Fleet Trends for 2005 and Beyond

Ongoing Aggressive Manufacturer Volume Incentives The extremely competitive environment to get as many fleet orders as possible to keep plants running near capacity will continue to fuel the very aggressive rebate and incentive scenario, Jim Creighton, director of operations, ARI, told Automotive Fleet. Steeper interest rates and a decline in real disposable income will eat into auto sales, analysts say. Meanwhile, rising energy and commodity prices will cut into automakers’ profits. Yet competition is so intense that most carmakers will eat the extra cost and continue to offer incentives to keep market share, even as profits decline. Changing Definition of Volume Order “The number of vehicles that defines ‘volume’ has taken a huge step backward,” Jim Tangney, vice president, purchasing for Emkay Inc., told AF. Tangney says ‘volume’ can now be defined as anywhere from 1-25 vehicles, where in the past that order would need to have been 50-75 vehicles per year. This trend will benefit the small-fleet buyer, though it will hurt residual values. Expansion of State DMV Online Renewal Services Currently, online registration renewals are available only in nine states. Over the next five years, at least 25 to 30 of the remaining 50 states will institute online registration access. “There will be continuing development of electronic titling to reduce the need for duplicate titles and the risk of fraud,” Ken Ridgley, manager, title administration for PHH, told AF. “State process improvements and automation will result in improved tracking of taxes due or past due at the time of title and registration.” Increased Use of Vehicle Tracking Systems The technology to allow a fleet manager to track and monitor vehicles has been available for years, though its prohibitive cost has meant GPS systems were used primarily by the trucking industry. As the cost of systems continues to decline and economies of scale are achieved, vehicle tracking systems are becoming more cost-effective for the small vehicle fleet. Maintenance Issues with Hybrid Vehicles There will be a rapid increase in the use of hybrid vehicles in the fleet market during the next five years, said Dave Lodding, vice president of Fleet Management Services for Donlen Corporation. “The issue of servicing these vehicles will be critical for their success. Fleet drivers will be required to return to a dealership for service until the independent repair facilities become trained to properly service these vehicle,” said Lodding. “Normal PM services are no different than traditionally powered vehicles.” Fewer SUVs and More Crossover Vehicles in Fleet Manufacturers will develop different types of products that will change the profile of fleets. These vehicles will provide many of the benefits of SUVs, but have an improved risk profile (not as many rollovers, etc.) and better fuel efficiency. Some crossover vehicles will be more like station wagons, like the Ford Freestyle. Several manufacturers, including Ford, DaimlerChrysler, and Subaru, will offer AWD versions of new sedans. These vehicles are likely to replace higher-priced SUVs when safety is a concern and there is no true need for an off-road-type vehicle.