Automotive Fleet, noting the change in the used car market regarding diesel-powered vehicles, took the time recently to speak with four 'diesel experts' at a symposium sponsored by AF. Those involved in the discussion include Bill Henderson, fleet manager, west, for the Oldsmobile Division, Don Kolb, fleet administrator for McDonald's, Arnie Mach, fleet administrator for Northern States Dower, and Ron Vogt, fleet administrator for the Shaklee Corporation. Our discussion began by AF asking the participants to describe the make-up of their fleets.

MACH: Our total vehicles that we lease and we are leasing through Gelco, are 750. Of the 750, 250 of them are diesels. We started out with the V8 diesel in 1981, which was our heaviest year. From that we went to the V6 diesel. We started ordering those in January, 1982. I've got to say we were offering them to everyone in the company at all levels. We've got typically very distinctive types of drivers in our units, everything from meter readers to vice president-types. At NSP there is no 'company image.' What we do is prepare a selector list and the employee chooses a vehicle from that list. Looking at it from the success, I would have to say it is successful with some drawbacks. They are really not for everyone.

If the driver you put behind the wheel is not willing to take care of his maintenance as we require, there is going to be problems. We live in the cold spot of the nation, Minneapolis, and if he isn't blending his fuels correctly there is trouble. You've got to make sure the driver is doing what we are asking he or her to do.

As far as driver training, we put on driver information meetings, we explain diesel in detail. I stress with a dealer that before a driver takes delivery of the car, the dealer drills the driver on proper maintenance for that car.

If we came right out and said 'If you're not willing to take care of that car don't order one' that might save some trouble.

AF: What specific cars are you talking about?

MACH: Specifically, Olds and Buick.

AF: What differences do you find between the V8 and the V6?

MACH: I have to say that I don't have information on the V6, the oldest one we have is only three or four weeks old. The efficiency of the engine is what prompted me to buy the V6. Looking at the price, there wasn't too much difference, about $20, and we were really looking for the efficiency. Our mileage with the V8 ranges from 17 to 22 mpg, and we expected that because we have got different types of jobs in the company, requiring different types of driving for the cars.

AF: Ron, could you fill us in on the Shaklee fleet?

VOGT: Shaklee Corporation is a little different from other companies, where our drivers are not company employees, they are independent distributors. We offer a selection of approximately 72 different makes and models of two doors and four doors, station wagons, vans and pickups. It is basically their selection to choose what they want from the selection we give them. We also give them certain equipment we require but we give them an option list. The diesel is one of the options we do have on the list. Out of approximately 5600 automobiles Shaklee has on the road, approximately 2038 are in the Oldsmobile line. Of that 2000, I would say approximately 50 to 60 percent are in the diesel category.

We have been running the diesels in the Cutlasses, the Deltas and the 98. In 1979 we had a little problem, in 1980 we had a little problem, but in 1981 and 1982 we have not fore­ seen anything.

Our mileage is pretty good on our cars, which should help us with the diesel. We are averaging about 36,000 miles over a 2-year period. We have not gone with the V6 at the present time. We do allow it in the Ciera but it is the only one we have put it into since I want to make sure the Cutlass is going to be able to handle it.

We are not sure of the engine. We usually do not jump into an engine or an option the first year right off the bat. I perceive we will use the V6, since I understand it is quieter and efficient and probably offers better mileage.

Shaklee is not responsible for the fuel. This is our driver's responsibility. They are going to pick the fuel-efficient car. We are talking about 40-50,000 miles a year, a lot of drivers live in outside areas, and a lot of them have their own diesel tanks as well.

We do stress maintenance on the diesel and that is because we have a warranty with our people where we will cover our cars up to 50,000 miles or 24 months, whichever comes first. If we find they are not protected or not taken care of or there is water in the tank and so on, we will let them pay for one $3000 engine. That corrects the situation quick out in the field.

We are getting what we need from Oldsmobile in terms of cooperation. We look forward next year to keeping them on the list.

We sell our own cars, we are not leased, we are company-owned. We have had terrific and not terrific sales on them. As you know, in the last couple of months that has dropped off. We still take them to the Midwest. We will bring all our diesels there and we are working it out. I am sure as soon as gasoline comes back up the diesels will be there where it is supposed to be as an economy engine.

AF: What criteria will you use when you decide whether or not to use the V6?

VOGT: Basically, from what I am going to hear, from talking to Don Kolb and some other people, I am sure we are going to put it on our list as an option. We do not force our drivers to take a diesel. We do keep them out of the large (gas) V8s. Our selection list goes all the way from a Skylark to a Continental; they can even get a Rolls-Royce if they reach a certain level. The engine itself sells itself and that what the people go for.

