"I have but one lamp by which my feet are guided, and that is the lamp of experience. I know of no way of judging of the future but by the past ... "Patrick Henry: Speech on the Stamp Act, Virginia Convention, March 23, 1775.

 

During these months of attempting to hold costs in line in the fleet business we are faced with a number of key basic elements, all of which influence the strong inflationary pressures put upon us. The net effect is that the cost of doing business is rising radically on all fronts. All areas except one.

 

Most of us are aware that the vehicles that are purchased with '75 stickers are going to be up from better than $400 to over $1400, depending upon the model. That is stiff to say the least.

No one has to be a professional finance man to know that the prime rate for interest is at 12% or better and this penetrates the cost picture for every purchaser; it influences the lease rate; and it directly affects the dealer in his floor planning.

Depending upon where you cars are being fueled around the country, you are now paying in excess of 55 cents for every gallon and getting less mileage out of it. The auto companies currently assure us of a gain of somewhere around 15% on mileage with the '75's; and that is good news.

There is little question that service and repairs and just plain maintenance are soaring in costs also. Mechanics remain difficult to recruit and they are being paid record wages. Replacement parts follow the same pattern with continued regular price increases.

In spite of the fact that many of today's so-called "paper dealers", who are assigned the bulk of a major purchaser's requirements for a certain make that are ultimately drop shipped by a delivering dealer, are at least partially responsible for the depressed dealer rates because of the huge volume; there still exists the need for proper parity for the delivering dealer who presumably maintains the proper get-ready and delivering tasks.

Almost everything else is keeping pace with the cost spiral. Everywhere you look you can find parking, tolls and business forms totaling more dollars each month. Costs are pointing up with no halt in sight. Pointing up except for one instance in our business.

That one is the fleet dealer's fee for the sale of the cars.

Our publication is dedicated to the fleet man and we support his efforts to extract the best price possible for any purchase in volume. It is axiomatic that a fleet purchaser has that credo as his fundamental objective. It remains the same through the years.

In my opinion, this the time for fleet-minded dealers to re-assess their marketing programs in their fleet departments. Dealer operational costs are increasing like everyone else's. There are no new shortcuts to make-ready and delivery. The so-called basic fleet car that closed out at about $3,000 a half dozen years ago, crept up to about $4,000 in '74. Now we are looking at something close to $5,000, for '75.

During this period various fees have been charged usually ranging from the daily rental companies demanding the getting $25 over 1% to the $75 or $100 over for the flee that demands more in service. These rate just have not changed that much over the years. Only a handful of the wiser dealerships have been innovating with higher rates.

In checking with a number of purchasers and dealers during the past few months, there seems to be a trend developing to raise the fleet dealers' rates on '75 cars. Where it will settle, and just how successful the negotiations between buyer and seller are, will be evident in the months ahead.

It is also evident that because of the tight money position, even many of the larger leasing companies run "a little late" with reimbursement. Another real cost to the dealer.

It seems clear to me that the fleet buyers today can expect, and I think properly, growing pressures to increase the dealer sales rate. If it comes, you can refer to the analysis to determine if you feel it is justified. It just could be.

 

About the author
Ed Bobit

Ed Bobit

Former Editor & Publisher

With more than 50 years in the fleet industry, Ed Bobit, former Automotive Fleet editor and publisher, reflected on issues affecting today’s fleets in his blog. He drew insight from his own experiences in the field and offered a perspective similar to that of a sports coach guiding his players.

View Bio
0 Comments