The following remarks were made during a panel discussion on "How Pro Dealers See the Future" at the Automotive Fleet and Leasing Association's annual meeting in Houston. The panel consisted of Don Fenton, Long Chevrolet; Jim Berkley, Elmhurst Chrysler-Plymouth; Joe Rosenfield, Fincher American Motors; Milo Matick, Alpiemonte Ford; Earl Stewart, Myrtle Motors; Murray Heit, Stillman & Hoag Buick; Tiny Solomon, O'Connor Lincoln-Mercury; Shirley Rupp, Elmhurst Dodge; and Mark Rosenstock, Dale Oldsmobile. The session was moderated Jack Oliver of Beaudry Ford.

Fenton: I'm going to discuss a subject that pertains more to the fleet sales manager than to anyone else in the room, but I think there will be a message for everyone.

Before looking at the future of the fleet industry, I think we have to backtrack a bit, so I put together a few quick figures related to market growth and fleet penetration. These figures take into consideration corporate purchases, government purchases and major lease. They do not include individual dealer leasing, which is a very large segment of our market. In 1963 176,000 units were purchased in the United States in those three categories, comprising 6.7-percent of the market. Five years later in 1978, this segment had grown to 793,000 fleet units are 10.5-percent of the market.

I think it is important to project ten years down the road to see where we're going, so I asked many knowledgeable people to give me as much information as they could from a corporate standpoint. The consensus was that by 1987 the fleet market will grow from 11.8-percent to only about 13-percent of the market. However, because of the tremendous growth in the total number of vehicles purchased, it should be an 18- to 20-million-unit year, which would put the major fleet purchases over two million units. It doesn't take a genius to see that if two-million fleet units are bought in the next ten years, we have a great future.

How can a fleet dealer share in this growth and get his fair share of the market? I think we have to ask, "How have the professionals - the Jack Olivers, Bob McGarveys, Jack Rosenbaums and many others who have been in this industry for five, ten, fifteen and twenty years and more - achieved their success? What has been the ingredient for their success year after year?"

I tried to analyze that and I came up with a very simple answer: they give what is called a "total package deal." That is, they blend service and price into a total concept. Today's marketplace has become a bit scary for some of us because some present-day prices seem to put a lot of people in the industry in jeopardy. The professional buyers have taken many short deals and have not received enough service. What I'm trying to say is that the buyer today is very sophisticated. He needs a competitive price. He is going to search for the best possible deal available in today's marketplace. If your deal does not include the service he needs, he's not going to be with you for very long.

I think it's important for us to decide that in the future we are going to be better, not just cheaper. Blending service with competitive prices is very tough because you have to be competitive and yet have your department staffed with good people to give the service that's necessary. You have to order cars correctly and deliver them correctly, and you must bill and collect correctly. We should be competitive, but if we want to around next year we must also analyze our true cost of doing business, looking beyond the obvious costs of salaries, travel expenses and servicing of car. We must be familiar with the hidden costs, the interest costs, the cost of employees' payroll taxes. A total package to hire an employee in today's market runs about 18-percent more that the salary you're paying him. In other words, add about $1,800 to a $10,000 salary for payroll taxes and all the fringe benefits such as insurance.

I think it's very important that we as dealers have these figures together and take them to our management. If, instead, the management comes to you as a fleet manager and presents you with these figures it will be a lot more embarrassing that if you know what your true costs are. If you're out in the marketplace and don't know your costs, and as a result are not making a profit, it's easy to see that the dealer is not going to keep you, or the company that's buying the cars is going to drop you because you can't afford to give service.

I don't want anyone to think that I'm advocating high prices, because I'm not. This is a free marketplace, and the buyers are going to search out the best price. In order to be a successful, long-term dealer, you must be able to give the service that's necessary blended with competitive prices. In plain and simple terms, to remain successful you're going to need to be better than your competition and not just cheaper.

Berkley: My topic is servicing the fleet account of the future. What are we going to do in the future that's different from what we are doing today? I think first we have to go back to see what the dealers though of the fleet business years ago. Most dealers then didn't know what fleet business really was. They thought it was a fringe benefit, a plus, something extra that they didn't have to work for. Most of them never thought it was a profitable asset to a dealership. Many of them took fleet business because they were forced to by the manufacturer. Frequently when your customers went to a dealership for a quote on a company car, they wouldn't get to see the sales manager or the dealer principle. Instead they'd be thrown to a retail salesman on the floor who really had no concept of fleet business. He wouldn't know any of the fleet programs. He would think, "Here is another company car and I'm only going to get a mini-commission for handling it, perhaps just $10." This has happened in the past. Most of the time the paperwork that had to be filled out - time of delivery, billing, license and title - were not done correctly because people didn't understand the process.

