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Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL LIFECYCLE ANALYTICS DEPARTMENT (GLAD)

Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

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Page 1: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet

Buying and Leasing Decisions

WALDEK RACZKOWSKIFORD MOTOR COMPANY

GLOBAL LIFECYCLE ANALYTICS DEPARTMENT (GLAD)

Page 2: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

Why Fleet Cost of Ownership (CoO) Matters…

Smart Fleet customers buy vehicles based on total ownership costs – Thousands of active Fleet customers make buying decisions based on: depreciation, maintenance costs, fuel costs and operating fees

Competitive Net Operating Cost projections allow customer to compare vehicles across all OEM’s

Fleet operating costs are volume and budget driven

Over past 6 years over 2,600 GLAD CoO comparisons prepared per customer request and spec

Page 3: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

The ultimate arbiter of the health of a brand is its residuals

Page 4: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

The Benefits of an Improved Residual

Lower Lease Payments

Lower (Better) Cost of Ownership

Better Brand Image

Higher Customer Satisfaction

Easier Financing Support

Page 5: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

Key Drivers of Vehicle Residuals

Long-Term Durability

J.D. Power APEAL

Initial Quality

Brand Perception

Right pricing

Retail / Fleet Mix

Incentives

Supply of 1 YIS Vehicles

Page 6: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

Benefits of a Good Cost of Ownership (CoO) Tool

Fully updated with 3rd Party/independent Data Sources

(All variables are sourced from outside of the OEM so as to alleviate any issues of bias.)

Reflects current and forecasted market positioning

Ability to compare multiple vehicles across all segments (both domestic and import)

Consolidated and clear calculation page for end-customer

User friendly Report – Detailed yet not overwhelming

Meets Fleet CoO needs

Ability to identify all CoO gaps to take action

Page 7: Cost of Ownership (CoO) – The Logical and Most Feasible Way to Make Your Fleet Buying and Leasing Decisions WALDEK RACZKOWSKI FORD MOTOR COMPANY GLOBAL

ALG 36-Mo. ALG 36-Mo. ALG 36-Mo.Residual % Residual % Residual %

47 47 38

GLAD Cost of Ownership (CoO) Comparison (JBS USA, LLC. Fleet Scenario) '10MY Ford Fusion SE (2.5L I-4) (FWD) vs. '10MY Chevrolet Malibu LS (2.4L I-4) (FWD) & '10MY Chrysler Sebring Touring (2.4L I-4) (FWD) 10MY Fusion SE I-4 FWD 10MY Malibu LS I-4 FWD 10MY Sebring Touring I-4 FWD

Vehicle A Vehicle B Vehicle CVehicle A Vehicle B Vehicle C

Model Year 2010 2010 2010 UsageMake Ford Chevrolet Chrysler Years in Service 3.00 3.00 3.00Vehicle Fusion (POH/200A) Malibu Sebring Miles per Year 33,333.33 33,333.33 33,333.33Trim SE 4-Dr. Sdn. FWD LS FWD Touring FWDEngine/Trans. Configuration 2.5L I-4 6-Spd. A/T 2.4L I-4 4-Spd. A/T 2.4L I-4 4-Spd. A/T Net Transaction Price $20,099 $20,454 $18,645

Financing 1,530.58$ 1,557.61$ 1,419.85$ Total Price $21,099 $21,454 $20,145 Loan Interest Rate 6.00% 6.00% 6.00% OEM National Fleet Incentive $1,000 $1,000 $1,500 % Financed 80.00% 80.00% 80.00%

Actual Down Payment 4,019.80$ 4,090.80$ 3,729.00$ Net Transaction Price $20,099 $20,454 $18,645

Depreciation 11,474.00$ 11,829.00$ 12,745.00$ Financing $1,531 $1,558 $1,420 ALG Auction Price 10,775.00$ 10,775.00$ 8,050.00$

ALG Vehicle Group Code 4 4 4Depreciation $11,474 $11,829 $12,745 ALG Vehicle Adjustment 0.12$ 0.12$ 0.12$

ALG Auction Price $10,775 $10,775 $8,050 GLAD High Mileage Adjustment ** 2,150.00$ 2,150.00$ 2,150.00$ Adjusted ALG Auction Price $8,625 $8,625 $5,900 Adjusted ALG Auction Price 8,625.00$ 8,625.00$ 5,900.00$

State Fees $1,815 $1,847 $1,684 State Fees 1,814.88$ 1,846.72$ 1,684.46$ Selected State Michigan Michigan Michigan State Sales Tax Rate 6.00% 6.00% 6.00%

Sales Tax 1,205.94$ 1,227.24$ 1,118.70$ Fuel Costs $10,683 $10,871 $11,110 Title Fees -$ -$ -$

Average Fuel Economy (MPG) 26.05 25.60 25.05 Reg/Lic Fees 12.00$ 12.00$ 12.00$

Maintenance $1,009 $994 $1,192 Fuel Costs 10,683.30$ 10,871.09$ 11,109.78$ Fuel Economy: City (mpg) 22.00 22.00 21.00

Net Operating Cost $26,512 $27,099 $28,151 Fuel Economy: Hwy (mpg) 31.00 30.00 30.00% Highway Driving 45.00% 45.00% 45.00%

Ave. Net Operating Cost per Month $736.44 $752.74 $781.98 Average Fuel Economy (mpg) 26.05 25.60 25.05

Ave. Net Operating Cost per Mile $0.2651 $0.2710 $0.2815 Maintenance 1,009.09$ 994.32$ 1,192.36$ Parts Cost 454.09$ 409.32$ 547.36$ Labor Cost/Hour 75.00$ 75.00$ 75.00$

Definitions and Assumptions for Ownership Cost Assessments

Labor Hours 7.40 7.80 8.60Total Price = Base Vehicle Invoice + Destination & Delivery + Options & Packages Net Transaction Price = Total Price - OEM National Fleet IncentiveDepreciation = Net Transaction Price - Adjusted ALG Auction Price - based on ALG forecasted auction price for '10 models @ 36-months (July-August 2010 Edition) Fuel Economy is based on actual EPA Metro-Highway Combined Data for 2010MY Fuel cost assumed to be USD $2.783/gallon. (U.S Energy Information Agency (USEIA) Weekly National Average as of: Monday, 09 August 2010)Mileage calculated at 33,333.33/year for 3.0 years in service (YIS). (JBS USA, LLC. Fleet Scenario)Maintenance calculations assume 100,000.0 total Fleet miles. (JBS USA, LLC. Fleet Scenario)Maintenance calculations were performed from '06MY cumulative parts costs and labor data User-Defined Entry Field

provided by AutoQuote and reflect manufacturers' suggested service at recommended intervals. Input from Data Source

** Mileage Adjustment ($ Charge per Mile Exceeding ALG forecast of 15K mi/year) based upon Ford GLAD Fleet High Mileage Penalty Study. Calculation

Pricing and depreciation data assumes comparably equipped Fleet vehicles always including: A/T, A/C & ABS.GLAD = Global Lifecycle Analytics Department

KEY

GLAD Cost of Ownership (CoO)