"The biggest thing that faces the leasing company, the fleet administrator, the dealer, and the manufacturer is that we can't rely on the traditional ways of doing business.
"We have to innovate. We have to come up with new ideas. We are in an interchanging community. We have to change with the times."
The speaker was John Blessing, president, Commercial Credit Industrial Corp.
The site was the Royal York Hotel in Toronto, Canada.
The audience was a luncheon meeting of the Automotive Fleet and Leasing Association. The association is perhaps the best, and certainly the most recent, example of what Blessing advocates as a "new idea" in the car fleet industry.
As stated in the March issue of Automotive Fleet, which sponsored a one-day seminar in Toronto for the purpose of determining if such an organization was wanted and needed in the industry, the over-all objective was to "improve dealer relationships with fleet buyers in order to increase fleet sales, develop better communications in administration, delineate buyer motives and objectives, and to upgrade service."
There were 70 persons who attended the seminar, which began with a continental breakfast co-sponsored by Chrysler-Plymouth and Dodge Divisions.
Ed Bobit, publisher and editor of Automotive Fleet, officially opened the seminar with an outline of objectives.
These objectives, which later in the day were approved by the association's by-laws committee, included:
". . . to better analyze factory programs and to develop professional techniques for training programs and over-all industry relations with volume buyers . . ."
". . . to develop strong liaison with NAFA and other related associations who have a basic interest in the fleet buying and selling relationship. . .
Dennis McSweeney, new car purchasing manager, Hertz Car Leasing Division, spoke to a morning session on "How Hertz Leasing Deals With Dealers."
McSweeney told the seminar that his company does business with "1,200 new car dealers and that 85 per cent of the fleet managers that do business with Hertz have been doing business with the car leasing division for five years or more."
"At Hertz, we don't have any secret yardstick or secret formula in the establishing of our dealer network," McSweeney said.
He listed what he called the "big three areas" in the establishment of such a network. He said the three areas were not listed in any order of priority.
"First must be communications. This is communications between dealer and Hertz and the customer. These communication lines, once established, must be used for status of orders, operation notification, stock car availability and numerous other information.
"Second must be dependability. We have had more than our share of fair weather friends . . . those dealers who during the production period think we are great, but when production has stopped, stock cars are either at a premium or are non-existent.
"A third area is maintenance and used car facilities. These areas speak for themselves," McSweeney said.
McSweeney also listed geography, size of dealership, and the fact that a dealer does business with other leasing companies as important factors in becoming a part of the Hertz dealer network.
"I would prefer to do business with a dealer who does business with other leasing companies," McSweeney said. "Our problems are no different from their problems. The experience that a dealer can gain from dealing with other leasing companies will be a help to us."
In a question and answer session that followed, McSweeney was asked why Hertz deals with "certain dealers in certain areas."
"Basically, because most of these dealers have years of experience. The dealer is proven ... he is fleet minded," McSweeney answered.
Why doesn't Hertz Leasing drop ship, he was asked?
"We sell local service and the community dealer. We have found that there can be a great deal of indifference when we drop ship through a dealer. We feel it is better for our customer if we stress the local dealer. We think the customer will get better service in the long run through this procedure."
One dealer asked McSweeney why Hertz Leasing didn't pay more promptly.
"We pay very promptly upon receipt of invoice," McSweeney said. "In fact, we pay in 10 to 12 working days upon receipt of invoice."
Following McSweeney on the program was Ron G. Trapani, director of purchasing, Lease Plan International.
"The automobile business has placed emphasis on sales but appears to have forgotten what the customer needs, and that is service," Trapani said. "There is considerable evidence that the pendulum is swinging toward improved service and professionalism," Trapani said.
"Let me say right here, our business rests on a dealer framework, and if that framework is not solid, we do not have a business. At LPI, we look upon our dealer organization as the keystone, a critical part of our basic method of operation."
In discussing how his company, through the dealer network, strives to improve service, Trapani said: "Service most often refers to new car preparation . . . predelivery . . . or post-delivery shop work.
"Predelivery, done properly, can be the most effective means of reducing customer dissatisfaction. Service is predelivery . . . properly utilized, this tool can generate irreplaceable good will. It can also generate income, as high as 60 per cent of fixed expenses."
