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Thursday, December 15, 2005 

Vol.I No.4

NAFA (Atlanta Chapter) Fleet Industry Symposium at Manheim’s DriveCenter… Yo! Ma, I’m Getting Respectable.
[Note: it is my intent to report on events, as I experience them, but, because I attended some very worthwhile events earlier this month, my first few entries will refer to events of the last couple weeks, in chronological order – don’t worry I’ll catch up in a few days…]

Now if anyone is following my regular missives (if after two inserts, you can call them regular), you realize I left Vegas once again on Friday, Nov. 11 – having been there the week before as well. From there I traveled back for a brief refresh in my home base of Philadelphia, then went to our central office in Chicago, then headed down to the National Association of Fleet Administrator’s Atlanta Chapter Symposium on remarketing, co-hosted and held at Manheim’s DriveCenter.

A Quick Detour for Definitions:

National Association of Fleet Administrators (NAFA)
Founded 35 or so years ago, NAFA is made up of about 4,000 corporate and municipal fleet administrators –the people responsible for operating the vehicles (cars, trucks, equipment rolling stock) owned or leased by the nation’s largest corporations and federal/state/local governments. You may not realize it, but the total number of vehicles represented by the members of this organization is well in the millions. The top 300 corporate fleets alone represent a total of over 1.2 million cars and light trucks. Fleet has comprised at least 20% of Detroit’s total output, year in and year out, for over 30 years, and, in months like October of this year, a whole lot more. As Dee-Ann Durbin from the Associated Press correctly pointed out in a news article this month, if it weren’t for fleet sale registrations, the horrendous 30%+ plunge reported by the “big three” would have been a whole heck of a lot worse…Fleet represented 40% of Chrysler’s sales in Oct. 05, 32% of GM’s sales, and 33% of Ford’s sales…

Or Manheim Auto Auctions
A wholly owned subsidiary of Cox Enterprises, Manheim owns the largest group of physical vehicle auctions in the country, with more than 85 auctions in the US (and another 39 or so around the world). The next largest auction player, the recently public ADESA (NYSE: KAR) has 53 physical auctions. You may not be too familiar with them unless you are a new or used car dealer, as the vast majority of their vehicle auctions are restricted to licensed dealers -- a true wholesale outlet closed to the public. This isn’t the case in other countries but in the US, your average consumer can’t even get into one of these auctions, let alone buy anything. What is public, however, is Manheim’s most comprehensive annual report on used cars I’ve ever seen in the industry, called, appropriately enough, the Used Car Market Report, and put together by Tom Webb, one of the most knowledgeable economist type used car guys in the business.

Manheim DriveCenter (Atlanta, GA)
To my knowledge the one and only used car auction think tank facility, equipped with computer touch screens, used car auction viewing chambers, and every high tech gadget you can think of…now whether all this Mobey type techno actually helps to sell more vehicles or garners a higher sales price is open to question, but the bells and whistles sure look impressive…

Back to our story…

This day and half symposium was dedicated to the discipline of fleet remarketing (a subject near and dear to me since I founded a Web based platform/company specifically for this market back when remarketing wasn’t cool), an area that until recently was often ignored. (Actually, those who focused on this area of the business unceremoniously called “vehicle disposal” were usually assigned the task by large corporate bureaucracies as a punishment for some infraction!)

Today, though remarketing is becoming a hot topic as fleets and manufacturers alike have figured out that the true cost of a vehicle that is replaced every three or four years, isn’t the up front cash outlay, but the difference between what you pay on the front end and what you get for the vehicle when you sell or trade out of it, divided by the number of month’s “in service.” Amazing how simple that concept is, and yet this whole notion of “life cycle costing” took years and years for smart people and organizations to catch on to, let alone concentrate on.

Proof that remarketing is now getting serious attention can be seen by this full day and half symposium, which attracted some of the best names in the car business. Mary Ann Keller, the former equity analyst who was rated one of the top three automotive analysts over 12 consecutive years, spoke at the event. Eric Overby, a Goizueta Business School Professor, made a presentation, as did Manheim economist Tom Webb, noted above. Also, for the first time ever on one panel were the remarketing department leaders for virtually all of the major fleet lease management companies, including: GE Fleet, PHH, LeasePlan USA, ARI, Wheels, Donlen and Emkay. Now that last point may not mean that much to the casual reader (do I have casual readers? For that matter, let me know if I have any readers…e-mail me and let me know, it gets lonely “on the road”), but those in the fleet industry know that almost all of the entire large fleet lease market for all of the Fortune 1000 (3 million + vehicles) in the US is controlled by the eight named fleet lease companies above. It didn’t used to be that way. Back even 15 years ago when I was a Chrysler dealer selling a lot of fleet cars, the fleet leasing world was much larger, but, as in other industries, waves of acquisitions, mergers, and consolidations took place and now there are only eight…

Now I’ve been plugging the “new wave” of Web based upstream remarketing with my own company in the marketplace for pretty much five years now, and, up until very recently, only the very brave early adopters in the business would pay much attention. For a industry specific, “star studded” cast to show up on Friday/Saturday just before Thanksgiving week is quite a milestone.

“Vehicle Disposal” has turned into “Vehicle Remarketing.” Even the physical auction giants don’t see Web based remarketing platforms as the enemy anymore. And even the word “upstream” is starting to become a buzzword. And to think, it wasn’t that long ago that I felt like I was banging my head against brick wall. Still can’t tell my mother exactly what I do though -- selling used fleet cars is not all that mainstream respectable yet - but things seem to be moving in the right direction…

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