Ed Bobit's Publisher's Page
. Detroit's top moguls meeting with President Ford found no encouragement toward an early prospect of another year that might see even ten million cars sold.
"It's time for a change."--Thomas E. Dewey: Campaign speech, September 21, 1944, San Francisco; campaign slogan.
Whether you agree that 'It's time for a change' or not, it is evidently taking place in the car fleet market.
The source and primary influence is the recession in which we appear to be imbedded. Even the governmental officials now admit that the term has merit. Detroit's top moguls meeting with President Ford found no encouragement toward an early prospect of another year that might see even ten million cars sold. The Wall Street Journal editorializes that "It is becoming painfully clear to much of organized labor that the dominant left wing of the Democratic Party is committed to a no-growth economic philosophy..."
To the credit of our industry, adjustments are being made; some with suffering. One of the largest lessors is on record to some of their clients to work out a 48-month or 80,000 mile replacement policy. A Pittsburgh lessor tells me that a year ago, his average age at replacement was just over 26 months; today, it is running about 31 months. The obvious delay in ordering by so many firms during the past year makes it party evident to Detroit the old axiom of trading every 24-months is now exception, rather than the rule.
Reports out of Detroit in early December indicated that a number of leasing companies were holding thousands of fleet car orders in anticipation, of new incentives. This may have prompted GM's letter to their dealers in mid-December outlining their determination that the marketing plan does not call for factory incentives; i.e. "Buster, if you are waiting for a special allowance to order, you had better know now that it just isn't coming." (Unless competition would make us be competitive; then we will cover you within a prescribed period of time.)
To the contrary, word out of Detroit seems to suggest that we may expect another price increase in the next four months since the projected inflation (and lower sales volume) dictates a rather strong increase for the '76 models and an increase in-between might 'soften' the eventual blow.
Our biennial survey reported in this issue shows that in 1972 the average new car cost was $3987. Two years later, it is a whopping $5203; up over 30-percent. This fact in spite of a dramatic switch to intermediate and compact cars during the period. No wonder they are keeping them longer.
And the trend should continue that way since Detroit plans to continue to build better products that last longer. There doesn't seem to be anything magical about 60,000 miles of the 24-month factor; especially when ring and valve jobs do not appear common when they are run longer. The new radial tires run markedly longer. The interstate system of roadways gives the car a minimum of driving harm. Twenty years ago a Chevy owner was supposed to have his car serviced no fewer than 49 times in 50,000 miles; today, it is six times.
Pete Estes, GM's new president, tells us he is shooting for 'zero' times. He foresees that the car of the 1990's will be maintenance-free with sealed power systems, much like refrigerators. The Department of Transportation is asking for 40-percent better fuel economy by 1980.
Detroit and the fleet market know it is 'Time for change'. They are meeting the challenge. Using our abilities to meet the challenge in an orderly and dedicated fashion will insure a healthy fleet market in the decades to come.
Happy New Year from our entire staff.
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