According to Trapani, LPI "takes every opportunity to impress its clients that ours is a one-stop service. If I were a dealer or fleet manager, I would apply the same principles," he said.
"I would make absolutely certain that every fleet account 'thinks' my name in my area whenever it had a need. There are a select few dealers whose telephone numbers I have committed to memory. The reason is quite simple. They put out . . . they come through when we need them . . . They service our accounts and our customers."
It was Trapani's contention that the "present and future success of the car fleet industry depends more and more on the depth of service we (lessor-fleet dealers) can offer.
"The stronger our chain of service becomes, the larger our respective businesses will grow. The result has to be greater income."
In selecting a dealer, Trapani listed six determining factors: professionalism, pricing, ability to deliver, service, used car handling, and invoicing.
Trapani was asked why his company drop ships?
"The most significant reason why is because we are more effectively able to stay on top of each and every order that we have and we are able to use the leverage that we have with Ford Motor Co. to do what so many of our dealers do not do . . . that is stay on top of the order and thereby reduce the time of delivery."
Trapani said LPI will drop ship its vehicles through a dealer that the company is doing business with.
When asked if LPI "sat" on orders, Trapani was quick to reply:
"From the day that we get an order, it takes us less than three days to process that order. Our buyers have strict orders that they do not go home until the orders are placed. One thing we do not do at LPI is sit on orders."
Trapani said that when LPI places an order with the dealer, it also sends a copy of that order to the driver. One dealer asked about payments.
"Our average pay time is about 24 days," Trapani answered.
In discussing payments, Trapani pointed out to the dealer that "if we have an invoice that has this, this, and this, then we expect to be hilled for this, this, and this."
Trapani asked those dealers present what they considered a fair time period in regard to payment. The consensus was that the dealers would not object to payment being made within 30 days of invoicing. Most of the dealers present said they would not object to paying interest on a car for 10 days.
"Twenty days from the day that a dealer delivers the vehicle is a very fair time in which to expect payment," Trapani concluded.
McSweeney also agreed with the 30-day time period for payment.
Blessing, speaking at a luncheon meeting sponsored by General Motors Fleet Section, said the "delivering dealers are in a position to make or break our relationship with our lessee clients."
"The tangible beginning of the leasing cycle is delivery of the automobile and, therefore, you gentlemen, the source of these automobiles, have the opportunity to make the first real impression on our lessee drivers and on our lessee-company. It's not just an opportunity, it's also a responsibility."
Blessing then discussed what he termed an "irritant" in a dealer network:
"If your dealership is going to accept our orders for leasing vehicles, everybody at your place should be taught or told that units delivered are just as important as any sold to an individual customer."
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In discussing predelivery, Blessing said that "when an appointment to deliver a car is made, give yourself enough time to prep it properly or if, for the driver's convenience, it becomes a short notice affair . . . face the facts, If time is short, something special must be done to get the car completely ready. We'd like to see the day, but we probably never will, when the independent business men who are dealers could accept a recommendation from the manufacturers to do minor service jobs regardless of whether or not they were the delivering dealers."
In discussing used car condition reports, Blessing told the dealer" that everybody "all along the line will be better off if they can agree that the report is an honest representation of the car as it stands."
Blessing caused a murmur among those present when he said that "our dealers are letting us down. Maybe the number of dealers qualified to handle large fleet accounts is smaller than we thought. It looks as though we may have to regionalize on some broader geographic scale."
Blessing told about an experiment that CCIC was conducting in the Chicago area in which the company was buying from one dealer of each franchise for drivers within a 100-mile radius.
"If the Chicago plan proves out to be satisfactory, we will try to expand it," Blessing said. "We'll give fewer dealers more volume and hope to recapture the good prep work and lessee confidence we had in years past."
Blessing was asked at what price he felt dealers could operate profitably in today's leasing market.
"A dealer cannot get by on $30 or $40 over his tissue, keeping his holdback, unless he is getting a large enough volume from a leasing company to justify it. I would suggest to any dealer in this room, that if you are trying to service the five to ten unit fleet on your operation, you are out of your mind. You simply cannot handle all the different paper work.
"You can make more money selling to large fleets at $25 over than you can make selling three, four, and five units at say $50 over," Blessing said.
