In the beginning of “fleet,” vehicle purchasing was anything but uniform. Before the advent of manufacturer fleet departments around the late 1940s, company vehicle administrators purchased units from individual dealers.
Policies, paperwork, and warranties varied widely. With fleet orders subject to allocation, six- to 12-month waits for factory-ordered units were not uncommon. The manufacturers’ allocation practices, which required fleets to request allocations based on prior-year purchases in the late 1950s, lasted until the early 1960s.
Each new model-year, large fleets met individually with Detroit automakers to research new offerings. Scant printed information was available and pricing was kept confidential early in the new-model cycle. Smaller fleets relied on obtaining new-model information from local dealers.
“Dealer holdback,” a concept introduced in the 1940s, increased the difficulty of establishing a vehicle’s price. To beat competitors, many dealers gave away most of their mark-up, while tying up capital in used-vehicle trade-ins. Dealers asked manufacturers to protect them from themselves.
Around the 1940s, Ford instituted a three-level holdback. The automaker paid smaller dealers $7.50 per vehicle; “principal city” dealers received $12.50 per vehicle; and dealers located in larger markets, such as New York, were granted $17.50 per vehicle. Plymouth and Chevrolet offered a flat $15 or $20, with payments made after vehicle sale. This practice soon evolved into a 1-percent holdback of the vehicle’s cost, and rarely was passed on to the purchaser. Market conditions slowly pressured dealers and manufacturers into first refunding half the holdback to fleet buyers. Today, the holdback refund is almost a “given” in vehicle pricing.
The Start of Fleet Dealers
Ford was a pioneer in establishing a fleet section in 1947. Around this time, another factory innovation was the introduction of fleet previews to provide new-model specifications to facilitate vehicle replacement planning.
In the 1940s, 1950s, and 1960s, lease companies began using regional dealers to handle the delivery of vehicles to their drivers. PHH, GELCO, and others ordered vehicles from a dealer in an area, and that dealer might handle delivery to drivers in a two- to three-state area.
McCullagh (later acquired by GE), went so far as to set up regional offices where it would take delivery from dealers, then drive the vehicle to the receiving driver.
This was the norm until the 1970s, when manufacturers began allowing drop-shipping of vehicles. Drop-shipping changed the fleet dealer landscape dramatically. A few dealers took the initiative to begin shipping vehicles across the country. These dealers became the major fleet dealers in the 1980s — Long Chevrolet, Piemonte Ford, Dale Oldsmobile, Ray Oldsmobile, and Weil Oldsmobile, among others.
Before the advent of OEM fleet departments, companies purchased vehicles from individual dealers, who usually only handled one model. Use of dealer ordering codes in the 1980s by non-dealers, such as fleet lessors, allowed factory-direct orders.
Courtesy Deliveries Become the Norm
With the advent of drop-shipping in the 1970s, dealers across the country began handling courtesy deliveries for fleet dealers and lease companies that drop-shipped to them. It became apparent that one of the sticking points for courtesy delivery dealers was the negative cash flow of handling a courtesy delivery. For example, the dealer would deliver a vehicle and then have to bill the fleet dealer who ordered the vehicle for tax, registration fees, dealer-installed options, etc. Increasingly, courtesy delivery dealers required up-front payment for these fees.
In 1978, Chicago’s Long Chevrolet began using a draft to pay the dealer the courtesy delivery fee. The draft allowed the dealer to itemize any additional charges. The courtesy delivery dealer was now paid up front for every delivery.
“That one change we instituted changed the industry,” explained Rick Nicoletti, general manager at Napleton Fleet Group. “It made handling courtesy deliveries a simple and profitable venture for dealers. Dealers suddenly wanted to handle courtesy deliveries. Drop-shipping vehicles became the norm in the fleet industry.”
In the 1980s and 1990s, OEMs set out to improve order-to-delivery (OTD) times for fleet vehicles. One development was the creation of OTD status alerts by OEMs using Web-based tools to track vehicle ordering. These tools were also used to optimize production scheduling and allocation.
The Advent of Large Dealer Groups
The 1990s saw larger dealer groups start to grow, handling 20 or more different makes and models. Technology was also the theme of the late 1990s, which saw fleet management companies utilizing the Internet and Web-based services for vehicle ordering. Donlen debuted its online ordering system in 1997, and Wheels and Volvo did the same in 1998.
In April 2009, Chrysler filed for Chapter 11 reorganization and announced a plan to partner with Fiat. GM filed for Chapter 11 reorganization in June 2009, marking the largest bankruptcy filing of any U.S. industrial company.
