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Monday, March 06, 2006 

Vol. 2 No. 12

Treating a Neglected Market Well Creates Opportunity for the NVLA

In a dynamic economy, service voids don’t go unfilled for too long, especially in the automotive industry. For example, for many years, new car dealership neglected merchandising and convenient servicing, figuring their market was captive. There was nothing “quick” about getting an oil change at a dealership, nor was it typically inexpensive. From that market void, in the 1970’s and80’s grew “Jiffy Lube,” “Midas Muffler” and other quick service automotive maintenance chains. Similarly, the many small businesses around the country who run small fleets of commercial vehicles and have unfulfilled transportation needs have become a target market for smaller commercial lessors, geographically dispersed all over the nation, and no better represented than in their trade group, the National Vehicle Leasing Association.

The National Vehicle Leasing Association (NVLA), has within its membership hundreds of small leasing companies in chapters all over the US, many of which focus on supplying vehicles and fulfilling transportation needs of smaller commercial accounts. The NVLA members take their job seriously, and each has pledged to a code of ethics and can complete a rigorous certification program in which they can earn the status of Certified Vehicle Lease Administrator (CVLA). I’d bet most automotive journalists would be surprised to know the small commercial lease market is as large in aggregate as it is, and that there has been for many decades a national multi-chapter lessor trade group with hundreds of members dedicated to serving this clientele in their local marketplace. Of course, many of these “small” leasing companies actually have corporate clients who maintain what is categorized as large fleets as well. (As we used to teach in the old Ford Business Preferred courses, the neat thing about successful small business is that they become large business, and typically feel a loyalty to their original vehicle vendors.) Bbut none of these lessors, I have found, ever lose their “personal” service touch with their clients and customers…and it has given them the edge over the largest of lessor vendors.

We recently hosted a reception created and managed by NVLA veteran Bill Thomas (CVLE) of Excel Management Dynamics for some of the best, most successful examples of these lessors at couple of “twenty groups” (that is, a focus group of operators from similar companies in the same market, though differentiated geographically, coming together to concentrate on ways to improve business). We will see them all again both in their special focus groups and, in general, with all of their fellow members at the NVLA annual conference and exposition, June, 7-10, in Grapevine, Texas.

I should note that I have special admiration for the member lessors of this group, not only because they have proved successful in satisfying the transportation needs of local businesses (I should get out of the habit of saying “small” business; some of these client companies are rather large by any standard), but because they have done so through leasing vehicles during both good and bad times - during times when the manufacturer held captive finance companies, through economically irrational “buy down” or residual incentives were making it almost impossible to compete as an independent bank financed lessor, and through the subsequent “pull back” that happened afterward, when residual values collapsed and non-captive independent banking sources dried up lease funding.

For decades the leasing professionals within the NVLA group survived and prospered on good old fashioned superior customer service for their clientele, instead of using the short term financial “buy down” gimmicks that vehicle manufacturers throw on the marketplace to lift quarterly sales numbers (which created the very real collapse of both new vehicle residual values a few years ago and the severe pull back in retail leasing from which the industry still has not fully “unburied” itself). They also did this holding their membership to the highest standards in ethics and by promoting member education as a means by which to raise the standard for client service conduct and, in that way, increase their volume of business collectively. It’s proof in a way, that the fundamentals of good business practices are ultimately what works in gaining clientele long term, particularly for grass roots businesses, even in the “incentive of the moment” environment of sourcing new vehicles.

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