In the area of communications, Blessing suggested that the fleet dealer develop a stronger line of communication between "your fleet sales and your service departments. You'll improve your product because you will find that you will not have so many turnbacks."
Blessing also told the dealers that if they were working in a dealership where the owner was no "committed to fleet sales, then you had better find another job."
Blessing was asked about the "splitting of fleet accounts."
"It has become the general practice in recent years to find fewer and fewer lessees who are splitting their fleets. I think you will find his trend continuing."
Both McSweeney and Trapani echoed Blessing's sentiments.
Dick Smith, city manager for Avis Rent A Car System in Buffalo, N.Y., discussed his company's mode of operation in regard to vehicle selection and dealer selection at an afternoon seminar meeting.
According to Smith, "our selection of makes and. models may vary, predicted upon the manufacturers repurchase and/or licet assistance programs available at the time. The time of the year will determine our selection, again predicated upon the programs available," he said.
Criteria in Smith's vehicle selection included: competition's selection of makes and models; customer preferences; and what effect a specific make or model will have upon "our published rates."
In dealer selection, Smith listed the following criteria: location; selection of a "full service fleet dealer;" separate fleet department; and pricing.
Richard P. Hogue, fleet administrator, Westinghouse Electric Corp., outlined for the seminar the organization of the Westinghouse fleet and the programs and policies used by the company in regard to fleet acquisitions.
Hogue listed five things that Westinghouse expects from its dealers: competitive new car delivery; courteous treatment of drivers; prompt and accurate paperwork; top dollar wholesale prices.
In return, Hogue said Westinghouse offers to the dealer: exclusive territory or territories; opportunity for a lasting relationship; prompt payment of invoice (within seven days); immediate title transmittal; simplified paperwork; no cancellations or changes; no driver negotiating for equipment; used car appraisal; no bids or commitments.
In discussing the dealers' part in the Westinghouse used car disposal programs, Hogue said it is "our intention to establish relationships with dealers who are not only fleet minded in a new car sense, but who also have the desire and ability to efficiently handle used fleet vehicles."
At the close of the one-day seminar, temporary officers were elected. They will serve until an election is held in the fall. Elected were:
M. C. (Bud) Morrison, Konner Chevrolet, Levittown, N.Y., president; Don Fenton, Torn Edwards Chevrolet, Elmhurst, III., executive vice president; Jack Rosenbaum, Park Circle Chevrolet, Baltimore, Md, first vice president; E. Woody Wooclard, Al Piemonte Ford, Melrose Park, III., second vice president; Mark Rosenslock, Dale Olds- mobile, Bronx, N.Y., third vice president; Edward J. Bobit, Automotive Fleet magazine, Glenview, III., executive secretary-treasurer.
The association voted to hold bi-yearly meetings, one prior to the annual National Association of Fleet Administrator's conference, and the second in New York City during the new car preview period.
The board for the association shall consist of nine members. Association officers will share board duties. No more than three board members will be dealer fleet managers. All dealer fleet managers will serve for two-year periods on a revolving basis.
Membership in the association is open to all persons with an active interest in the fleet buyer-selling relationship. Regular members include those who have a total responsibility and who solely derive income from fleet and/or leasing sales; and, similarly, those fleet purchasers whose function is fleet vehicle buying in leasing, daily rental, business/corporate and other related fleets.
Associate membership is available to those dealers personnel who do not have a primary fleet and/or leasing responsibility. Also, dealer fleet service managers; auto wholesalers; auction managers; regional and headquarters factory personnel and the business press.
In the association's public statement of objectives, which will be incorporated into the by-laws, the following statement was listed:
". . . No price setting purpose, discussion or objectives will be allowed ..."
Annual dues are $75 for regular members and $50 associate members.
Comments on AFLA
Richard P. Hogue of Westing house: In the past, there has always been a gap between fleet buyer and fleet seller. I think this organization will fill that gap"
Herb Smith of Chrysler Leasing System: "I look forward to great things from AFLA."
John Rock of General Motors: "I feel this organization could service a worthwhile purpose in the fleet buyer-seller relationship."
Ron Trapani of Lease Plan International: "I believe this organization will be of definite benefit to the car fleet industry in general." Dennis McSweeney of Hertz: "I think AFLA is a great idea."
H. A. Pries of Ford Division: "AFLA could prove out to be a very sound idea."
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