Fleets were unable to take delivery of ordered vehicles from these OEMs during this period, since assembly plants were closed, prompting some fleets to look at non-traditional manufacturers. The biggest impact on fleet was the shift by OEMs to building vehicles to demand, versus building to capacity.
A Few Big Names
The fleet industry would not be the same without a few big names, including Don Fenton, Milo Matick, Sam Lee, and Zollie Frank.
Fenton, one of the pioneers of fleet and known by some as the “godfather of fleet,” sold his first fleet car in 1957. A founding member and past president of the Automotive Fleet & Leasing Association (AFLA), over the years he directed fleet sales efforts for Nickey Chevrolet, Long Chevrolet (see article on page 40), and Larry Faul Oldsmobile, all in the Chicago area.
Fenton believed some of the key aspects of volume selling were “reliability and longevity of the individual fleet person and the dealer he’s working for, and trust,” he said in an article that ran in a 1985 issue of Automotive Fleet. “The trust and confidence the client should have when the orders are placed, knowing the fleet dealer will be around long enough to get the units delivered and on the street.” Fenton believed service started with people, noting that he “always chose people who are willing to be with me long-term, who are paid well, and who know that servicing the customers is why I hired them.”
You cannot over emphasize the influence that Fenton had on the dealer side of the fleet industry. Not only did he sell more fleet vehicles in his career from 1957 to his untimely death in August 2003 than anyone else, Fenton also brought more individuals into the fleet dealer side of the industry than any one else. “Old timers” will remember names such as Shirley Rupp, Jim Berkley, Mog Mogenson, and Ernie Lancaster — all Fenton proteges. In addition, current fleet industry professionals Judy Baxter, Brian Farrar, Mike Lureau, Rick Nicoletti, and Darrin Aiken are all individuals that began in the business with Fenton. “Don’s influence on the fleet industry remains today with the success that all of us enjoy,” Nicoletti remarked.
Milo Matick was VP of fleet for Piemonte National Fleet in Melrose Park, Ill. He managed fleet sales for the Al Piemonte dealerships for 32 years, and, prior to that, worked in the daily rental and fleet leasing industries.
Matick’s career in the automotive industry began with his employment with an auto parts retail store in the Los Angeles area. From there, he went to work as a retail lease salesman for AAA Leasing and left the company as a used car manager to work for Avis Car Leasing and then Grand Rent-A-Car, an Avis franchise in Los Angeles as its fleet manager.
During this time, Matick helped pioneer the sale of daily rental repurchase units through dealerships. After accepting a position with Hertz as fleet and distribution manager, he and his family relocated to Chicago. In 1971, Matick joined the Al Piemonte dealerships as fleet sales manager, where he remained for 32 years until his death.
In 1979, Matick was joined by Russ Cass, who is still with Piemonte. While at the Al Piemonte fleet department (later renamed Piemonte National Fleet in 1996), Matick ultimately rose to the position of VP of fleet. During his 32 years at Al Piemonte, he was instrumental in building and maintaining one of the most sophisticated, full-service fleet sales departments in the industry. He was the recipient of Ford Motor Co.’s highest level of sales recognition award, along with other industry awards and was also very involved with AFLA. He served as president of the organization from 1993 to 1994. He passed away Aug. 6, 2003.
In 1938, Zollie Frank and Armund Schoen founded Four Wheels. Before Frank passed, he had built a vast, Chicago-based family auto empire, which, at the time consisted of five leasing and rental companies, five vehicle franchises (including “Z” Frank Chevrolet, one of the world’s largest Chevrolet dealerships at the time), four firms in the finance group, five real estate companies, and three insurance firms.
Sam Lee founded Lee Fleet Management in 1948 after working in Chevrolet dealerships in New York and Chicago. He later moved Lee Fleet Management to Cleveland, where he purchased a Ford dealership. Following the sale of his own companies, Lee organized the Fleetway System in California, installing lease departments in eight western states. This program was eventually merged into the Chevway system, organized by Lee for Chevrolet.
Soell Believes in Courtesy Delivery
Robert “Bob” Soell, fleet manager at Suntrup Ford in St. Louis, celebrated his 95th birthday in 2012 and his 64th year in fleet. He was inducted into the Automotive Fleet Hall of Fame in 2008 as a founding member, and has no intentions to retire until he reaches at least his 102nd birthday.
Soell’s motivation? “I enjoy the business. It’s a job I can do blindfolded because I know how to do it,” he said.
Soell checks in the vehicles and arranges any service for them. He handles the courtesy delivery process personally. This includes receiving and processing the purchase order for the vehicle, serving as the point of contact with the driver, and arranging with the auction to pick up a trade-in.
By his own count, Soell has delivered tens of thousands of fleet vehicles.