With three selling days left in the year's shortest month, Ford Sales Analyst George Pipas is preparing the financial community (and the Ford family) for the worst: "The retail business is not that strong." You got that right. Pipas is predicting a ten percent drop in Ford sales relative to last Feb. That said, Pipas boasted that Ford will "hold our own" on retail sales relative to the rest of the industry. According to Automotive News [sub], Ford did so last month. FoMoCo sales "only" tumbled 3.9 percent, compared to the overall industry average of -4.1 percent. Excuse us for not believing Detroit's official retail sales numbers these days, what with reports filtering-in of increased fleet sales to government agencies and other commercial organizations. But we're good with Pipas' invitation to consensus: "I think we can all agree: '08 is getting off to a pretty low start."
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Why should this Feb. be unlike last Feb. for FoMoCo??? And for that matter the last how many months of dropping sales?? FoMoCo is SERIOUSLY mismanaged and needs a direction change ASAP (or at the least get the company out of Ford family control) or it may just beat Chrysler at having the honor(???) of being the first in bankruptcy court. And how far can FoMoCo sales drop?? Eventually they will run out of customers(new and repeat)as the well is only so deep and once customers experience Ford’s build quality (or lack there of???), terrible dealer service and the terrible value it’s vehicles have as a trade-in it’s no wonder it is losing customers. I’ll take a Honda or Toyota any day !!!!!!
Just how much iron can the Big 2.8 shovel into fleet sales anyway? Doesn’t there come a point when everyone has as many rental cars as they need?
Last time I checked, Ford cut their rental fleet sales 35% last year. Their rental fleet sales were down again in January and were predicted to fall in February. Their corporate fleet sales (good fleet – and integral fleet for Ford, which builds trucks like the F-series specifically for corporate work) were good in January relative to last year because of Super Duty ramp up in ’07 and were likely to be ok in February for the same reason.
If we are concerned about dealer reporting, realize that every Toyota, Nissan and Honda dealer operates similarly and often report incorrect sales classifications intentionally and inadvertantly. How do you classify those two xB’s you sold to zipcar? We aren’t talking 100 auto transactions with Avis being reclassified here. There is no vast conspiracy.
I don’t think it’s a stretch to see Ford’s retail share (not nominal sales) remain stable YOY. They were far outpacing GM and Chrysler at mid-month and keeping up with the industry average.
If you want to know who’s been really ramping up their fleet selling, take a look at Toyota’s fleet sales in 2007 and discover where over half their growth came from last year.
@RobertSD
Yes, I think you can expect Toyota’s fleet sales to keep rising, due to the obvious fact that people will ask for a rental that matches the one they drive back home. And as Toyota’s sales rise, so will those requests become more frequent.
When US majors were the dominant makes in garages, those were the brands people wanted to rent.
OK! Stein X let me get this sraight.If the domestics sell to the rentals its cause nobody else wants them?Now if Toyota does the same thing its cause thier so called superior vehicles are what people want to rent? LOL
@mikey
No. Maybe I was unclear. I just pointed out that there’s a connection between what people drive, and what they ask for – and that this accounts for the increasing popularity of Toyota’s at rental firms (partially.)
If the domestics had ensured that the rental fleets they supplied weren’t as cruddy as they became, people who ended up in one of their cars wouldn’t have been scared off driving one of their more fully featured and outfitted models.
And if Toyota falls into the same trap, they’ll live to regret it.
RobertSD
Last time I checked, Ford cut their rental fleet sales 35% last year.
Yes they cut their rental fleet sales but they increased sales to government and commercial fleets, according to Edgar Online. I’m trying to find the breakdown of fleet sales for the Big 2.8 and Toyota for 2007. If anyone has those figures, please share with us!
As per Frank's information, I have changed the text from: Excuse us for not believing Detroit's official retail sales numbers these days, what with reports filtering-in of increased fleet sales channeled through Ford stores. to Excuse us for not believing Detroit's official retail sales numbers these days, what with reports filtering-in of increased fleet sales to government agencies and other commercial organizations. However, we do have information that Ford stores are selling to fleets and reporting the sales as retail. This is an [all too common] practice within the industry, but again, I've heard from the sharp end that Ford has increased such sales. By the same token, we're still looking into Mazda's enormous growth. Two Florida dealers have told us that Mazda has taken up the fleet slack from Ford, often using the same retail ruse. No official information on that score is available.
Frank Williams: Yes they cut their rental fleet sales but they increased sales to government and commercial fleets, according to Edgar Online.
But operators of government and (most) commercial fleets are not dumping lightly used vehicles on the used car market within 1-2 years. Police departments and taxi companies, for example, will use a Crown Victoria for years. It’s the same for utilities using F-series trucks or Escapes.
No doubt that retail sales are still the best type of sales, but sales to government and commercial fleet operators do not damage resale value and brand reputation, unlike sales to rental car companies.
Robert Farago :
February 28th, 2008 at 8:49 am
As per Frank’s information, I have changed the text from:
Excuse us for not believing Detroit’s official retail sales numbers these days, what with reports filtering-in of increased fleet sales channeled through Ford stores.
to
Excuse us for not believing Detroit’s official retail sales numbers these days, what with reports filtering-in of increased fleet sales to government agencies and other commercial organizations.
