We need not review the litany of bad news to remind you the Motown’s money’s too tight to mention. But amidst all of the plant closings, layoffs and rumors of bankruptcy, one song remains the same: management perks. The Detroit News reports that even as executives descend on DC begging for bailout billions, Ford, GM and Chrysler refuse to eliminate programs which subsidize car leases for management, often with insurance, maintenance and gasoline included. And this isn’t going over well with workers. “We’re taking concessions,” says UAW worker Jim Willington of Ford’s Woodhaven Stamping Plant. “They should level the playing field. They ought to be willing to buy the products. They can afford it.” A little perspective after the jump..
To be fair, GM and Chrysler are limiting their programs. GM managers used to pay $150 a month for their vehicle, fuel, maintenance and insurance, and got four different vehicles each year. Starting in September, the fee was increased to $250 a month, and the length of each lease was extended from three months to six. A similar program at Chrysler now limits managers to a single vehicle per year. Ford’s program has variable pricing, but allows family members to qualify, sticking Dearborn with the sky-high cost of insuring the teenage progeny of its managers. Ford also recently expanded its lease program to reduce inventories of Fusion and MKZ. Meanwhile the automakers claim that these programs are one of their only ways of retaining employees, and it’s better than having vehicles sitting on lots. But if GM can do without developing any new vehicles, can’t they also do without this perk?
I know it is easy to see this as a waste of money.
But it is also how you get your people to live with your product. Does everyone at Apple have an IPOD and IPhone? Hell Yes.
Actually I think every decision maker should be driving company cars. But I would make it a fleet consisting of every car produced plus some competitors. Users would have to change cars every so often to be exposed to all levels of vehicles. Plus no special servicing. If there is a problem its off to the dealership. If the decision makers lived with all their products they may make better decisions.
I’ve got a demo through my workplace (private leasing company) and honestly, if you are in the industry and require a company car…more power to you. When I was at lexus I drove a honda simply because I love my SIR and Lexus didn’t offer demos. You’d be suprised how many people ask what you drive when you work at the dealership never mind when you are a GM white collar staffer.
I just imagine saying “oh hi your a GM manager, why are you driving a Toyota for your personal vehicle??”
one would think that they aren’t that crass at GM but then again…
You speak the truth, Juniper!
Especially the part about making the execs do the “dealer game” for service and warrantee work.
Can you imagine a GM exec being given the line that I was re: my last (ever) GM product?!
Sorry – we “have” to skim the rotors again instead of replace them. (I responded that I’d be back sooner next time because they were junk and I was right). Next visit: here’s a bill for $80. (I responded by questioning the fact that the car hadn’t reached 36,000 miles).
I was informed that GM brake rotors were covered only to 17,000 miles…
I offered to potentially stay a GM customer for an additional 30 years – OR they could have their $80. They needed their $80.
Took the Cavalier, went and got non-GM brake rotors, put them on myself and traded it off.
Product Evaluation Program vehicles (PEP) are useful and beneficial.execs test out units loaded with options. the public sees these on the road and in neighborhoods. employees/retirees are eligible to purchase them at a tidy discount after they’re driven, and it is a perk. plus, those who drive them are required to buy one personally every three years. good program.
Inquiring minds want to know: 2-3 years ago GM heads Red Ink Rick and Lutz large mouth Putz cut their salaries and bonus in half. Few months ago they restored their income levels (things were good?). What do they earn now between 2 of them? How much those priceless decisions cost GM stockholders (losers) and how much it will cost us (taxpayers?) once US bails their hides out?
I used to work for Ford. I use to have a company car. My car was provided by Ford for my job. The standard procedure was to fill up the tank on Friday drive on the company all weekend and fill again on Monday. No expenses at all to me and could put all the miles I and my wife could drive on it.
I also knew many people that qualified for the “cheap lease” cars. It was a great deal. Typically what they paid wouldn’t have paid the insurance on the top of the line cars they always ordered. My boss’s teenage son had so many accidents that he joked that without free insurance his son wouldn’t have qualified for any insurance.
Whenever you brought up whether there was any company benefit to spouses and kids driving almost free vehicles they always defaulted to the vehicle feedback that they always gave about the vehicles. Most of these people had new cars every 6 months and there feedback was limited to the nice colors they came in.
My friends still with Ford tell me that the free weekend gas days are over. But the cheap lease cars for spouses and kids for qualifying employees still lives on.
Every year, the automakers have to certify the durability of their emissions systems by running a 100k mile test on all of their models on real world roads.
So Chrysler, GM, and Ford have a fleet of vehicles, every year, with 100k miles of real-world miles on them, and what do they do with these cars when they’re done? They scrap them. All that valuable data lost.
At Chrysler, a lot of the engineers had at least a minimal interest in these 100k mile parts, but the common thinking was that you shouldn’t really be driving these old clunkers around or you’ll get stuck somewhere.
