One challenge to global fleet management is adjusting to different fleet terminology for different regions. One example is the difference between the use of “model-year” and “calendar-year” in describing the year of a fleet vehicle.
Most of the world uses calendar-year to designate a vehicle date; however, the U.S., Mexico, and Canada use model-year. Generally, under the model-year system, new models are “officially” introduced Oct. 1 of the preceding calendar-year.
Why the difference? Here is a history of how the model-year concept arose in North America and how it has evolved to today.
The practice of identifying automobiles by “model-year” started in the U.S. when Alfred Sloan, the long-time president and chairman of GM, decided to extend the idea of yearly fashion change from clothing to automobiles in the 1920s. Slow vehicle sales due to the Great Depression prompted other U.S. OEMs to also start selling “next” year’s vehicles in October of the preceding year.
But, as global fleet managers know, this isn’t a universal practice. For instance, vehicles sold in Japan are classified on a calendar-year basis. Similarly, the U.S. model-year concept was never universally adopted in Europe. One exception is VW, which switched in 1966, but chose Aug. 1 to start selling next model-year's vehicles.
In later decades, the model-year (October-September) became entrenched in the U.S. as new-model advertising was coordinated to the launch of the new television season in September. This allowed for a stronger marketing program by placing more resources in a concentrated timeframe.
Nowadays, the term “new-model introduction” in the U.S. has almost become a misnomer in today’s sales climate. When a new model is “introduced” has little to do with the calendar as new models in the U.S. are now introduced throughout the calendar-year. Year-round new-model introductions are facilitated by the U.S. government (NHTSA), which allows vehicles to be designated the next model-year if manufactured by Jan. 1 of the preceding calendar-year. For instance, in the U.S., a vehicle produced Jan. 1, 2017 could be designated by the OEM as a 2018 model-year vehicle. The advantage of mid-year vehicles for fleet is the benefit of 16-18 months of use, but the vehicle is depreciated for only 12 months based on its model-year.
Other reasons why OEMs selling in the U.S. market have adopted early introductions include CAFE averages (government mandated fuel economy requirements), competitive leapfrogging, keeping the lineup fresh, maintaining year-round floor traffic at dealerships, and parts availability. I don’t think we'll see all the manufacturers in the U.S. line up and introduce new models at one specific time each year ever again.
Let me know what you think.
P.S. Check out the latest on the 2017 Global Fleet Conference in Miami June 6-8, 2017: www.globalfleetconference.com
Originally posted on Automotive Fleet