Since this still happens quite often today, what are we going to do to change it? Most importantly, fleet managers are going to have to make people more aware of their dealerships and of what fleet business really is. They're going to have to educate people as to why they're doing certain things. Fleet managers are going to have to be more aware of the drop-shipment programs that are available, parts, service, body shop business and the retail sales of new and used cars. In closing, I'd like to say that the only way for us to improve our business relationships with our customers in the future is to have a common goal: service.

Rosenfield: I'm a salesman. I don't know what the car of the future is, so I had to go to the people who do know. I went to American Motors and asked them about their plans for future cars and they gave me some information that I'd like to pass on to you. Basically, the decision will belong to the government and the manufacturers. The fleet car of the future is one that will be determined by government regulation and by the ability of the manufacturer's engineering departments to meet these regulations while still giving the consumer a car that meets his passenger-space, load-carrying capacity and styling requirements. We must take into consideration regulations concerning miles per gallon, safety controls and emission systems as well as decreasing energy supplies and increased costs.

We're going to have lighter cars, smaller engines, lighter-weight glass, shorter wheelbases and more use of plastics, such as in molded body panels. The changes are now coming faster than they have over the last several years. We've recently seen the impact of the use of four- and six-cylinder and diesel engines. Long-range forecasts could include electric power. Technical advances will determine when we'll see that. We can only guess at the styling that the car and truck manufacturers jealously guard in their future plans. As salesmen and operators, we can only hope that our association is with winners like Jeep and the Olds Cutlass. There are some handouts outside the room that cover an idea recently developed by AMC called Concept 80, which is their plan for future production as far as their fleet units are concerned.

As a salesman, I can only give you my ideas about the car of the future for fleet use. The actual car will come to all of us from the final decisions by the manufacturers.

Matick: Many experts feel that the fleet market will continue to expand over the next few years until it is 20-percent of the market by the year 1980 or 1981. With the price increases that we apparently will continue to live with in the foreseeable future, disposal of the used fleet car on a volume basis has more effect than ever before on a company's profit, if for no other reason than to increase capital. The best method, of course, is to retail every used car, therefore realizing the optimum return. Unfortunately, getting into the retail business means additional expenditures, such as qualified personnel and good locations.

The "number one" rental company has been extensively involved in retailing for over four years. During the last two years they have realized a substantial profit increase due in part to retail used-car sales. I realize, of course, that a car rental company deals mainly with one-year-old cars, whereas a lease company and company-owned fleets have cars as old as three years. The car rental companies have a distinct advantage in that the cars they order, for the most part, will coincide with what is selling well now from a retail standpoint.

Even now, renting an automobile from a company in the retail business can be an experience from the standpoint of unexpected equipment. These vehicles can vary from units equipped with tilt steering wheel, cruise control and stereo all the way down to "strippos," some of which have a stick shift. The reason rental companies do this is to create a bigger market area when the used cars come up for sale on a retail level. I'm not saying that the number of cars we will process through auctions or wholesalers will differ from the number we are presently selling through those routes, but with the increase in so-called fleet cars - be they leasing or company-owned - volume disposal by way of retail will increase, and thereby take up the slack while increasing profits.

The following are a few facts that we can look forward to. Five-hundred thousand individuals will lease cars this year. Lease/rental is the fastest-growing segment of the automotive industry. The lease/rental industry is growing three and one-half times faster than the rate of retail automobile sales. Two out of every five vehicles made in this country will go into lease/rental by 1980. I - and, I'm sure, many of you - would miss the action as far as wholesaling automobiles is concerned, should the business turn 100-percent retail, which I can't see happening in our lifetime. By action I mean being able to sell a car to someone who says, "What do you want for that red Granada? There are 68,000 miles on the clock, the paint on the roof is faded, the sides are chipped, the windshield has a scratch, the floormats are worn, it needs three tires and tune-up, and the brakes and transmission are questionable. It either has a lifter or rod knock, but outside of that it's not a bad car and I think I can make a few bucks on it providing you'll let it go for $1,500 back of AMR." I don't know about you, but all the cars we sell seem to have at least the afore-mentioned afflictions, and I am pleased when we can sell one. I'd like to see the day when all of the companies install a rigidly regulated preventive-maintenance program for their leased and company-owned cars along with a corrective maintenance program in order to change the feeling that a fleet car means a bad car or a not-cared-for car to the idea that a fleet car is a good car and a good buy.