However, we do have information that Ford stores are selling to fleets and reporting the sales as retail. This is an [all too common] practice within the industry, but again, I’ve heard from the sharp end that Ford has increased such sales.
By the same token, we’re still looking into Mazda’s enormous growth. Two Florida dealers have told us that Mazda has taken up the fleet slack from Ford, often using the same retail ruse. No official information on that score is available.
Mazda has really gotten the fleet market cornered. Last week, we had five 6s on the lot (one a 5-door hatch, the rest sedans), two 5s, three 3s, and a Tribute. At one time, we had all five 6s and four Sonatas, out of perhaps 20 cars on the lot ready to rent.
However, Mazda only seems to sell to (former Ford subsidiary) Hertz, as Avis, Enterprise, and the smaller players don’t ever seem to have Mazdas.
As far as what’s outside at this moment (I am at work), there are two Escapes, a Taurus, an Accent, a Cobalt, an Impala, a Kia Rondo, a Jeep Commander, an Elantra, and a Camry.
I can’t speak to the cause, but Toyotas, Hyundais, Mazdas, and Kias really seem to be multiplying heavily. There are still domestic stalwarts like leftover ‘07 Taurus(es?), Impalas, Malibu Classics, Cobalts, Foci, Escapes, and Equinox(es?), but Sonatas, Camries, Rondos, Santa Fes, Azeras, Optimas, Corollas, 3s, 5s, and 6s are shockingly common now, although just two years ago they were relatively rare.
We’ve also had quite a few Prius(es?) of late.
Folks…it is rough all over in the car game. Even the new Accord isn’t rocketing off the lots as we would have expected. Hyundai is unleashing the motherload of all incentives to keep their plant humming…. http://www.autoobserver.com/2008/02/hyundai-sonata.html
In all fairness the domestics created the negative concept/ impression of selling cars to rental fleets and in all honest the game is NOT the same for the japanese and other foreign brands in rental fleets as it is for the domestics.
Rental fleet cars got a bad name not because the car could be rented but because the Doemstics made it a habit and built up a history of filling the rental fleets with half-a$$ piss-poor cars.
If a company is building very good cars rental fleets are a very good thing. Case in point, I can attest to the fact that a Chysler Pacifica is a fine vehicle because I rented one and was rather impressed. On the other hand I KNOW that the majority of GM cars are total garabge because the cars GM send to the rental fleets just plain sucks; Malibu (last year), Impala, G6, Colbolt, etc.
No one seem to complain when they are directed to a Toyota or Nissan product at the airport rental counter, but it is common to here costumers request something else when handed the keys to a GM POS.
The paradox is that though the rental fleets in the USA a great deal of Americans became turned-off by domestic cars. It is like the big 2.8 did everything in their power to show the world just how crapy their cars are!
The irony today is that the big 2.8 have successfully damaged a chanel by which they could have been using to get their “NEW” products into the hands of domestic customers. Renters are out driving around in new rental Camrys and Altimas and are getting very good impressions from them that will lead to sales. I would be nice to be able to spend some real time with a new Malibu to see if the hype lives up to reality.
The last point about getting products into the hands of consumers who otherwise would not drive a Ford or GM is interesting because it is exactly how Ford has transformed its strategy for rental business. Ford hasn’t abondoned rental cars, but it’s not going to “dump” a model either. You put new vehicles (or new model year initial runs) into fleets for exposure and durability testing. But striking the right balance for Ford means reducing their rental sales to 10% of total sales – still a bit high in my opinion, but much better than the 17-18% of 2006.
However, dumped rental cars, no matter which supplier supplies them, will never be considered “high-quality.” If Toyota started dumping Corollas, the Corolla’s resale would drop even more than it has recently, and people would associate it with a banged up rental car instead of a high-quality, desirable (to some – not me) compact. That won’t happen, but the effects of fleet dumping are the same for anyone. It’s just that Ford and GM already did their dumping and have 10+ years of negative equity built up.
My greater point with Toyota (Honda, Nissan) is not to criticize the business move – because frankly, I think they are making the right one by inching up their fleet sales ever so slightly – but to call attention to the fact that not all of Ford’s losses are customers walking away from showrooms just as not all of Toyota’s gains are from retail customers flocking to their showrooms. Ford’s RETAIL sales were poor last year, but they only declined 8% – less than the 12% fall overall – and part of that was less incentive spending.
Overall sales numbers don’t lie, but there are many factors that drive them. I think it is important to factor both the increase in fleet sales from Toyota, Honda and Nissan, the massive decrease in fleet sales especially by Ford, and the change in relative incentive spending YOY of the automakers (I’ll give you a hint: it’s not in the Japanese makers’ favor). The reality is that Ford’s net pricing last year in NA jumped drastically. Almost all of that was caused by two things: 35% drop in rental fleet sales and something like 10% drop in incentive spending. Toyota grew 4% last year, but half of that was fleet (not all rental) and their incentive spending was significantly higher YOY almost every month last year.
Ford can’t escape its poor sales, but I want this to be an informed argument; the “truth,” if you will. Ford would not have fallen to Toyota last year if they kept their rental sales and kept their incentive spending up or increased it with their Japanese competition. However, credit where credit is due. They did the right thing for their future business and continue to by all accounts so far in 2008.