DETROIT – Brian McVeigh says he doesn’t have the best job atCorp., but to him it is the most enjoyable.
He is general manager of GM’s Fleet and Commercial Operations, which covers a low-profile part of the auto business that is “the most misunderstood and probably always will be,” he says.
Yet at GM, the fleet department accounts for 1.1 million in annual new-vehicle sales, or 26.9% of total deliveries. That represents four plants operating on two shifts and a total of 12,000-15,000 employees, McVeigh says.
Those numbers are one reason he likes his job.
Another reason is a high degree of autonomy. “We get our approved profitability and volume targets, and then we’re pretty much left alone,” he says. Corporate types offering advice and why-not-do-it-this-way input tend to confine their comments to the retail side of the business, seldom the unglamorous fleet side.
McVeigh’s operation is responsible for three areas of GM business:
Rental car company sales (representing more than 500,000 units a year). With the exception of the Enterprise rental company, the fleet vehicles return to manufacturers for remarketing.
National fleet accounts to various firms providing employees with company cars (about 200,000 deliveries a year).
Local dealership fleet sales of mid-duty commercial vans and trucks (300,000-325,000 units a year). About 500 GM dealerships sell (minimum order of five) and service such vehicles. The facilities offer flexible hours – often at night – for service work because commercial vehicle users can’t afford much down time. Larger stores employ 12-15 outside sales representatives, a different set-up than conventional dealerships.
GM’s fleet and commercial operation also oversees the remarketing of commercial and off-lease vehicles through auctions and GM’s certified pre-owned program, which has grown from virtually zero unit sales a few years ago to 450,000 last year at dealerships.
“On paper, the certified used-car program is GM’s third-largest brand,” says McVeigh.
A reason fleet sales operations are misunderstood is few people bother learning about them and consequently are under misimpressions, he says.
One is that fleet sales are undesirable because they bring in less money per unit than retail sales. But McVeigh doesn’t see a problem with volume discounts for mass deliveries vs. the time and effort of individual vehicle sales.
“If you’re buying 20,000 vehicles a year, you should expect a discount,” he says. “It is sound business policy that you get a better deal.”
Many industry observers, not to mention some GM executives, scorn rental fleet sales, calling them inferior alternatives to retail sales. McVeigh concedes an auto company’s rental fleet sales shouldn’t be unmanageably high.
Indeed, GM for yet another year will scale back on rental sales in 2007by 120,000 units to about 550,000.
But McVeigh says a well-balanced rental program offers significant profits and benefits.
“There is no published guide, but a 500,000-plus unit range of fleet rental sales is easier to manage than a 700,000-plus range,” he says.
McVeigh says it is important that the model mix of rental vehicles resembles retail market demands. Otherwise there will be low-appraisals up the road. Rental vehicles that are slow sellers in the retail world become residual headaches when they are remarketed.
On the other hand, he says, “we’re over 20% fleet rentals with the Chevrolet HHR, but the residuals are great because a hot car is a hot car.”
McVeigh says rental vehicles help showcase products because a person in a rental car is experiencing the equivalent of an extended demonstration drive and, if favorably impressed, could ultimately buy that model at a dealership.
“You want to make a good impression, and that’s one reason over the last five years we’ve gone from offering stripped rental models to ones with more content,” he says. “We sold 80,000 rental cars with sunroofs last year. We’ll more than capture those costs when the cars go through remarketing.”
Another big attraction in rental cars these days, he says: XM Satellite Radio.
Meanwhile, GM will showcase a range of new commercial vehicles at this month’s Chicago Auto Show, including a new HHR with side panels in lieu of windows.
McVeigh says a customer suggested the side panels because he transports pharmaceutical supplies, a cargo he didn’t want to be visible from outside the vehicle.
GM has invested more than $2 billion in recent commercial-vehicle enhancements. Those include commercial vans with E-85 (an ethanol-gasoline blend) compatibility and the Chevrolet Uplander with Sit-n-Lift power seating that raises and lowers second-row passenger seats.
Overseeing fleet and commercial sales isn’t the most glamorous part of the auto business, McVeigh acknowledges. “We sell three-quarter ton trucks, not (Chevrolet) Corvettes. But you know what? A sale is a sale.”
A native of Edmonton, AB, Canada, McVeigh has worked throughout the U.S. and Canada during his nearly 40 years at GM.
“I’ve been with the company 37 years now, so I’m not running for GM chairman,” he says. “But what we do here is important.”