 

We are getting the requests for it. We are putting it in the Ciera, we have not allowed it in the Cutlass or the Delta. Probably for '83 we would allow it in the Cutlass once we see the performance, what it is doing, whether it is working right.

Again, we let the drivers use the selector list. The publicity Olds uses to push it is really a big factor with our drivers. I would say out of the 2038 Oldsmobiles, probably 90 percent of those are Cutlasses of the Supreme Brougham category.

AF: Will the diesel percentage go up from current levels in the next year?

VOGT: It depends on what happens with the maintenance criteria and the used car end of it. If it picks up, or if Olds comes back and says 'We're going to protect that engine we're going to give it what it needs,' definitely. If not, we are probably going to have to put an additional charge into that engine to protect it at the end. Our warranty program will probably have an additional charge for diesel.

AF: What does Olds have to provide they are not giving now?

VOGT: If the 1981 and 1982 cars basically hold up to where they are they won't have to provide anything once the word comes back that the diesel engine will hold up past the 30-40,000 mile criteria. If you start having the same problems with the 81's and 82's that you had with the 79's and 80's, then I think we're going to have to look somewhere else or make a decision on whether to stay with the diesel.

The other big factor is. . .what happens to gasoline prices?

AF: Don, please give us a look at the McDonald's fleet.

KOLB: We operate 1700 cars. We have been into diesels in a free- choice environment since the 1980 model year began. Halfway through the 1980 model year we made a basic decision that we were going to go diesel 100 percent. Since, then, all but about 100 cars have been converted to diesel, as they normally are cycled.

We right now have about 1600 diesels in our fleet, operating all over the country, mainly the Cutlass Supreme, the Supreme Brougham, and in the 1982 model year we added the Buick Regal. We use Regency 98s for our officers.

The V8 has been the only engine available until this year. We are presently testing the V6. In­ terestingly, in our fleet, the V8 is averaging 28.3 miles per gallon. The V6, of which we have about a dozen right now, in the new A-body, in a total of about 30,000 miles, are averaging about 38 to 39 miles per gallon. So, it looks like a dynamic direction for us.

We do use the V6 in the current G-body. Our experience is that the diesel by its very nature tends to be a bit sluggish on the bottom end. The V6 with less cubic inch displacement is even more sluggish. That situation does not exist with the V6 in the A-body. We are looking at the A-body for our 1983 model body. We are not buying them right now, we are testing them.

AF: How about maintenance and driver education?

KOLB: These are the areas where we really separate from the pack. We have our own fueling systems in 17 regions around the country. We started installing fuel systems because of the gas shortages we experienced back in 1979, not because of diesel. We lost about 15 percent of our man-hours with people waiting in line for gasoline every week between California and New York alone. If we translate that to the entire country, there is no way we can effectively operate reducing our workforce by 15 percent.

So we began to put fuel systems in, sometimes at regional offices, sometimes at store locations.

The one thing I think diesel does is it takes any driver totally out of his 'comfort zone'. Anyone who has driven a gas-powered company car for any amount of years. . .there is a certain amount of comfort that he has in that environment. Take him out of that and put him in a diesel . . . you have put him in a foreign land, where no one speaks his language and he really doesn't under­ stand what is going on.

I think they key to success with the diesel is driver education.

We also have extremely tight control on the drivers. They know up front that if because of lack of maintenance, particularly oil and filter changes, if that engine goes because of that, that driver buys it. We have done that for years, with our gas engines, and we have continued it with our diesel engines.

The engines themselves, although we haven't run into what Ron talks about with a 30,000 mile problem, we have over 60 million miles on our cars, and we have seen a transition into different types of problems. From the 1980 models going into the 1982's, we have seen a shift from the fuel distribution system in­ to more traditional problem areas like transmissions, torque converters, things like that. . . 

VOGT: We are totally the opposite. We have not seen any transmissions in the 80's or 81's.

KOLB: We have had our fair share of them.

AF: You are saying that you didn't have as many problems in 1980?

KOLB: I cannot say we didn't have problems. One of the difficulties in confronting the diesel situation is that you have drivers that, anytime anything goes wrong, they are on the phone. You do not encounter that with the gasoline engine. You go to the corner mechanic. Major problems will go unnoticed in a gas engine. That is not the case with the diesel. I do not care how small it is.

They are scared to death that something might happen to the car and it might be their responsibility.