Meanwhile, the execs are driving new cars that get gassed and washed every day. I always thought that the best lesson for these pampered execs would be to force them to drive these 100k miles vehicles as their commuter cars. Force them to live with the long-term consequences of their actions. Yes Mr. Exec, it does matter that you cheapened up that minivan transmission and now you’re stuck on the side of the road. Or, did that 2.7L spill its oil all over your expensive driveway? Weel, this is how hundreds of thousands of Americans are experiencing your products.
My dad worked for Walter P. for 38 years so I have seen this first hand. For a good 15 years each department had a few cars for employees to use on weekends and for moving things. My dad worked in the minivan design group and they had a variety of vehicles for use. Keep in mind that these were NOT executive vehicles whatsoever. These were for the regular working stiffs.
Now, I just bought a PT cruiser that was part of Chrysler’s “executive” fleet out in Auburn Hills. The dealership had maybe 8 of them and they were all in immaculate condition. These executives didn’t pay for a damn thing in regards to filling up the tanks or washing these cars.
** Side Note: At Chrysler’s headquarters all non-Chrysler cars had to park in the boondocks. What is odd is that there were dozens of long-time employees who drove Lexus and other model vehicles simply because they had diarrhea for brains. I will give the Indian IT contractors because they didn’t know better and Indians only drive Toyota due to a cultural glitch.
4 cars a year!?! What the hell does GM do with the cars after 3 months? Sell them as used? They must be loosing $40k a year on each person this way.
Do the math. If a 3 month old car looses $10k off of MSRP (My SWAG) just by being a used car, times 4 per year. Wow.
Each car they they tie up as a benefit was a potential source of revenue. But on the other hand, if they are loosing money on each car, then why not. Not a good way to stay in business.
Obviously its good to get your execs to experience the products they work on, but the days of letting them drive around severely discounted vehicles as daily drivers, much less allowing their family members to do so, are long over. Have a fleet that execs and other employees take for a day here and there and thats it.
To the argument that this perk (or any perk for any industry, including banking) is needed to retain employees I ask, have you seen the job market??? Anyone who had any chance to escape Detroit did so long ago, everyone else is thanking their lucky stars for every minute they are still employed.
Honda does the same thing – employees above a certain grade get subsidized leases on new Honda’s.
I’m not saying the big shots are pampered to the same degree, but middle management seems comparable.
taxman100-Honda is profitable.
Just a thought.
The money saved by cutting these perks wouldn’t mean diddley but it might help with numerous negotiations that would.
Bunter
Starting in September, the fee was increased to $250 a month, and the length of each lease was extended from three months to six.
Well, they increased the fee cuz they need the money. And quality has improved so much that nothing should break before six months…
Seriously, they need to send employees home in the occasional Honda / Toyota. Though I doubt the UAW would understand… Then again, I doubt most managers would get the point either…
Eric the Red . . .
You sound like just the kind of dead wood that we were hoping would leave during our recent rounds of downsizing. Good riddance.
Fueling management lease cars at the company pumps has NEVER been authorized in the 20 years I’ve been here. If that’s not what you did, then I can only assume you took a test vehicle or a pool car and boondoggled at the company’s expense over the weekend. Also, in my experience that’s never been considered acceptable behavior — let alone encouraged — by anyone in the company. At best, it was ‘overlooked’ by other, equally unethical supervisors. Who I imagine are now also gone. And again . . . good riddance.
It’s funny that you seem to think you’ve indicted the company, when in fact you’ve shown that you yourself are the lowlife cheat. Bravo.
Contrary to popular ‘wisdom’ I’ve seen here, the ‘best and brightest’ did not abandon ship and leave us with the dregs. On the contrary . . . the slackers and naysayers abandoned ship, and the folks who are left are smart, talented, and most importantly dedicated and loyal.
Regarding the article . . .
I’ve often seen TV ads for vehicle leases offered at rates competitive with the Ford management lease program. Granted, the program includes insurance, but it’s hardly a giveaway. As was stated, sometimes deals are given to help equalize inventories. But most vehicles are not on special, and usually in-demand vehicles or combinations are not even offered. All in all, and considering the beating we’ve taken recently on declining healthcare, etc, this is not that huge a ‘perk’ to complain about.
Not too long ago, I heard a story from an ex GM person. She is in marketing but saw the huge spray painted writing on the wall and now works for a much more stable company.
When GM bought SAAB, and Ford bought Volvo, the Executive car folks rejoiced ! They could get a euro car from the Company !!!!
Say no more on that
And yes, my management friend got a new GM vehicle every six to eight months. She didn’t get a choice, so sometimes it was a Cavalier, and other times a fully optioned out Suburban. There were a few Pontiacs and Buicks. For a special occasion, she was able to borrow a Vette for the month, but it was a “special request”.
She was quite clear that it was a huge problem as all the execs got new cars flawlessly maintained and had no idea what it was like getting the same car from a dealership, or facing a nonresponsive service department.
