NAFA fleet meet in St Louis [Fleet Management May 2012 Print Edition]

Opportunities for networking and learning

June 7, 2012
by Emily Atkins

From the Fleet Management May 2012 Print Edition

Fleet managers from across North America gathered in St Louis, Missouri in April for the annual I&E (Institute and Expo). NAFA Fleet Management Association hosts the annual meeting and expo as a way for fleet managers and service providers to exchange ideas, network, do deals and study for the fleet management certification (CAFM).

A highlight was the annual executive panel, “More Straight Talk from Fleet Executives”. Jim Frank, president and CEO of Wheels Inc; George Kilroy, president and CEO of PHH Arval; Carl Ortell, president of ARI, Automotive Resources International; Clarence Nunn, president and CEO of GE Capital Fleet Services; Mike Pitcher, president and CEO of LeasePlanUSA; Gary Rappeport, CEO of Dorlen; and Greg Tepas president and CEO of EMKAY, took the stage to answer a series of prepared questions.

George Kilroy was asked about currently high resale values: would they stay that way, and if so for how long? He said values would not likely cool until after 2013 because inventories will remain low as a result of low new car sales in the preceding three years. He added that early replacement was a strategy fleets might want to consider, given the gains in fuel economy in newer models, coupled with today’s higher resale values and climbing gas prices.

Jim Frank answered a question about driver behaviour: It is crucial to control it in order to drive costs down, true or false? Driver behaviour matters a lot, he said. “It’s the closest thing we have to a silver bullet in this industry.”

Getting control of driver behaviour yields results in several areas, Frank said, including safety and accident reduction, fuel economy and driver productivity. Corporate culture and motivation are key to getting employee cooperation, he added. The panel was in agreement that there have to be incentives for drivers to be willing participants. Drivers need immediate feedback to know how they are doing, which is where technology like telematics comes in. Fleet managers were encouraged to mine the data and manage the outliers—pick off the ‘dirty dozen’ bad apples and the numbers will come up, Frank said.

Greg Tepas was asked to comment on fuel and maintenance costs—specifically whether maintenance costs are going to rise as vehicles become more technologically advanced and require more sophisticated repairs, and whether fleet managers may begin to drop technology if it becomes too expensive to repair.

Tepas said he did not anticipate a slowdown in the adoption of new technologies. New vehicles are safer, more comfortable, have better fuel economy, last longer and have longer preventive maintenance cycles. Plus, people are addicted to having the latest thing and it’s hard to deny them that. Whether technology will provide value is something fleet managers will have to look hard at, he said.

Jim Frank noted that the increasing durability of new vehicles is driving down the cost of depreciation, making newer cars and trucks more attractive. Kilroy pointed out that the wildcard in the tech game is the shortage of skilled technicians available. Maintenance costs will climb if this shortage is not addressed.

Continuing with the theme, Carl Ortell was asked if technology will continue to develop at the same pace and which technologies would prove most useful to fleet managers. His short answer was that development will continue and that it will change every aspect of fleet management. Over the next three to five years, the biggest trend will be the collection of data using telematics. The key, he said, will be using the data to drive costs down.

Tepas said that with the greater availability of data, fleet managers will be able to be much more strategic.
Gary Rappeport was asked about the barriers to converting fleets to use natural gas. There are three, he said: technology, infrastructure and economics. The technology is not there yet, with the weight of drive systems still too high, and performance not where it needs to be. Infrastructure is also lacking, with insufficient fuelling options available to make long-haul trucking an option.

Economics is the most interesting challenge, he said, with the cost per unit still too high to make the ROI feasible. However, the equivalent cost per gallon story is very compelling, with prices well below half the cost of gasoline. Rappeport said all told, it’s very near the tipping point that will make natural gas viable.

In closing, moderator Pam Sederholm of the American Automotive Leasing Association asked the group what the breakout technology would be in the next five to seven years. Jim Frank said anything that will get the weight of vehicles down to increase fuel efficiency will be big. He said it would be a mistake to underestimate materials research, as products like carbon fibre will play a big role in automotive design once their price comes down.

Clarence Nunn identifed gas-first hybrid technologies as the ones to watch in the future. He suggested there will be plenty of new options in this area, with costs coming down in a strong resale market.

Mike Pitcher said, “Rumours of the death of the internal combustion engine are greatly exaggerated.” He does not see any significant change in the next five to seven years because the infrastructure will not be there to support electric or other technologies.            b2b