Equipping the car well at time of purchase is a good idea because an option that was a luxury one year ago could be a necessity today. Once considered luxury options, automatic transmission, power steering and AM radios are standard fleet-car equipment today. Presently, the options are unbelievable: power brakes, air conditioning, tinted glass, wheel covers, vinyl roof, stereo music and tape players, CBs, white walls, body side molding, front and rear bumper guards. In the near future, tilt steering wheels and speed controls will be included in fleet packages. In the snow-belt states some fleets are even making it mandatory to have electric defrosters. What people are looking for in a new car today, time turns into a requirement as far as a used car is concerned. If the people in charge of purchasing would make recommendations to their superiors in order to show a better return and equip units in such a way as to make them more salable at the retail or wholesale level, volume would increase almost automatically. The percentage of used cars actually turned in as opposed to anticipated returns was less than 25-percent during the current 1978 model year at our dealership. That tells me there have to be some good cars out there.

Stewart: Wiser men that I have said that those who do not know what has happened in the past are condemned to relive it. We're not here to discuss the past but to look at the future, and in order to do that we must, for a brief moment, relive the past. The fleet business is still relatively young, so with the permission of those who have been actively engaged in it for the past twenty years or so, let me recap its brief history.

Until 1959 prices were negotiated much as they are today, but in those days a manufacturer's invoice cost to dealers was pure, raw cost. We had absolutely no assistance; there was no such thing as holdback, commission or rebates. At announcement time of 1960 models the manufacturers inaugurated a one-percent holdback. This opened up a whole new area of negotiation. The following year that program was so successful that they increased the holdback to two percent, which is, of course, still in existence today. Since then leasing companies have grown larger and have developed systems totally unknown at that time. Initiation of drop-ship or courtesy delivery was a negotiation between dealers for the convenience of their fleet customers. The manufacturers at that time assisted their fleet customers in an attempt to further merchandise their product lines to the fleet.

The size of the market, according to sophisticated sources, is estimated to be 11.8-percent of the available production, Obviously this lends itself to computerization with myriad controls and a speed of communication found only in electronic data-processing systems. The market dictates where cars are purchased and through which dealers deliveries are effected. As many of you know, time is money and speed is of the essence. Neither time nor money can be wasted in paper-chasing. More data processing is in the future of fleet business. The business of the large leasing companies - Gelco, Hertz, Avis, National, PHH and Wheels, some of which own dealerships - is dealer oriented. Therefore, dealers that want to remain competitive are going to have to seriously consider EDP [Electronic Data Processing] of orders, billing, etc.

History is repeating itself. It seems that the more changes take place, the more control requirements remain the same. We're selling a service faster, more economically and more efficiently than anyone else. If we don't, we must number ourselves among the non-professionals, the beginners and those who do not know the past. Basically, we are now delivering, licensing and servicing automobiles exactly as we did 20 years ago. We are using the same methods of negotiation as before, but our customer has changed. He is now our fellow dealer, requiring us to do something for him and the customer at a negotiated fee. If this seems like déjà vu, it is, because we have been there before.

Heit: The term "communication" is as broad as it is long. It is very important that we communicate with our customers and leasing companies. Accuracy of orders is one of the most important things we have to deal with, because if we don't get an accurate order, or if the equipment isn't listed properly, a lot of time and effort is wasted. There are many ways we communicate with our leasing companies; we use messenger service, telephone, mail and Telex. We are beginning to see that if the volume is there and the cost isn't too great we need more computerization than ever, but that will take a little time. It is very important that any communication that a dealer gets from the factory, such as changes in equipment or certain options that are being held up in production, be transmitted to the leasing companies. If you have the information and they don't, it really slows down the ordering cycle. Anything that interferes with the ordering cycle naturally adds up to a great deal of difficulty.

Another very important factor is to make sure that if there are any inquiries from your leasing companies, you quickly call them back with accurate information. If you don't, they feel neglected, and that doesn't do your business any good. We are in a service business, and if we don't keep that in mind we won't be in the service business much longer.

Solomon: We've been discussing how to sell cars, buy cars, repair and service cars, but what we're getting down to is that every time we have a problem or get involved in any kind of sale the government becomes involved - someway, somehow, somewhere. We have strikes and can't get cars. We don't like the equipment on a car or someone in Washington decides that we're going to have to put an air bag or a side bag on a car.

Speaking of air bags, a man on the news recently said that instead of using the electric chair or the gas chamber, we could use the air bag as an execution device because it would break a person's neck immediately and would be painless.  Now, instead of using the air bag for cars, we could use it for the maximum penalty. This gives an idea of how our government is operating. It's going sideways and we're going to get caught in the middle. Every time we do anything, every time we create a car, there are additional government regulations to control it. If it's not a catalytic converter, it's a smog device; if it's not a smog device, it's an air bag or some other device such as bumpers that explode. Now the government is encouraging the development of a recyclable graphite car and that ends the used-car business.