We ran into governor retaining ring problems early in 1980. We found what the fix was. Olds came out with a kit that had the right ring in it. We told our people 'Anytime you have any difficulty with distribution of fuel in your car, tell the dealer you want this kit installed.' We spent an extra $30 or $40 per car sort of anticipating a 30,000 mile governor retaining ring failure. We did not encounter hundreds of injector pumps being replaced or that sort of thing.

For us it has been a particularly good experience. In spite of the fact that you get a lot higher visibility on diesel problems, the maintenance costs for the diesel is still below comparable gasoline models. Although it looks like you might be having a lot more problems with the car, when you get to the bottom line, you really aren't. It is a visibility and a communications phenomenon.

AF: You're saying your strict policy with your drivers is a factor in keeping problems to a minimum.

KOLB: I wouldn't call it strict. In my experience, if the driver knows what is expected of him, that is what he'll do. If he has got to turn in an expense report each month, he'll do it. As long as management supports that. If his manager doesn't care, we are not going to get expense reports. Same thing with oil changes on the car. . .or any part of his job. It is important that McDonald's be properly represented to the public. It is his job to see that that happens.

AF: So a driver must look at his or her car as part of the job.

KOLB: Absolutely, it is another responsibility to the corporation. He gets a paycheck, a car is an important tool to him, like a typewriter to a secretary.

VOGT: I think that is the difference between what McDonald's has and what Shaklee has. We have independent distributors not on our payroll. The car is used for the sale and promotion of Shaklee products and it is basically their responsibility to keep maintenance up on the car. We cover an extended warranty on the car and it is their responsibility. That is where we differ in our type of fleet, because we don't have that type of control where we can see the oil change or glow plug change or whatever it might be. That is partially why we have told our sales force that if you have a failure, you'd better be able to produce the proper maintenance on the vehicle or it will void your warranty.

AF: Arnie, as a public utility, how do you handle maintenance and education on your diesel cars?

MACH: On a monthly basis 1 put out a newsletter to all the drivers in the system, telling them about the unique features of the car, telling them what is expected of them, that type of thing. Along with that, annually, we meet with all the drivers for more specific sharing of information.

AF: Let's talk about the sudden drop in used prices for the diesels and how you handle disposition.

MACH: We use Gelco Leasing Company. When I terminate a vehicle, it will go one of two ways. It will be driver sold, or it will go to Gelco. Gelco Leasing handles the sale of the vehicle. They sell to brokers and they use the auction system. We have seen diesel car prices drop for the past six months. Whenever we turn one in, we're just not getting the type of dollars that I had expected to get for it when we ordered the vehicle.

AF: What type of premium do you pay for the diesel over the new car price?

MACH: About $800. And we are not seeing that return on the used car end.

KOLB: There are two things to be considered. One, if you look at an in­ crease in residual value because the car is diesel, which is what we experienced until the prices fell off, then you are talking about recapturing that $800. The other thing is that the significant improvement in mileage and the lower cost of the fuel recovers that $800 in about 40,000 miles. So, are you talking about recovery at time of resale? That fluctuates with every car in the marketplace. Right now, with the lower cost of gasoline, your return on investment during operation might push back until 45 or so thousand miles.

I am not naive enough to think that gasoline is going to stay where it is, or diesel is not going to get back to its more traditional spread between it and gasoline. That is just the way the market works and it will work.

When you talk about used car value, I think we will see the diesel market pick up. It may not ever get back to the $600 or $700 we saw before, but anything, in my opinion, that gets packed into that residual side, is a plus. I have already recovered my original investment and gotten 10 or 15,000 gainful miles out of it afterwards. There are a lot of ways to look at it.

HENDERSON: If you break it up three ways, into cost-in, cost-in- service and cost-out, then I have to agree with you. I think we'll see some fuel prices that are going to increase.

AF: Of course, this is an example of the professional fleet administrator looking at things from all sides.  

VOGT: You have to look at your program. Shaklee varies because we are not involved in paying for the fuel. At disposal, we buy them, we sell them. . .it is a walk-away "I do not foresee a tax on diesel fuel." lease for our drivers, basically. We are not talking just Oldsmobile, we are talking diesel.

The loss is there right now, it was not there before. Put the two Cutlass Supreme Broughams together, one is a gas engine one is a diesel engine, and they both have 30,000 miles, I am going to hit a grandslam with the gas V6 and I might get to first base with the diesel. Again, I think it is the knowledge that we give our drivers and that Olds has got to give the public. Our used cars are being sold to the public. We do everything in our power to sell our cars back to our drivers. We are selling about 65 percent back to our drivers and that is helping us. If someone orders a diesel, they'll usually buy the car. That saves us and them in the long run, because next time they order a diesel we won't have to put a higher depreciation or maintenance on it to bring it out at the end of 24 months. We also tried to extend some diesels in the past, but now we are not. When 24 months is up we ask them to make a decision because if they decide to buy we might let them go a little longer. If they say no and decide on another car, we want to keep the mileage at that 24-month point.

