GM Fleet Tackles TCO

Ed Peper

US Vice President of Fleet & Commercial Sales, General Motors

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.

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