We have reached the point now where we all must get involved and pay attention because those taxes we're paying are being used to hit us over the head. I'm sure you've heard the media take shots at us; they consistently do it. The government does it through them. You must get involved and if there is something that doesn't make sense, tell the government about it. Inform your Senators and Congressmen; inform all your administrators on county, state and federal levels. Let them know, because this is your business. Remember that one out of every four people in this country is involved in the automobile industry, so what affects our business affects the whole country.

Rupp: A fleet dealer's main goal must necessarily be the best possible service to the fleet customer. Service is the name of the game; it's been proven true time and again. If a fleet dealer keeps the same clients year after year, it's because that client is satisfied with the dealer's performance.

I'll limit myself to discussing the point I consider the most important in improving the fleet dealer's image - striving for a high degree of professionalism. Ours is a very specialized field; we are pros. We must constantly work at honing that professionalism to a very fine point. In other words, we must offer efficient handling of paperwork, staff our offices with knowledgeable personnel and give the service when it's asked for. We must supply prompt answers to inquiries on status, billings, shipping information, and so forth. If you don't have the answers at your finger tips, you should all know where to get them. If you don't, make it a point to find out. Naturally, your local distribution office is the first source, but beyond that, if it is a production problem, a special-equipment problem, shipping problem or even a lost vehicle, make it your business to cultivate contacts at the various plants, the different transport companies, and most especially at corporate headquarters. Let your fleet customer know that you're not reluctant or hesitant to go as high as necessary to get some kind of response to his inquiry or to resolve a troublesome problem. You may not always be able to accomplish your goal immediately, but keep your customer informed and let him know that you are on top of the situation. Don't stop at just one try. Believe in the old saying, "the squeaking wheel gets the oil." If necessary, keep hounding your sources; they'll help you if they can. Make them understand, as I have done with people at Chrysler Corporation, that they will be helping a customer that is buying their product and that if they can't give an answer the customer will go to a competitor. They will help you, even at the top.

Most of your dealings with customers will necessarily be on the telephone, so bring professionalism to the phone. Have a pen and notepad handy so that you can take down a purchase order number or a question or whatever they're calling about. Remember that time is money for you and for the customer. Don't let your customer hang on the phone while you are trying to get an answer. Call him back; spend your nickel. I once had a valued fleet customer say to me, "Shirley, when I have a problem I want to make one phone call and consider it handled." I took that to heart and I've tried to make it my business to do this with all of my people. Get back to your customer as quickly as you can, with some kind of an answer or satisfaction. At Elmhurst Dodge, if we have a problem layed in our laps, we go to work getting it solved as expeditiously as possible to relieve our customer of the burden. Sometimes it seems it will take a miracle to come up with a solution or an answer, and while we haven't quite mastered that, we are working on it.

Rosenstock: In our dealership we look at the subject of upgrading the fleet department from within as a training program. In our training we start out with the question, "Do the people who answer your phones answer them promptly and courteously?" Eighty percent of your fleet business comes in by phone and a phone call is generally a fleet account. The first contact with your firm makes an impression that can never be made again.

Do the people answering your phones have ample product knowledge needed to answer the fleet buyers' questions quickly and accurately? Can then intelligently discuss availability and delivery? Are your people familiar with your current available fleet stock? Can your fleet people find information for fleet buyers when they request it? Do they know where to look? Do you have enough phones? Do your fleet people realize that each fleet account is to be treasured and handled accordingly? Do they realize the work required to obtain one good account? A good manager never finishes training his people.

This brings us to the subject of communications. Do the people who sell fleet accounts and the people who administer orders and delivery of the accounts really understand the needs of each account? Does your fleet department inform your service department in advance as to incoming fleets and delivery requirements? Does it inform the office manager and the billing department as to same? Does your fleet department notify fleet accounts far enough in advance of delivery to eliminate unnecessary delays?

I think consistency is a very important point in this business in order to service accounts properly. On that subject we ask ourselves the following: Do people function as a single unit or as a group of individuals? Are your fleet people aware of monthly objectives? Do they understand that they are a profit center within your organization which is as meaningful as retail, used cars, finance and insurance? Do you establish systems for receiving, billing and delivering cars and for receiving payment and do you adhere to them? Do your people finish one job before starting another? Does someone in your fleet department establish daily priorities and follow them through to completion? Does your fleet manager realize that the ultimate responsibility lies with him for performance of the department, or he is a buck-passer?

This is when the dealer comes into play. Any fleet manager must have good communications with his employer, to be able to service accounts the way they expect to be serviced. If he makes a deal, he must live up to it. He must understand that a retail manager on occasion will say, "I need that car," but if it's reserved for a fleet, the fleet must get it.

Finally, take time to listen and to understand the everyday problems of your fleet people, no matter how small they may seem. Big problems are no more than lots of little ones put together. Learn to appreciate your employees' problems and try to find a solution to them. Try to eliminate routine boredom by lending importance to each person's job, no matter how small the job seems to you.