AF: What sort of life or mileage expectancy do you see for the 1980 and 1981 diesels?

VOGT: Once Olds gets the message to the public that the cars are running well and holding up, 50 to 60,000 miles, things will improve.

HENDERSON: Oldsmobile, right from the start, never tried to say that the diesel engine would last any longer than the gas engine. We never said that one time.

AF: Don't you think that the public perception of the diesel has something to do with that of a one million mile truck engine?

HENDERSON: I would say that perception has been out there, yes. Maybe we didn't do a good enough job of presenting it. I think we do have a job, right now, through our merchandising efforts, to bring the public back to diesels.

Our diesel business is down. It is not totally down because of failures. It is more so right now than any other time due to the price of fuel. Like Don said, it is not going to stay like that. Down the road, not because of the lack of fuel but because taxes on gasoline, prices are going to go appreciably up. You just don't have any money out there right now to fix the roads and do other things necessary. I think the federal, state and city governments all are going to apply taxes to gasoline.

I don't think they will apply taxes to diesel fuel for one simple reason: there are too many off-the-road uses of diesel fuel such as farming and the likes. They are not going to touch the diesel fuel. They are going to apply all the taxes to your gasoline and that differential that is now in some cases nothing could get back up to the traditional 15 cents.

AF: I can envision angry gasoline car owners, when their neighbors start buying diesels, clamoring for these taxes to be put on diesels. Would the lobbying abilities of truck organizations, for example, be put into use then?

VOGT: I do not foresee a tax on diesel fuel either. You have got the farmers, probably one of the biggest users of it right now, doing everything to help the farmers and the trucking industry isn't going to allow it. I've got to agree.

KOLB: I don't think you can make these decisions for those kinds of reasons, singularly. I think you've got to look at the overall picture. Where are energy costs going? Down, stay the same or up? Without trying to be a crystal ball gazer, you need only read a newspaper in any hamlet in this country to know that chances are they are going to go up. If that is the case, then your exposure is to try and improve the mpg performance of your fleet.

The public's perception of the world energy situation never ceases to amaze me, it is absolutely incredible. Gas drops to $1.10 a gallon, and they act like it has all been a big game.

OPEC is not going to sit still. Costs will go up, perhaps not as much, but we are looking at a steadily increasing energy cost factor.

AF: So you men find yourself in the strange position of being victims not of OPEC, but lower gas prices.

KOLB: If there is any one thing that has contributed to the drop in the resale of diesel cars, it is that. We are in the 45 to 47 percent bracket of sales to our employees, and we get no resistance. . .we are selling more cars to employees now in our diesel mode than we did when in our gasoline mode. We, too, have hundreds of cars that go thousands and thousands of miles without any problem.

It is a perception, not a reality. Perceptions are hard things to confront.

HENDERSON: So many times your memory only remembers the bad things. All the good things you forget. You only remember that one bad time, whether with an auto or something else.

MACH: Last January we had 80 below wind-chill. People with diesels were calling and saying they would never have a diesel again. I had to explain that it wasn't the diesel. . .it was the car that was frozen. Everything was frozen.

KOLB: Last winter I had less cars down because they were diesels then I had gas cars down. In the case of the diesels it is a question of the fuel. I had company officers tell me that their car was the only car in the whole neighborhood running.

AF: Where do you get your fuel?

KOLB: We have a controlled source, since we have our own fuel systems. We are not on the street buying fuel, we buy it on the wholesale market, so we can control the blend of fuel.

MACH: We also have 1500 company-owned vehicles. Our business people have to use the pumps. The problem is that fuel, blended for different parts of the country, does not always get to the stations in time for drastic weather changes. They just can not always respond fast enough. We get the fuel gelling and that type of thing. I am telling people to go to the truck stops, make sure it is blended right, watch the temperature, and those people have no problems.

VOGT: There are bigger advantages to the diesels than negatives. We have to look at a few losses at our used car line, but we also have to keep our direct-sales force happy. They can get the bigger gas tank that gives you 550-600 miles on a tank where an equivalent car can go 250 miles. People like this.

AF: Bill, what is the mileage spread between the V6 Ciera and the V6 diesel?

HENDERSON: It is six miles. And that will go up in 1983 when we introduce a new transmission. The EPA figure will go up to 43, and highway to 48.

