• Jun 16, 2008



Showing great discipline amid declining sales, the Detroit 3 have held back on the temptation to dump vehicles on fleet customers in order to boost numbers. As we reported last month, selling vehicles to corporate fleets and daily rental companies has been a long-practiced method to offload automobiles when sales slow down. Unfortunately, it also results in lowered residual values in the marketplace as these vehicles are dumped in quantity at auctions at the end of their service. Over the years, some models have even earned a "fleet" or "rental vehicle" stereotype, additionally damaging their public image, and sales, at the retail level. The Ford Taurus, for instance, was only sold to fleet customers during the last generation's final year of production, which may have further damaged the brand and affected sales of the renamed 2008 Taurus.

Even though the Detroit 3 are limiting fleet sales, it is still a large chunk of their business that accounts for nearly 35 percent of total U.S. sales for Ford and Chrysler. While fleet sales to Chrysler, GM, and Ford are down, other automakers are increasing their volume. It is reported that Toyota sold an additional 10,000 units to fleets during the first four months of 2008.

[Source: Automotive News - subs. req'd, Photo by Stan Honda, Getty Images]



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    • 1 Second Ago
  • 12 Comments
      • 6 Years Ago
      Michael,
      1-Please mention that fleet sales are down because government agencies all over the country are having budget constraints for a variety of reasons and are not purchasing as many vehicles as they used to

      2-Rental agencies are also not buying as many vehicles because people are not vacationing as often as before. Enterprise Rent a Car rentals are down 9.9% this year. They dont need more vehicles.

      3-Even though Toyota went up 10,000, According to the latest estimate by PIN and Global Insight the breakdown of sales to fleets out of total sales is Chyrsler 41%, Ford 35%, GM 34%, Toyota 6% Honda 1%. Those are the only five I could google.

      Do you think if there was a buyer for 20,000 Explorers Ford would say no we are not selling? The UAW would have a fit. Even Ford management would not refuse. Fleets are down mostly because demand for fleets are down.
        • 6 Years Ago
        Close, but not quite right on several accounts.

        1) Government fleets are down, but Ford's sales to corporate and government fleets, as an indicator, are stable YOY. Rental is down about 30% this year. I'm not sure of GM/Chrysler/Toyota/Honda/Nissan break downs.

        2) Rental car companies are down, but if Toyota is increasing its total sales, it is "stealing" it from somewhere else. That means, as a share of the rental market, the Detroit 3 are realigning with their overall sales.

        3) The thing people always forget is that GM and Ford OWN the work-truck market. Ford OWNS the chassis cab market (small buses, ambulences, etc). Those are all fleet sales, but they are profitable and don't hurt residuals.

        For rentals, Ford is targeted at about 10% rental fleet this year. Toyota is sitting at about 8% rental this year after their fleet sales grew 35% last year. Nissan is at similar levels. Only Honda can play the "low rental" game, but less effectively than they used to. Most of their growth this year has been increased fleet sales. And again, not all of these sales are bad, but I've never seen as many Honda's sitting at the Avis lot. I've never seen as many rental Altima's tooling around either.

        Fleets are down because demand is down, but Toyota/Honda/Nissan are taking larger shares of the declining market. Check.

        Then, let's always be clear that when we talk fleet, there are two bodies: commercial/gov, which are mostly profitable and good sales, and rental, which are rarely profitable but in small quantities can be positive sales (new vehicle intros, durability testing, etc). With the F-series and E-series, Ford is about 70% commerical/gov and 30% rental. Toyota, for example, was about 15% comm/gov and 85% rental last year.

        I can't speak for Chrysler or GM, but Ford's rental percentage is stablizing very well. Their commercial sales will always give them higher fleet numbers than, say, Toyota. But that doesn't mean they are failing in their mission. They are actually doing exactly what some of their vehicles (Super Duty, F-150, E-series) are designed to do.
      • 6 Years Ago
      Just give up, Detroit. You got beat at your own game, horribly. Have some dignity and pull the plug.
        • 6 Years Ago
        OMG stop talking.
        • 6 Years Ago
        What a great message to preach. When someone or something is better than you, just give up.

        /sarcasm

        Sure, the big 3 have made some poor decisions, due to many reasons, but it doesn't mean they should give up. Hopefully they'll stop, look around at the competition and ask how they can do better.
      • 6 Years Ago
      Fleet sales flood the market place and damage resale values?

      Seriously, how much more could you damage the Sebring/Avenger or the Canyon/Colorado? If fleet sales can move the vehicles, go for it.
        • 6 Years Ago
        Fleet sales are only bad if you're peddling bad cars. If you have a great product why wouldn't you want as many people as possible to experience it? Resale schmesale, Detroit hated it because they'd pawn junk to the fleets, then when someone drove one they'd say "Wow, what a piece of crap. All GM (or Ford or whoever) cars must be junk. I better go buy a Toyota."
        • 6 Years Ago
        Not only does it kill resale it also puts a dent in your profit margin.


      • 6 Years Ago
      yep like has been said for a year now here, toyota and the koreans expand their sales into the rental biz, and take positive press for expansing their sales... while the detroit folks get mocked for it...

      The article states toyota is up to 11% of their sales from fleet up from 9.
      ..
        • 6 Years Ago
        i see a ton of altimas at the lots
      • 6 Years Ago
      BTW I absolutely love the comments around here. The minute the Big 3 show some semblance of knowing what consumers want and delivering on it, or righting their business practices, there is always someone willing to discredit it.

      If this were Honda or Toyota and the article went on to mention that their fleet sales were at an all time low, no one would bat an eye.