Fleet sales also an issue abroad
Now here's a story that won't take many Europeans by surprise. Just as GM, Chrysler and Ford get knocked for selling tons of vehicles to rental fleets in the States, BMW and Audi do basically the same thing in Europe. In fact, those two German firms lead the list of automakers who rely the most on fleet sales in their home market. This according to auto motor und sport magazine, which has reported that Audi and BMW "have the fewest private customers of all brands in Germany," with just 33.5% and 32.8% respectively. Mercedes was least likely to send a vehicle to Deutsch Hertz, with 50.1% going to private owners. VW rang in at 47.5%, Ford at 41%, and Opel tallied 39%.
To put those numbers in perspective, in the U.S., Ford sells about 66% of its vehicles now to private buyers, and 34% to fleets, which is almost the complete opposite of BMW and Audi in their home markets. Both Ford and General Motors, as well as the Chrysler Group to an extent, have managed to lower their fleet and rental sales in the first quarter of 2007.
Fleet sales take a toll on automakers because of the big discounts with which they're usually associated. The magazine says that the Focus typically sells to fleets at a discount of 28%! Passats (27%), Renault Lagunas (30+%) and Ford Mondeos (30+%) also go for a song. At 30% off those cars aren't making much if any money for the manufacturers. Essentially, they just keep the plants running, according to one sales director. It's hard to say why the percentage is so huge in Europe compared to US totals, but the fact that Americans have more vehicles per capita is probably one big factor.
[Source: just-auto, Blogging Stocks]
_opt_thumbnail.jpg)
_thumbnail.jpg "2011 Audi A8: Live from Miami")
Reader Comments (Page 1 of 1)
Tom 5:29PM (4/17/2007)
I think in Europe it's a lot more likely to have a company car assigned to you than it is in the U.S., so that may be a factor
Reply
BOB 2:41PM (4/12/2007)
APPLES AND ORANGES.........??????????????
From years of reading CAR Magazine, I always had the impression that, in Britain, cars of the Mondeo level upward were mostly bought by employers as job perks, not bought by individuals. I would imagine the rest of Europe might be the same.
The term "fleet sales" generally refers to rentals, "company cars", etc in the US. Company cars here tend to be fairly basic, like Tauruses.
In Europe, a nice car of fitting status is more commonly a part of manager compensation. US tax laws are not so keen on this.
Also, I cant imagine a car nut (or blog writer) who was not aware that European prices for the same car tend to be somewhat higher than the US price. Perhaps that is so all the discounts work.
Isn't the main point that the US makers were dumping off production at low prices to keep factories (with workers who get paid anyhow) busy, and sales figures up, but have cut that back?
Reply
Guenther 3:29PM (4/12/2007)
The corporate structure in Germany tends to have many prospective BMW/Audi/Benz customers in a company ride. It is often a cash allotment, and Benz's tend to be a little more pricey than the Bavarian brands.
The statistic I'd like to see is which brands people over-reach for the most- income level vs vehicle price.
Reply
Graham 3:45PM (4/12/2007)
Right, what all the others have said. Fleet sales in the US are nearly always to governments and rentals. Fleet sales in europe of mid-high range cars go to companies who supply them as company cars to their employees. Apples and Oranges indeed.
Reply
nagmashot 4:01PM (4/12/2007)
#4 100% correct...and funny as a employer I buy my private used Audi over my company..makes it a fleet sales to that article logic.. which is for sure nonsens.. most of that fleet sold Audi BMW are owned by the company owner(Germany economny strenght are the hundret thousend smale companys with less than 50 employees)...their owner bought the car for tax reason as a company car even if used only private.
From that 60% fleet sales are for sure more than 50% bought only for private use. BTW currently the tax law is changed and many of that fleet cars get turned into private owned cars... the government cut the tax advantage for companys if the cars are not 100% used for company work... now it gets more expansive to buy a car for private use over your own company. Means in 5 years that statistic is completly different and the sales are still the same
Reply
BOB 4:02PM (4/12/2007)
... now that we have kind of shot this article to Hell, lol:
A more interesting point?????????
What if the Big 2.5 cutback on fleet sales causes the rental companies to go with Korean (soon Chinese) cars? Will the lack of US cars to rent get Americans comfortable with the 2nd tier Asian brands?
Will that rear drive large Hyundai end up being the Fire Chief's car in Peoria?
Is the Meter Maid of 2010 going to be driving a Chinese car?
I am suggesting that removing the ONLY presence of mainstream US boring sedans -- rentals -- in some markets (Los Angeles, for instance) may lead to the brands becoming weaker.
Will the American brands first become niche brands, then disapppear? Anybody stupid enough to think that GM making Buicks in China is not likely to lead to our having only Chinese Buicks here?
All the more reason to fix the UAW mess.
Reply
Lithous 4:28PM (4/12/2007)
Too bad I couldn't read the article (asked for subscription).
