Closing the Safety Gap Between Small and Large Fleets
November 1, 2005
• by Chris Brown, Senior Editor
A recent Consumer Report survey revealed that a low percentage of consumers rate key safety features—electronic stability control (26 percent) and side-impact airbags (40 percent)—as “very important” in their next vehicle purchase. A study conducted by the Insurance Institute for Highway Safety (IIHS) showed that vehicles with stability control were involved in 56 percent fewer fatal single-vehicle crashes than comparable vehicles without it. Still, in the CR survey, cruise control (59 percent) and a CD player (64 percent) rated much higher.
Do small fleet operators have a similar resistance to safety related options in their vehicles? I asked a handful of fleet managers and executives at leasing companies that cater to small fleets. “The executive making decisions about fleet selectors talks about buying safety, but the truth is that he doesn’t want to buy it, he only wants it for free,” says one executive. “To the small fleet operator, there is not a correlation between state-of-the-art safety equipment and lower fleet costs.”
This is an unfortunate viewpoint, but understandable given the nature of the small fleet as opposed to the large. Why is this so?
The large fleet manager is tasked with keeping up on crash data and the latest in vehicle safety. The small fleet operator runs a business; the fleet is never the focus. Hence, like the average consumer, little time is spent on safety research. One manager of a large fleet says “We in fleet have education available to us repetitively that the general public doesn’t.”
On top of general safety studies, large fleets have a statistically relevant number of accidents per year. The subsequent reduction in accidents after acquiring vehicles with a safety option or implementing a driver-training program can be more easily measured.
Large fleets incur catastrophic loss more often, and their big pockets open them to litigation, another safety motivator. The small fleet operator may never have dealt with a serious injury or fatality, leading to an “it couldn’t happen to me” mentality.
When the driver has the ability to choose optional equipment, safety features don’t rank high on the list. Jefferson Leasing runs a driver option program. “Over the years, after thousands of opportunities, we see six-way power seats, CD players, sunroofs and fancy wheels chosen, but rarely any safety equipment,” says President Jerry Duffy.
According to the Black Book Official Used Car Market Guide, power sunroofs, leather seats, aluminum wheels and CD players return from 56 to 96 percent of their original value after three years and 36,000 miles. Antilock brakes, traction control and side-impact airbags return nothing.
Why don’t safety-related options enhance residuals? It has to do with the nature of the auction. The average vehicle is “in the lane” for about 10 seconds. Buyers only notice things that show: leather, sunroof, fancy wheels, pinstripes, etc. The value of the model is enhanced by equipment that makes it look different from the hundreds of similar models coming before and after.
How then will the small fleet operator get onboard when it comes to safety? Some leasing company executives believe part of the burden rests on their shoulders, even given the obstacles. “[We] have an opportunity to counsel the client to upgrade safety related equipment, and I would say a responsibility,” says Jack Leary, president of Motorlease. “But often at bid time, the client assumes that the management product is the same from one supplier to another and looks at the cost only. We generally do not get bonus points for playing the Cassandra.”
Ultimately it takes safety features becoming standard on all new vehicles to ensure that all drivers benefit. We are moving in that direction. ABS, tire pressure monitors, new front head restraints and stronger roofs are all in various stages of implementation. GM announced recently its intention to make Stabilitrak, an electronic stability control system, standard on all models by 2010. In reality most vehicles will have ESC standard before then. Good thing this process is happening much faster than the 50-year journey seatbelts took to full acceptance by the public.