We at General Motors and particularly at Oldsmobile are dedicated to the diesel. We just built a million square foot plant in Lansing to build the V6 and further diesels. We feel we have the product. Over the years we have spent time engineering a quality product. We have it now, we had it in 1981. The V6 is just getting on the streets. The true test is when the customer drives the car.

In February the major fleet users came to Lansing for a presentation on the V6. Each one of them had an opportunity to drive it, and without exception they thought the performance and noise level was outstanding. You can sit in that car with the radio off and the car doesn't sound like a diesel.

VOGT: I am amazed at the numbers Don gave on the V6 mileage. If this is the case, there is no question the public is going to go with it, even if the spread on gas and diesel isn't great, the mileage increase is worth it by itself.

HENDERSON: Across the country, the Olds fleet sales force is at­ tempting to put every possible fleet administrator in a Cutlass Ciera diesel. Experience the economy, the acceleration. When we talk about our merchandising effort, we are making an all-out effort to make all fleet administrators aware of the 6-cylinder Ciera diesel. It is a heck of an engine.

AF: Let's try and sum up before we close.

HENDERSON: In the future, we do know, there are 5-cylinder, 4-cylinder, supercharged. . .the market right now does not dictate to us to proceed farther than we are right now. Once the market changes we will get our act back together and start proceeding with the development of those things.

AF: So whatever another manufacturer does with a diesel we can expect to see from Oldsmobile?

HENDERSON: We're going to be the leaders.

KOLB: Many of the things we have seen in the past are in the area of perceptions more than realities. There is a small percentage of drivers who don't like the car, maybe one percent. Hands-on ex­perience with the car is favorable. I expect we will continue to pursue the diesel avenue over other alter­ native fuels at this point in time, anyway, and gasoline, for the foreseeable future. It has been an exciting experience; far more favorable than negative, although you talk to a lot more drivers than you used to. The problems are not of a serious magnitude. The used car market will come back, more directly related to the cost of fuel than we may think, but that is what got us into this car in the first place. The diesel market will come back.

VOGT: There is no question we will continue to offer the V6 and the V8 diesel. I agree the market will come back. We need the diesel engine, we need to use diesel fuel so we don't rely on gasoline so much. People are going to choose the diesel. We have had unhappy people, I think they are in the minority and a lot of the problems relate to education. We may have to raise our depreciation a little bit to bring residual back. I drive a diesel, I enjoy it and don't have any problems with it.

I think Oldsmobile has to provide us and other fleet people with more knowledge, give us more information, possibly fliers to send out to our drivers. Nobody wants to spend the money for an engine, and sometimes we are responsible for an engine and Olds isn't. When fleets are happy with the diesel, the public is going to be happy with the diesel.

MACH: I have to end by saying that one of the company goals for us was to make us less dependent on gasoline. We don't want to put all our eggs in one basket. We have a tremendous responsibility to the public. In the case of a storm, with a lot of lights down and a lot of electricity out, we can't tell people we can't buy gasoline so you are out of luck. So the company told us, 'Make us less dependent on gasoline.'

With that, I will see that I always have that type of vehicle.

 

Volkswagen Offers Diesel Choice

While the diesel cars offered by General Motors' divisions have been getting a lot of attention, Volkswagen of America also presents diesel powerplants for fleet use in their line of cars and trucks.

For 1982, a 1.6 liter 4 cylinder diesel engine (97 cubic inches) is available in the Rabbit L, Rabbit LS and Rabbit GL, the Jetta, the pickup truck and Vanagon models. Also, a turbocharged version of that same diesel engine is available in their new Quantum coups, seans and wagons.

William Fields, fleet sales operations manager for VWoA. points out that the Rabbit comes with either an optional manual diesel transmission or an optional E-mode (economy) automatic diesel transmission, and that that the Rabbit diesel is the leading economy sedan (manual. 4 speed, 45/58 mpg) and the leading economy automatic sedan (87/47 mpg). Fields states that the VW pickup is the leading economy pickup (manual 4 speed, 42/49 mpg), and adds that the 1983 Rabbit and the 1983 Jetta will both have turbocharged diesel engines available for fleet buyers.

For 1981, VWoA sold 162,445 Rabbits in this country. Of those, 99,308, or 61 percent, were diesel models. The company sold 33,879 pickup trucks, and of those, 77 percent had diesel engines. As of June 7, 1982 year to date sales for the company had 38,309 Rabbits on the street, with 45 percent of those diesel and 6291 trucks sold, 65 percent of those diesel.


 

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