Apples and oranges, OK, LMAO. Are you guys sure it isn't tangerines and oranges?
Basically if the U.S. wasn't filled with a ton of people with more money than brains and/or people willing to go into lots of debt for their import car and fleet sales then a few of the German car companies would abe GONE, faster than you can say, "GM". Bottom line.
Ask user Takeo that comes on here about his successful bid to get the U.S. military to use Camry fleet vehicles. Yeah, all those Prius' I see with gov't stickers on the side. Yup, that is America. All about protecting our own and selling everything the gov't buys.
You guys are talking 1980's crap. Sure there are a lot of GM and Ford sales to gov't still but there are lot of gov't sales to foreign companies now too. So with fleet down for the U.S. companies it really is a subsidy to the German companies over there even though people over here think GM and Ford are far worse at that game.
Brainwash all you want. It is not apples and oranges... "Essentially, they just keep the plants running, according to one sales director."
I'm sure any Japanese gov't entity is going to buy only Japanese and any rentals they have too.
The cars cost more (yet aren't needed in many cases) so it makes it an apple to the basic rental car orange here?
Please explain that better and in more detail how it is such apples and oranges. Other than with the money made from European fleet they NEED those and with the money lost from U.S. fleet vehicles it is bring profits down. Other than that, what is the real apples and oranges?
Reply
Lithous 4:34PM (4/12/2007)
So companies buying cars for what is ultimately private use as you say may be stopping a lot of Japanese cars from being purchased by private owners and the Japanese companies don't have history and the deep discounts the Germans give to their fellow country companies.
It is still fleet. And it changes the game (as to who would buy/drive what vehicle). And it keeps the factories open.
Reply
rgseidl 4:44PM (4/12/2007)
In Germany - and, I suspect, many other EU countries - corporations can deduct the depreciation on company cars from their tax bill. Fleet sales discounts are nowhere near as deep as in the US because they don't need to be. The focus is more on resale value after 2-3 years when company cars are sold on the used car market.
Btw, the German Green party triued to kick up a big fuss recently because they feel the tax loophole described above actually encourages sales of gas-guzzling premium cars that spew out a lot of CO2. Funny, this was never an issue while they were enjoying the perks of the government motor pool.
Reply
nagmashot 12:18AM (4/13/2007)
#8 Japanese cars are not successfull in Europe. They hold only 10% of the market volume... and no government orderes are not placed to local producer. EU law does not allow that. If they say our Police needs 3000 new cars every car producer can place a offer and the government has to take the best offered deal by law... and this is done with open sources!
Example many police cars in Germany are from Opel which is a GM brand and from Ford both are US Companys. In France the new highway police cars are Subaru. Audi for example has no big government deal for police or red cross or military vehicles, there is not much government support in that way... and if they sell a car to a private person by law or a private owned company by law is no different at all...both are commercial success. There is no different if a company choose a Audi over a Honda as would be a private person choose a Audi over a Honda. Subrau sells in Germany less cars as Porsche... changing fleet slaes would not change the fact that Subaru has no success at all in Germany.
BTW who does this work on the Japanese market...
How many of the Nissan Honda Toyota sold there are fleet sales?
When does Japanese open their car market for a fair trade? Do they fear that it would hurt their own companys badly if suddenly GM Ford BMW Audi VW Renault Peugeot Citroen FIAT Chrysler Mercedes and the many other car comapnys can agressiv attack them on their home land market?
Just for the record...the car exchange between Germany and Japan count on money is close to 1:1 and that with the extrem unfair import tarifs customer in japan have to pay if they wanna buy a German car.. without that tarifs Germany would sell more cars in Japan as Japan in Germany.. and I am pretty sure US companys would also have success in Japan..
Reply
JESH 1:51AM (4/14/2007)
As has been said, company car sales are the reason. I've no idea what %age of BMW 320d's are company cars, but in the UK for example, I suspect almost all of them are. Incidentaly, company car recipients have to pay tax depending largely on the car's co2 output, which largely explains the success of diesels even amongst expensive cars in Europe.
It is not true that this is "still fleet" in the same way as rental fleets, gov't fleets etc. though, since company car recipients, especially at the top end, usually get to choose what car they get - so it in a large part it does come down to desireability.
A fact that is not always appreciated in the US or Japan is that European brands carefully develop their models to appeal to the company car market. For example, Audi and BMW's have developed their 4-cylinder diesels without increasing the capacity but instead investing heavily in turbo-charger tech etc., though expensive. Toyota, just for example, increased the capacity (to 2.2 liters)to increase the performance. Doesn't sound like a lot, but it pushes up co2 and means that if I wanted a Toyota company car I would have a pay a signficant tax penalty over an Audi, VW or BMW. Why would I do that?
The phenomenon of sporting luxury cars with high purchase prices but 2 liter diesel motors is explained by a combination of market forces and regulatory enviroment.
Reply