It has been my argument that the fleet car contributed to the demise of the Big Three auto makers. While it was not, in and of itself, a principle cause of their decline the Big Three were able to sell hundreds of thousands of automobiles to local, state, and federal governments. Meanwhile the Japanese and the Germans were not guaranteed such sales and therefore had to produce cars that attracted the disposal income of private customers rather than the expropriated income of the various levels of government.

The result was that the Big Three continued to produce automobiles as ugly and low quality as the K-car (among others) while the Japanese beat the Big Three in the consumer market. There are benefits to signing on with the government contract - ensured sales, etc. - but there are also potential costs.

The thing that I found interesting during the 1990s (while I was a budding young economist) was that public fleet cars were always American made, notwithstanding the fact everyone knew that they were of low quality, low efficiency, and so forth. The "Buy American" idea can justify this outcome, but I have never been fully satisfied with that argument - as a tax payer I care about the local bureaucrat in Arlington, Texas, driving a Ford Taurus, say, made in Atlanta? That is preferred to my city purchasing a more efficient and higher quality (for roughly the same price) Honda Civic or Toyota Tercel/Camry?

All that said, the April 25, 1906 NYT has an article in which the Board of Alderman in New York City have regulated the city automobile purchases - which arguably would have been one of the first instances of the government creating the fleet car:

Only American makes of automobiles may hereafter be purchased by the city under a resolution adopted by the Board of Alderman yesterday. Furthermore, the city departments must not pay more than $4,000 each for the machines they use.

This stand was taken on a report from the Finance Committee urging the fixing of these rules. Dock Commissioner Bensel then was authorized to purchase two machines without public letting, one to cost $2,500 and the other $4,000. All machines owned by city departments must be lettered with the department name hereafter, and are to be used only for departmental business.

There are, of course, reasonable arguments for the fleet concept - all cars are the same and are therefore easier to fix/maintain (the Southwest Airline model), the local content of the automobiles (whether directly in the city/state/region or at the national level) might contribute to local employment, and perhaps there is some political cost to having foreign cars in the fleet. On the other hand, those companies who are guaranteed a certain revenue flow from government contracts (perhaps outside of arms manufacturers) seem to have little incentive for quality control, innovation, etc. The Soviet system was plagued by such agency problems and ultimately, IMHO, these problems contributed to the system's demise.

It seems that the Big Three have rediscovered the American Consumer and are trying to make cars that appeal to the private-sector rather than the public-sector customer. Good for them.