Despite The Big 2.8's mantra that their declining market share and evaporating sales volume reflect a concerted effort to reduce dependence on low-margin bulk sales, Automotive News [AN, sub] reports that Detroit's fleet sales have declined by just one percent during the first five months of '07 vs. '06. Fleet sales still account for roughly 25 percent of GM's total, 32 percent of Ford's and 35 percent of Chrysler's (a slight increase from last year). Into the breach dear Horatio: the transplants. Toyota/Lexus/Scion's fleet sales have increased from seven to 11 percent. Fueled by corporate demand for the new Altima, Nissan's fleet sales rose from nine to 15 percent. One fourth of all Kia sales now sail with the fleets (up from a fifth). And Mazda's fleet sales jumped from 18 to 24 percent of their total. The numbers reveal a stunning lack of resolve by Detroit, and a residual-threatening expansion for their competition.
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The fleet people need cars/suvs/even pickups.Somebody has to meet that demand.If the big 2.8 can’t or won’t somebody else is gonna take thier place.
I guess that the tranplants/imports arn’t that different after all eh?Gotta keep them lines running. 25% Mazdas to fleets? Thats a lot of cars.
Now the new car buyer want’s to tred very carefully or you will get stuck with a lousy resale.
However the savvy used car buyer thats got his heart set on a import/transplant,just might find some good deals out there in a couple of years.
It occurs to me that the import/transplants.are finding something out.Building,selling,servicing,and making a profit in the North American car market,might not be that easy.
I’ve been saying for some time that all of the big talk about cutting fleet sales would ultimately prove to be a lie, one which would be repeated by Big 2.8 management for as long as possible in order to please the analysts and support the stock price.
It goes back to the fact that fleet sales are largely a symptom of a problem, namely that the product isn’t good enough to be sold at retail. It’s not enough for Rick Wagoner to wave a magic wand and proclaim the end of fleet sales; you’d have to actually make better cars so that you have retail sales to replace them.
The end result of their fleet reduction initiative was predictable — total sales and market share have fallen, with retail sales falling so quickly that the fleet percentage remains about the same. Just because the Big 2.8 automakers want us to buy their cars at retail prices doesn’t mean that we will.
So PCH101 The product isn’t good enough to sell at retail.
I’m a little confused Mazda 24%Kia 25%even Toyota at 11?
So 15% of Nissans are not good enough to be sold as retail?
Do the fleet buyers buy Kia cause they are better cars?
Does Avis charge a premium for say a Camry?
Fleet buyers, like all buyers go for the best value for thier money.So at 35% I guess GM wins that race
at least Honda isn’t selling out
I’m a little confused Mazda 24%Kia 25%even Toyota at 11?
Mazda is a FoMoCo product. The Mazda 6 has had mediocre reliability, a back seat that is smaller than the main rivals and bland styling. It’s no wonder that the Camry, Accord and Altima all beat it.
Kia and Hyundai are in a different boat. They have built substantial factory capacity as part of their plan to build market share, and are producing more cars than are demanded in the hopes of establishing a market for their products. We’ll see how that goes, but so far, it seems to be working, as their retail sales are increasing.
Toyota sells about 1/8th of its cars to fleets, but many of those sales are corporate sales that don’t degrade residuals. When accounting only for rental sales, their advantage grows further still.
Fleet sales are like hamburgers — it’s OK to have one every once in awhile, but you don’t want to make them a substantial part of your diet. There’s a big difference between selling a few Camry’s to the fleets and selling half of Impala production to rental agencies.
PCH 101 I see your point.Fact is I have 3500 coworkers that build the Impala .Trust me, these guys don’t see the down side of fleet sales.
There is good in this story. GM and Ford HAVE decreased fleet sales from last year and they have done it while losing marketshare! This is a heck of a good job on their part. Who is picking up the slack? Chrysler and Toyota/Nissan/Honda.
Are you guys reading these graphs? The trend is away from fleet for 2 of the Detroit 2.8 and toward fleet for everyone else!
The fact that Toyota has decided to increase its share of fleet sales during a time of increased marketshare and (absolute numbers of sales) is really surprising!
There’s a big difference between selling a few Camry’s to the fleets and selling half of Impala production to rental agencies.
It also matters at what price point the fleet sales happen. Government fleets buy domestic because they don’t care about cost or reliability.
Just like in much of flyover country the only concern is low initial cost.
Private fleets may just say “enough” and pay much closer to retail for reliable cars with lower operating costs.
Fleet sales destined to daily rentals are usually on a “buy back” basis from the manufacturer, or defined time frames prior to being offered for sales by the daily rentals.
