We Try Harder...And Avis

In 1964, the Avis Car Leasing Division had 5,000 automobiles on lease. By 1965, the number had grown to 14,000. Yet, business was far from good.

In the latter part of 1966, the division found itself floundering in a sea of low-return, non-profit business, largely the result of leasing contracts that were mar­ginal in profit.

As a result, Avis initiated an entrenchment program just prior to 1967 that included top-level management changes for its car leasing division, and, most import­ant of all, a major change in operating procedure.

One of the first steps was to dispose of 4,500 to 5,000 automobiles which were operating under what Avis officials termed "marginal conditions."

As the slogan says, Avis Car Leasing Division offi­cials did "try harder" . . . and a new profit picture be­gan to emerge. During 1967, Avis Car Leasing Divi­sion had a 15 per cent growth in revenues and profits over 1966. According to Avis officials, the picture for 1968 is just as rosy. At present, the division has nearly 11,000 cars on lease and is "on a very sound financial footing."

Spearheading the new policy changes at Avis is Edgar J. Dame, Jr., vice president and general man­ager of the division.

The Division's Fundamental Policy

"The fundamental policy of the car leasing division is not to become the largest per se leasing organization in the U.S., but to become the fastest growing on a controlled basis," Dame said.

"We wanted to begin once again a growth program but with a principal concept to be profits. After all," said Dame, "I am not ashamed to tell my customers that I run a profitable operation. If you are profitable you are in a better position to offer services and con­cessions when they are essential to give."

And with Avis Car Leasing Division personnel, serv­ice seems to be the key.

"We believe that by providing what we feel is the best all-around service program in the car fleet indus­try we can achieve the profit growth we are looking for," Dame said.

"Avis is a leasing and rental organization with over 7,500 employees in the service business coast to coast. These people on a day-to-day basis buy, sell, license, repair, arrange insurance and title. This huge group of people - their whole livelihood revolves around the operation of cars and trucks," Dame said. "Within the framework of this large number of people we have a smaller group of specialists. These specialists bring to bear on an individual lessee's problems the services of this larger number of people. And we are unique in that there is literally no one else in this business who can make that type of claim," he said.

These 7,500 persons are employed throughout the four divisions of the Avis Rent A Car System. The Daily Rental Division concerns itself with short-term rental of automobiles at airports and downtown loca­tions; Truck Rental Service is primarily a local service; designed to provide truck rental and leasing on a local basis in every major city in the U.S.; Car Leasing Divi­sion is designed to provide long-term passenger car leasing service on a national basis to established busi­ness concerns. Under this division, Avis also provides, in certain cities, leasing service for individuals on a finance-type arrangement. The, fourth division is the International Division, winch concerns itself with all facets of the rental and leasing business in 34 countries.

While the total number of people involved in the Avis "service" is important, the physical locations of the vast Avis network are equally as significant in the over-all Avis picture.

"We are very proud of the fact that we at Avis have an ability to deliver a vehicle throughout the 50 states. We have an Avis sign in excess of 1,000 locations and in about 800 cities. Because each of these locations is in reality a leasing office, we provide service that we believe is unequalled," Dame said.

Here's The Avis Structure

Headquarters is the "central operation center" lo­cated at Plainview, Long Island, New York. In this headquarters are departments that handle purchasing, used car disposal, accounting, licensing, titling, taxing, insurance and maintenance procedures.

The leasing division is broken down into three re­gions. Charles W. Parker heads the 11-state Western region, Lawrence Franceschi heads the 10-state Mid-West area and Dick Fanner is in charge of the 29-state Eastern Region.

"Regional offices are fundamentally responsible for development of new and additional business in their respective areas," Dame; said. "But more important, they are responsible for servicing and for the liaison between the customer, our suppliers and our central operation center."

Within the Leasing Division are six sales and service locations at Los Angeles, San Francisco, Chicago, Bos­ton, New York and Miami, Fla.

And at the base of this organization, and perhaps the most vital link, are the Avis locations.

How does this network function? Let's take the case of salesman W. T. Harder, whose XYZ Company leases from Avis.

Before W. T. Harder even becomes aware of his company's dealings with Avis, the Avis Car Leasing Division has taken the first step in what it calls "qualification of the fleet."

"We want to know how the fleet is used, where it is located, and average mileage, the special equipment that is used or needed, what the company is doing now with its cars. Basically, we perform a diagnosis of our customer's needs," Dame said.

Avis calls this procedure "the contour approach" to leasing. It's a program that fits the customer's own tastes . . . his own needs," Dame said.

It is only after this "qualification" that Avis begins establishing a lease arrangement.

After the lease is signed, XYZ Company supplies to Avis specific information on each operator who will receive a car. It is then and only then that central pur­chasing buys a vehicle from a dealer who is convenient to the operator's home.

"In the absence of a dealer close to the operator's home, our central purchasing bureau will call one of our sales and service locations or even one of our local car and truck rental offices and ask the office manager who he buys his cars from," Dame said.

