleets."
A COMPOSITE FLEET MANAGER
"At more and more companies, however, executives are finding that such problems as those cited can be overcome by leasing their cars," Ryan said. "Under 'full-maintenance' leasing arrangements, they have discovered that their fleets of autos are managed efficiently and economically by a team of specialists who, in effect, comprise a 'composite fleet manager' for the lessee," Ryan explained.
"These specialists-trained experts on the staffs of companies from which vehicles can be leased-each work full-time on one particular phase of fleet management. Thus, they bring to the lessee a background of practical knowledge and experience in fleet matters which any company-large or small-would find difficult to equal," said Ryan.
"Hertz Car Leasing, for example, has separate departments staffed by men, each of whom is concerned with one specific function, such as handling new car purchasing, selling used cars, record-keeping, authorizing maintenance and repairs, conducting a continuing program of driver safety activities, providing necessary insurance, or registering vehicles," Ryan pointed out.
MANY ADVANTAGES IN LEASING
The advantages of the availability of a "composite fleet manager" through full-maintenance leasing over "do-it-yourself" fleet management-for both large and small companies were, in Ryan's opinion, as follows:
"One clear-cut advantage is that the services provided by a car leasing company can result in operating costs that are lower than those that would be incurred by a company that handles its own fleet problems, particularly for a company whose fleet does not warrant employing a full-time fleet manager.
"Savings for the lessee result in part from improved administrative and operating efficiencies that full-maintenance leasing produces, from the elimination of time spent in administering a fleet, and from efficiencies in buying and selling cars.
"In addition, a company which leases is able to use the capital which otherwise would be tied up in owning cars in more productive ways, such as plant expansion, purchase of new machine tools, research and the like.
"Also, by knowing its fleet costs in advance," Ryan said, "a company which leases is able to enjoy improved budget control since most fleet-related costs are covered in one monthly statement from the leasing company."
NO MORE MAINTENANCE HEADACHES
"Throughout the life of a car delivered under a full-maintenance lease," said Ryan "the customer does not have to concern himself with maintenance, repairs or tire and battery replacements. The myriad problems connected with maintenance are administered by the lessor's highly qualified maintenance specialists. And, since leased cars are usually kept in service for two years or less before being replaced, expensive 'down-time' due to the need for repairs is kept to a minimum. Thus, a company which leases is able to avoid the difficulties encountered by many business concerns which often over-extend the lives of their cars, with resulting loss in salesman's time while their automobiles are being repaired."
"Through its continuing contacts in the automotive field, Hertz is able to arrange for prompt, convenient delivery new cars anywhere, a service of particular value to large national companies with widely scattered fleets," he said.
"When a company's driver takes delivery of a leased car, he can be assured that it has been thoroughly prepared by the dealer for immediate use," Ryan pointed out. Hertz works closely with auto dealers to insure that new car "make-ready" procedures are performed including testing of engine operation, wheel alignment, removal of protective factory coating, washing, fuel, oil, lubrication and other important pre-delivery procedures.
The lessee's salesmen do not have to be concerned about the licensing of their vehicles, for the leasing company's specialists will have taken care of proper registry and tilting. Complete insurance for the automobiles is also provided, when desired by the customer.
Assistance in achieving better safe driving records for the company drivers is available to lessees from Hertz' driver education counselors. "In this connection, Hertz will contribute prizes for safe driving records or even participate financially in the safety programs of its lessees," Ryan observed.
ALL BILLS GO TO HERTZ
All contacts concerning maintenance or repair problems are made directly between the individual operator and Hertz, without involving the lessee. When major repairs are necessary, the salesman simply telephones, wires or writes Hertz' maintenance department for expense authorization. Servicing is done at the authorized new car dealer of the client's choice, where Hertz sets up a charge account for the operator to reduce his out-of-pocket expenditures.
When repairs are completed, the dealer bills Hertz directly and Hertz in turn pays him directly. This procedure relieves the lessee from having to audit, approve, pay and file the numerous invoices involved in keeping a fleet of cars in top operating condition. "This is in contrast to a common procedure in the car leasing industry, which ordinarily requires the operator to pay for repairs and maintenance and be reimbursed by his employer or the car leasing company," Ryan said.
As for replacing cars damaged beyond repair, replacements are made promptly by the lessor, thus removing the burden from the shoulders of the lessee.
"These many valuable services and others provided by the lessor under full-maintenance leasing comprise a 'composite fleet manager' for the lessee and are effectively promoting the increased acceptance and rapid growth of car leasing," Ryan concluded.