In many jurisdictions vehicles that have been daily rentals must be identified as such to the prospective buyer. A vehicle that had a previous life as a daily rental command less money on the used market.
No daily rental company keeps a vehicle long enough to be concerned with maintenance or reliability.
One view is that the product is “no good” and destined for daily rental consumption. Another view is the reality that daily rentals give an opportunity to “road test / experience” the product. This aspect empowers daily rental companies to demand better prices from manufacturers.
An Impala is either no good or a popular in demand daily rental. Why would any daily rental company buy cars that nobody wants to rent?
Hippo:
“Government fleets buy domestic because they don’t care about cost or reliability.
Just like in much of flyover country the only concern is low initial cost.”
Governments buy domestic fleets because due to the size of the fleet, they often do their own maintenence. Parts have always been more readily available (and usually cheaper) for domestics. They have to consider that and how long a vehicle will be out of service while waiting for parts. And don’t think an Asian fleet won’t need service. Fleet vehicles often have multiple drivers that dish out a lot more abuse than you’re typical self-righteous Honda owner.
Oh, by the way, as a resident of “flyover country”, I can assure you that I consider more than initial cost and buy a vehicle because it’s what I want, not because it’s the cheapest thing I can find.
Why would any daily rental company buy cars that nobody wants to rent?
Every man has his price, as the mafia would have it. Offer generic model at a low enough price and the fleets will buy. The fact that the fleets bought it, does not tell us nothing about the rental customer’s preferences.
Trust me, these guys don’t see the down side of fleet sales.
Depends on price again. If your employer makes little/zero/negative profit on fleet sales, it is going to affect you and the rest of the guys soon enough…
The point remains, falling market share is not caused by dropping fleet sales. Well worth pointing out.
If people only bought the cheapest thing in this country the Big 2.8 wouldn’t be in trouble since they practically give them away, well that is if they made a dime on any of them.
engineer,
If daily rentals offer a compact for X per day, and they offer a choice of 2-3 different compacts, they surely must know which make is more popular or in demand.
How much sense does it make for a daily rental to buy an unpopular unwanted make and model, even at a low price, and lose business to the compatition which has a more popular model available.
If you are talking fleets that supply vehicles to their employees, its a different situation.
Redbarchetta: I think you disproved your own theory: Nice job!
AGR: In the end it’s all about the bottom line: if they offer you enough of a discount rate, you’d drive whatever. Sure popularity is a factor, but it’s only one factor…
Why would any daily rental company buy cars that nobody wants to rent?
I think it’s fairly obvious that the consumer has higher expectations from a $30,000 car purchase or two-year car lease, than they would for a two-day business rental at Hertz or Avis. The bar for the rental is far lower, and selecting the rental is more a function of what the customer will tolerate than what they truly want.
If anything, I would think that the domestics have lost sales through less than desirable rental experiences. It’s hard to imagine that there are very many customers coming away from a Stratus or a Cobalt rental with an overwhelming desire to purchase one.
Fleet doesn’t just have to mean rental car companies. Look at Google with their fleet of Cobalts used to get a street view. If you owned a company and you needed to get company cars for your employees, would you care if the cheaper car was less desirable to the employees?
Generally, when renting cars from a major chain, you don’t get to choose what specific make/model car you get, just how big it is. Since, as Pch101 mentioned, you’re not really going to care all that much during your 2 day rental, the car rental company will buy whatever is cheapest.
One of the things I’ve noticed with car rental companies is that they are pushing more non-insurance related rentals when they can.
When that happens, they’ve recognized that people want a choice of what they want to rent and are getting more makes in so people have a choice.
I don’t know about the rest of the people on here, but when I have to rent a car for business, I’d like the option of renting something other than the standard American cars they generally provide.
Oddly, my last four insurance related rentals have been import brands over the years. 3 years ago it was a Hyundai. Two years ago a Corolla. Last year a Nissan, and this year a Kia.
While pleasure traveling once or twice a year I rent a car.
I specify and SUV or sometimes a Convertible But I do make it clear GM. Ford. or Chrysler I drive a rental as if it was my own.I’ve never had a problem.
While pleasure traveling once or twice a year I rent a car.
I specify and SUV or sometimes a Convertible But I do make it clear GM. Ford. or Chrysler
If renting for business, I may sometimes insist on renting an American car if I am meeting with a client who I suspect may be a Big 3 booster/ import basher. (Needless to say, I avoid these TTAC-style discussions with this kind of client.)
If it’s just for myself, I’m probably going to go for the cheapest rental available. I can live with just about anything for a few days, just so long as it runs, has a radio and an air conditioner. It may suffice for a few days, but it won’t mean that I’d want to own one for myself.