If no dealer is available in an operator's area, the central purchasing department calls a local office and a new dealer relationship is set up.

"We believe that this local purchasing arrangement is very vital to the salesman and to his company," said Dame. "Many times a salesman will buy from a dealer who has important ties in the area and this builds up good will not only for the salesman but for the com­pany. It doesn't do a salesman or his company any good if the salesman makes a business call in a car that has been drop-shipped from out of state or has been purchased at a dealer in a neighboring county," Dame added.

"It is in this area of local dealer selection that our many Avis rental locations aid our leasing operations. A local dealer may only deliver two cars a year for the Avis Car Leasing Division, but he will deliver 50 cars a year to the local Avis rental office. Therefore, it be­hooves him to do a good job for this Avis customer, regardless if it is only one or two automobiles a year."

When a vehicle is bought by central purchasing, a multiple-copy order form is used. One copy goes to the fleet manager. Another goes to the dealer. A third goes to central purchasing while a fourth copy is received by W. T. Harder.

The Operator Is Kept Informed

"We keep every individual operator informed as to the exact status of the deal," Dame said. "In this way, there is a minimum amount of friction," he said.

What procedures are followed when W. T. Harder has a maintenance or a part replacement problem?

"We ask individual operators to name a service ga­rage where he would like to have his car serviced," Dame said. "Why should we expect a salesman to take a day off or drive 25 miles out of his way to go to a service shop that we designate? We want him to have his car serviced at a time convenient to him."

When W. T. Harder informs Avis of his service selection, Avis cheeks to see if a charge account has been set up at the garage. If not, one is established. In this manner, Harder can go in for service at a time he selects.

"We tell the service location to give him (the oper­ator) carte blanche up to a certain amount," Dame said. Anything over that amount, the service location has to be in touch with Avis to inform them of what specific problems are involved. All bills, of course, are sent to central operation center.

Replacement of parts, such as tires, works in basic­ally the same way as the selection of a garage. W. T. Harder is not restricted to a certain brand of tire but may select from five or six major brands and from var­ious tire grades that come under an allowance allowed under the lease terms.

If W. T. Harder is involved in an accident, the en­tire Avis system also is put to use for the individual's benefit.

The central operation center is notified of a damaged vehicle by the lessee, the lessee's driver or by one of Avis' sales and service centers. The central office then uses a leased line or a WATS (Wide Area Telephone Service) line to notify the nearest Avis location of the damaged car to determine "what outside or inside service facility can best handle the elimination of that problem." From this point, the repair order is given "literally within hours of the first notification of the problem."

"This system is one of the reasons why we have been able to show a greater return than many other com­panies in the leasing field," said Dame, "If I have a damaged car in Pittsburgh, let's say, there can be as much as $200 in excess charges if you do business on a long-distance basis with no follow employee looking out for the company's interest. By making use of the personnel at the Avis locations or the personnel who work closely and constantly with our locations, it has to affect our business and make for greater efficiency," Dame said.

Another feature of the Avis accident procedure is the use the division makes of claim adjusters. "We send the adjusters to the accident, regardless of where it occurs," Dame said. "We also utilize the same dam­age repair facilities as do our local Avis locations. This also applies for new and used car disposals. In this way, the collective buying power of an organization involving thousands of people and literally 100,000 vehicles is brought to bear on the problems of an indi­vidual lessee who may have only eight or ten cars nationally," Dame pointed out.

What if W. T. Harder has an emergency, such as a transmission failure?

"Any emergency is reported to our central operation center or the nearest sales and service location for the car leasing division," Dame said. "At that point, a de­cision is made to either handle it directly with an out­side vendor or work back through the nearest Avis Rent A Car or truck location."

Is There an Average Operator?

Is there such a thing as an average operator?

"The average Avis ear is driven 2,000 miles per month and is kept in service 22.5 months. Our average Avis lease driver sells a product or a service and earns in excess of $10,000 a year. This average driver is 32 years of age and drives a top-of-the-line model, usually with air-conditioning," said Dame.

The size of the average Avis fleet varies according to regions. In the Western region, the average fleet is of the 30-to-50-car category. In the Midwest area, the average fleet is from 75 to 100 cars. In the Eastern region the smallest fleet runs about 10 vehicles while the largest runs up to 300.

Is there such a thing as an Avis philosophy regard­ing ear leasing?

"If there is one, it has to be this: This is not a price business. There are no magic formulas in leasing. If you are going to deliver a specific product and a cer­tain service, you are going to have certain costs that you are going to have to absorb," said Dame. "Most companies that lease or are thinking of leasing, are well aware that price is not the determining factor in the selection of a lessor. What is the determining fac­tor is the service that a lessor can provide a client. While many organizations offer many of the same serv­ices that Avis does, we at Avis Car Leasing Division feel that we are unique in offering to our clients the broad, over-all package of what we feel is the best service program in the business," Dame said.