Tom Simmons, who began his career in fleet management in 1966 and recently announced his retirement from Jim Pattison Leaseing,sat down with CAF to share his insights on the business,  its early days and steady growth – and what lies ahead for an industry in flux

Tom's career in fleet started when he was recruited by Chrysler Leasing to teach leasing to dealers. During the following fifty years, he worked for many industry heavy weights, including American Motors Company (AMC) as the National Fleet Manager and then Ontario Regional Zone Manager, which he describes as a "phenomenal experience". The following years saw Tom at Citibank, Grant Brown, and City National. Then, as Tom says: "I met Steve Akazawa, Jim Pattison Lease, and discussed growing the eastern portfolio. He took a chance on me and it paid off for both of us. We started with five hundred leases and now there's more than 8,000 in the region– that was fun!"

Noting  industry developments, Tom has witnessed technology’s evolution during the past half-century: "When I started, we used an IBM 360 mainframe, with trays of punchcards, Olivetti calculators, and massive paper reports. It worked. Now it's all digital, and we’ve got artificial intelligence around the corner, with machine learning to handle all the data telematics from autonomous vehicles."

Business growth through communication

Among Tom's many accomplishments are being involved with several acquisitions, seeing them as a great way to grow business and bring on good employees. "Every fleet is unique, and one size does definitely not fit all!" he says, adding that it takes a lot of work to grow and develop a business. "I'm proud of growing the business portfolio, especially through adding the small and medium-size businesses to our customer base. We always met with the client's senior managers to really understand their business model."

Tom was deeply involved in prospecting clients, matching up the right account executive with the right customer. He adds that communicating the importance of good remarketing practices was critical, always emphasising the outsize role played by deprecation: "I believe that is key to maximizing clients returns. I would always say to prospective customers that our biggest competitive advantage is our dedicated account executives and our remarketing process was the best in the industry."

Higher costs and controlled downtime

 Tom notes that a major change in current fleet management operations is in remarketing: "If you spend time negotiating with the OEMs you can probably get close to paying what we paid for the vehicles, but you can’t possibly remarket the vehicles as well as we could because customers spend more time thinking about rates and fuel and maintenance. The real benefit is to minimize the depreciation on the vehicle; everyone talks about the total cost of ownership but you don’t know what that is until you sell the vehicle – which is why we put so much emphasis on the back end."

Tom believes that finding the optimal recycling period is  essential, although not enough fleet operators quantify what the downtime is costing them and give enough weight to that factor. He adds: "That being said, the current environment might not allow for the prompt acquisition of new vehicles, but the thing with internal combustion engine vehicles is you can run them for 300,000 to 400,000 kilometres. So, if you have appropriate maintenance schedules, then don’t be afraid of taking that approach during this period of tight availability. You will have higher maintenance costs, but you control your downtime."

Considering major transformations

Tom's natural inquisitiveness  drives him to understand more about electric vehicles (EVs) and the impending regulations imposed to combat climate change. He foresees a major transformation to EVs and hydrogen vehicles, along with a continued rise in vehicle prices and a decrease in fleet incentives.

"I think there'll be a continued rationalization of fleet size, with focus on operating efficiency such as getting a Colorado instead of a full-size pickup," he says. "That rationale will probably affect all aspects including upfitting, with emphasis on managing the total cost of ownership."

He mentions other possible developments, such as the re-emergence of closed end leasing, and OEMs extending fleet programmes with financing and other fleet management tools.

Tom believes there are still unanswered questions on the shift to EVs – including home charging systems for drivers, who pays for it, how it is treated if the employee leaves – that will affect demand in the short term. "Canadians are generally conservative and will move slowly," he says. "The European market is moving quickly due to regulation, but in Canada, fleets are interested but want to watch and see the experience of others."

He adds that two issues for commercial fleets are fueling time and geography: "Depending on where fleets operate and the vast areas they can cover, and the weather they encounter, will all affect range loss when operating under very cold conditions."

Thoughtfulness on the road to the future

Tom believes working with a successful partner is critical to success. "Vehicle acquisition costs will keep going up, so everyone will have to be involved in the process to manage overall costs," he says. "If a truck acquisition cost goes up by between $5,000 to $10,000, then you have to find cost reductions elsewhere to offset that. That will include planning for a longer lifecycle, creating more effective PM schedules, and redeploying assets from high to low mileage areas. Continuing to analyse the downtime maintenance costs and remarketing is key, although the current market conditions make it difficult."

He adds that the ongoing development of a dealer network is another key to success: "Good dealers and dealership fleet managers can do so much for getting product. The Canadian fleet market continues to be dominated by small businesses who don’t necessarily have the money to order a new vehicle, but when they get a contract they then need a van, decalled and upfitted, and asap. It might cost more but they’ll take it."

He concludes: "Over the years we've taken some credit risks with small companies and they developed into very large companies. Growth happens through always taking care of customers, while managing the fleet you’ve got – and being thoughtful on the road to EV adoption."

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