Honda does offer some pretty nice lease terms to certain employees (particularily those posted overseas), they also have a small mix of “test” vehicles that can be rented by Research Employees (like if you need an SUV/minivan for the weekend).
The leased vehicles are almost all Civics and Accords (Odysseys are available to large families). They are leased through (and maintained by) one of the local dealers. They are replacable every 3 years.
BMW has some sort of similar program for their Financial Center Employees (the Columbus area is awash in Beemers with “dealer” plates). But I don’t know the terms, looks to be mostly 3s and X3s.
GM is able to use the PEP program as a tax write-off with no “imputed income” impact to the employee.
HOW? Since they don’t choose their car, GM calls it a random evaluation program. You got to get to Exec Dir level to pick your car. Exec Dir also park in a climate controlled garage.
There is a service center on site at the Tech Center in Warren. They have no clue about the average customer experience.
If you’re married, your spouse is expected to buy or lease a new GM vehicle every 2 yrs. If you’re single, no worry.
If you want to drive a competitor car, try the proving grounds in Milford, an hour away.
I was given a Aztek as a company car. That’s when I had to get out.
Toyota and Honda have subsidized lease programs, but they’re not great unless you need 30K miles/yr. If you drive 15K or less, you could do better going through a dealer specials.
So the UAW guys think “management” is getting too many perks and that there should be fair and shared sacrifice. Okay…I say lets!
So how many management “Perks” are out there…you know, where “the man” is sticking it to the UAW guy (who gets $25 an hour to sit in jobs bank….or not work while the plant is down).
Stock options – worthless
Stock grants/RSUs — near worthless
401K – essentially gone due to stock ownership guidelines killing the value…no more match.
Pension — Gone. Frozen. unless you’ve got 15 years or more, it’s almost a joke.
Pay increases — gone for at least two years.
Bonuses — gone…way gone.
Health care — anything under $5k and you’re
essentially paying if your management…all the benefits are cut to the bone.
Education programs — gone
Assistance for family/adoption/etc — gone.
Job security..ha! gone.
So, for the average management employee…they’ve take an all in 25-50 percent paycut based on the above (depending on their grade and bonus). I agree, we need to be more fair with the unions and level things up. I’m sure all the management folks driving lease cars (and BTW, we’re mostly talking about mid-level managers/engineers making around $70K a year…not exactly the stuff of Lifestyles of the Rich and Famous) will hand over their keys. At least then there will be nothing left to build in the plants.
I keep hearing …in all industries… how we need these perks to keep good people but am I wrong to say good people will stay with a good company? If the company goes ch11, where are your perks then? Where will you go? Is there a market for auto execs and middle managers? Is Toy/Hon/VW hiring in droves?
I am not advocating cutting these perks since I don’t know the cost/benifits but “if I ran the company” these are areas I would not overlook to prevent my company from going under.
There are significant product benefits to GM’s PEP program. All participants are required to fill out an exhaustive, JD Power-like survey for each vehicle they drive, so that the company can get some predictive data. Any problems reported require personal followup from the engineer responsible for the part.
Second, the service facility at the Warren Tech Center is tied directly to the assembly plants. Quality spills (i.e., a large percentage of drivers of a certain model bringing the vehicle in for the same problem) are detected quickly and immediate feedback given to the assembly plant. It is much faster response than going through dealerships.
Finally, for new models such as the CTS, Malibu, Traverse, etc., a large fleet of early production vehicles, called “Captured Test Fleet”, are built for the PEP program and employees drive them under real-world conditions. Drivers are required to immediately report any quality issues (in real-time via a special OnStar hotline). Any problems can be caught and fixed before the vehicle goes on sale at dealerships.
Another point . . . I would guess that the companies benefit in some way by these programs, or at least believe that they benefit.
When times get tough, they’re more like to expand them than cut them. And I doubt the reason is to keep more employees around. Lower market sales often lead to better deals on slow-selling models, faster turnaround on leases, or expansions in the number of available leases. I may be wrong, but I believe that Chrysler expanded their program to include lower-level employees . . . essentially senior working-level engineers, who would not be eligible at Ford or GM.
Given this behavior, it seems that cutting this ‘perk’ would not benefit the company . . . it would just be a symbolic move to placate uninformed people.
And bravo to prthug’s post. I’d gladly give up a lease car ‘perk’ in exchange for cost-of-living pay increases or worthwhile health insurance alternatives.
GM’s PEP program did indeed include competitor’s vehicles at one point. In the early to mid nineties I remember my father bringing home Volvos, Hondas and Nissans pretty much for a weekend or two before going back to a GM car for the rest of the workweek.
I’ve personally bought many PEP cars because of their incredible discounts, cars that I would never have been able to afford otherwise. Volume is volume and if they weren’t making money on the sale, they sure as shit were on all the financing.