What seems to be the biggest challenge for fleets right now from your perspective?
The biggest challenge is always the total cost of ownership. That is the number one issue on fleet managers’ and fleet companies’ minds. It revolves primarily around two things: residual values and the cost of fuel. It has been challenging for everyone as fuel costs have gone up. We are in a great position at GM. We offer upwards of 30 to 35 vehicles that get over 30 miles per gallon on the highway. Last month, we sold over 100,000 vehicles at GM that get over 30 miles per gallon so we are in a very good place in that regard.
Also, our residuals have never been better. We have managed the amount of vehicles that we have sold to rental car companies in order to optimize the residuals. I think it has worked very well for us.
Have you been able to get that message across in a really actionable way with fleet managers?
Yes, we have and we are continuing to tell that story. It is important for fleet managers and fleet companies to know that we have a great total cost of ownership story, not only in the residuals that we have versus our competitors, but also the fuel economies that we have.
We look at our mission to be the number one choice in the fleet and commercial industry. It is based on three things: great products, innovative business solutions, and exceptional customer experience. I think in all three of these, in what I would call our pillars, we do very, very well.
Also, the fuel economy story we have. It is not just with carbureted engines, it is also with many of the energy diverse tactics that we have taken to get that total cost of ownership, the fuel cost, down for fleet companies.
What has been the impact of the design work that Mr. Lutz and others have done?
Everybody loves a great looking vehicle and a great looking, functional interior and we happen to have both in what we offer. It has a tremendous impact. There are vehicles in the GM fleet with residuals that are higher than they have ever been and that is the result of how do they look, how do they function? How do they handle, what is the fuel economy?
Bob Lutz, Ed Welburn and others have just done a magnificent job with our products. Each vehicle that we bring out is great looking. The interiors are spectacular and I would consider them to be, irrespective of the product segment, best in class. Design has a tremendous impact on fleet management companies, ultimate fleet users, as well as retail.
If you were to give some advice to a fleet management companies, what are the three or four actionable things that they ought to be doing right now?
I think that number one you need to tell the product story. Certainly, in our case, we have great products and we want to have that fuel economy story told as well.
We would also ask our fleet companies, our fleet management companies and fleet managers to tell the story about the broad range of energy diversity that we have. We were the first one to offer a factory warranted bi-fuel pickup truck that runs on compressed natural gas and regular gasoline at the same time. We offer vehicles like the Volt. We have vans that run on not only compressed natural gas, but liquid petroleum as well.
We have hybrids in our full-size utilities that no one has in the marketplace. And as I said before, we have so many vehicles now that get great fuel economy. I think that is a big story that really needs to be told out there. I think it is very important for cost of ownership.
I would also remind folks to take a look at residual values and how much our residuals have improved at GM, especially versus our key competitors. Take a look at that because it will shock some people. I don’t think folks really understand when they hold a vehicle for three or four years the residual value is much higher than many thought they would be.
What is your perspective for fleets as far as alternative-fueled vehicles?
I don’t think you can put all of your eggs in one basket. You have to have great fuel economy with the existing fleet that you have. You need to offer a broad array of choices, whether they are hybrids, electric vehicles with range extending capability like we have, bio-fuels of some sort, potentially bio-diesels, etc. It could also be compressed natural gas, liquefied petroleum. We are the largest producer of E-85, ethanol vehicles in the marketplace. There is a great range of choices.
We are in a wonderful spot because depending on what gets really hot, we are dabbling in all of those areas.
One of the other turning points could be with hydrogen fuel cells, with the only byproduct of that technology being water; I think it is a very significant technology longer term. I think you are going to see a big electrification of fleets in a shorter term and I think there will be other technologies like hydrogen fuel cells longer term.
What is really needed for EVs to catch on in the marketplace?
I think that consumers need to be educated about electric vehicles. That is number one. With a vehicle like the Volt you don’t have to have range anxiety that your vehicle is going to run out of juice and you will be stranded because there is a range extending, small gas engine that will run the vehicle for you and still get great fuel economy.
You really have to do a lot more in the infrastructure areas. There is a lot being done right now but there is a lot that needs to be done to make it easier for consumers to be able to just plug in. As more and more people learn about this technology and as more and more people drive the Volt, for example, that has a 93% satisfaction rate, according to J. D. Power & Associates, I think this technology is really going to catch on. Once people go electric they are not going to want to go back.
Ed Peper is the US Vice President of Fleet and Commercial Sales for General Motors. Previously, he was General Manager, Fleet and Commercial Operations, has served as General Sales Manager for Cadillac, and has held several leadership positions at GM throughout his career.