Are We Asleep at the Switch?

After recently returning from this year’s successful Conference of Automotive Remarketing (CAR), my almost innate “fleet mentality” started playing tricks on me.

We were fortunate to have an agenda that invaded the vision of true experts in every phase of the remarketing field. Everyone I talked to agreed that CAR is the premier event presenting cutting-edge insights into current and projected problem areas.

More than 700 attendees (a new record established for our 6^th annual spring conference) showed up in force for every session, even for the early morning speakers. In view of the Las Vegas venue and the lure of the slots and gaming tables, it was amazing to me.

The audience was a broad one including dealers, wholesalers, auction personnel, factory people and rental used-car guys and gals. What struck me later was that there were only a handful of people from major lessors and virtually no fleet managers. The obvious exception was Jim McCarthy from Siemens; he warmed my heart just to see him. Surely some of the company-owned commercial fleet managers should have been responsible and interested; but they were absent.

The speakers and panelists read like a Who’s Who in the field of remarketing. David E, Cole from University of Michigan Office of Automotive Transportation; Mark Hogan, head of eGM; Bob McGuire. president of NADA; Chris DeNove from J. D. Power; and leaders from auction groups, guide book marketers, and a host of top-level people discussed values, the future, and influences in the marketplace. It was awesome what they shared.

Still, no fleet managers.

I’ve been championing the importance of the depreciation flag in my editorials for nearly 40 years. Few fleet managers literally utilize their lifecycle costing data in their purchasing decisions as they are mesmerized by the dazzling glow of incentive monies up-front.

Similarly, fleet managers appear to focus almost entirely on purchasing, leaving remarketing to be outsourced. These same fleet managers seemingly ignore or don’t take the time to fully understand the resale process, or even how to fairly audit the results from their outside source who, almost inevitably, chooses the auction channel for selling the used units.

Most of the industry uses a guidebook for reference on auction prices. The guidebooks are “bibles” as the only index available is what auction sales bring.

Interestingly, some question this scenario, as there is an ever-increasing flow of vehicles being sold without the auctions. Mark Hogan from eGM reports that a level of about 120,000 a year are now being sold through its Internet Web sites; and he is now going to include rental returns, which will increase the number substantially. Ford has its own fleet remarketing department actively soliciting resale programs from commercial and utility fleets.

One fleet manager recently informed me that he now uses wholesalers for 25 percent of his large fleet. He’s also getting an average of $75 more for each vehicle.

With rental companies using their own retail lots for their used units and with employee sales still thriving, it’s estimated that perhaps as many as 40 percent of the vehicles turned in do not gel to the auction (and most of the better-conditioned cars are picked up before the rest are auctioned). So, some wonder if the auction prices truly reflect the used car’s value. But, it’s the best index we have today.

My point is that fleet managers should rank their energies and knowledge in the resale process right up there with being a sharp buyer of new units. Otherwise, we may be accused of being asleep at the switch.