By on October 11, 2010

According to Automotive News [sub], both General Motors and Hyundai-Kia have reduced their fleet sales percentages in the last year, as the two firms seek retail-level pricing for their recently-improved products. Ford and Chrysler? Not so much. As the top-selling brand in the US, Ford is simply using fleet sales to boost itself to the top of the pile. Winning the annual sales volume race is good for morale, but The Blue Oval should be careful not to delude itself into unrealistic expectations. For Chrysler, on the other hand, the continued practice of sending 40 percent of sales to fleets is big, big trouble.

Not only has Chrysler been barely making its minimum “survival volume” numbers (and some months, not), it also had a “come to Jesus” moment on the fleet issue back in April. At the time, Chrysler swore it would limit fleet sales to 25 percent of overall volume, but since that announcement, its fleet percentage has held steady at around 40 percent. For a company on the brink, the lost profits are just as important as the lost credibility. Meanwhile, each new Chrysler that ends up in a fleet cements the perception that Chryslers are the automotive purchase of last resort. And at this point, the perception probably isn’t too far from the truth.

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27 Comments on “Chrysler Breaks Its Fleet Sales Promise, Tops Industry at 39%...”


  • avatar
    Cammy Corrigan

    My theory was correct Toyota’s low growth was due to low fleet sales. Honda’s fleet sales would be nice, too.
     
    Though, fair play to GM for lowering their fleet sales by 22%. But Ford and Chrysler?

    • 0 avatar
      bd2

      Otoh, Toyota has been spending more on incentives than at any other time.

      Also, that doesn’t explain Hyundai/Kia’s sales growth despite cutting back on both incentives and fleet sales, as well as Honda’s fleet sales remaining at 2-3%.

      Ed.

      Hyundai corrected its fleet sales % for Sept. to 13%.

      FOUNTAIN VALLEY, Calif., Oct. 1 /PRNewswire/ — Hyundai Motor America today announced all-time record September sales of 46,556, up 48 percent versus 2009.  Retail sales were up 73 percent.  For the year, Hyundai has reported total cumulative sales of 410,047, up 20 percent versus the same period in 2009, with retail sales up 26 percent.  Fleet mix for the month was 13 percent.

      http://www.prnewswire.com/news-releases/hyundai-motor-america-sets-september-sales-record-with-48-percent-increase-104163618.html

    • 0 avatar
      SVX pearlie

      GM should be commended for bringing their fleet dependence down, and being the least-fleet-dependent of all the “Big 3″. In 2009, GM sold as much fleet as the others *combined*, whereas in 2010, GM got their fleet sales below Ford.

      All good news for GM, so of course, TTAC fails to mention it above the fold. C’mon guys, if you really want to be about “the Truth”, have the integrity to give credit where credit is due.

    • 0 avatar
      jaje

      Honda’s fleet sales are negligible and go from 1-2% total sales (almost all to gov’t fleets and not rentals – which give better profitability).

  • avatar
    Zackman

    Does that mean I’ll be forced to choose between a Sebring or Avenger or Fusion at the rental counter? I was hoping for an Impala.

  • avatar
    cmus

    We’ll have to see how it plays out when Chrysler’s not (ostensibly) dumping the old product to fleets as the opportunity presents itself.  If the fleet % continues at a very high level even acter the product turnover to “the good stuff” has more-or-less occurred, then it might be an issue.

  • avatar
    OldandSlow

    Does this mean when Chrysler and Dodge post a monthly sales figure of let’s say 100,000 – 39,000 of those vehicles went to fleet buyers?

    • 0 avatar
      aspade

      And considering the number of competitive vehicles they make, about 40,000 went to flat out idiots.

    • 0 avatar
      SVX pearlie

      Pretty much.

      If Chrysler sold 100,000 vehicles in the month (which is actually pretty typical), then 40% fleet sales means:
      40,000 fleet sales
      60,000 retail sales
      = 100,000 total sales

      Chrysler is extremely fleet-dependent, in a very bad way.

  • avatar
    moedaman

    In fairness, Ford and Chrysler fleet sale have remained the same and not grown, percentage-wise. Although, they are still too high, especially Chrysler’s. Nissan, now look at how they’ve gained fleet sales. That’s a pretty scary jump.

  • avatar
    mjz

    Chrysler will be able to reduce fleet sales percentage when their new products begin appearing. Better to keep the factories going and make a little, than shut them down and make nothing.

  • avatar
    basho

    Is there a break-out by model?  Total fleet sales % without model mix context is a bit misleading.  Ford sales of Crown Vic are 100% fleet and Econoline must be more than 50% fleet.  Now with truck sales increasing throughout the industry, I would think Ford’s fleet truck business has increased along with the market.  These few models would greatly impact a total fleet sales number without actually hurting retail sales.  Fleet sales should also be broken out as sales to rental companies vs all others.   I think the only true negative impact of fleet is to rental companies. 

    • 0 avatar
      Patrickj

      Basho, don’t think you’re far off in saying that the only true negative impact of fleet is to rental companies.
      I’d add in a smaller impact from Government fleets of white sedans and minivans with levels of options lower than minimums on the retail market.   The only saving factor with these is that they won’t be sold into the used car market for a decade or more.

  • avatar
    SV

    I’m interested to see Ford and GM’s breakdown by model. The trucks are both very heavy on fleets, I’m sure (the F-150 perhaps more so as I’ve noticed they seem to be more common in commercial and work fleets); I also think GM has been pushing the Malibu to fleets lately (how else to explain its meteoric sales increases over last year even though the car itself is totally unchanged, if not slightly de-contented) while the Aveo’s high sales for its class can only be explained by fleets or heavy discounting.

    But the Cobalt’s sales, IIRC, have been so low to make room for the Cruze that its fleet numbers are probably not very consequential. The Impala of course is probably almost all fleet. On Ford’s side the Focus is undoubtedly relying heavily on fleets as well (nothing new in that case).

    I wonder how much the Fusion relies on fleets – certainly alot of its growth is due to private sales, but I imagine the hybrid is popular with government fleets and the S model has been popular with rental fleets in the past. But as its sales have been more or less flat over last year I don’t think Ford is pushing the Fusion to fleets too heavily. The Taurus I don’t think is a big fleet seller either; the Fiesta hasn’t been available long enough and isn’t cheap enough (apart from the fairly rare S trim level) to have much rental fleet appeal anyway.

    So I’m curious as to where the higher Ford fleet percentages come from. I’m guessing trucks, and Ford’s vastly larger presence in the commercial van market (thank you, Econoline). The Escape is probably a big fleet car as well, both rental and, perhaps, governmental in hybrid form (also taxis maybe?). The Crown Vic and Grand Marquis are of course all fleet – but how many of those do they even sell, now that they’re winding down production?

  • avatar
    mtr2car1

    Come on Ed, when is a flashy percent change not really a flashy percent change?

    When the penetrations don’t change.

    Sure Ford grew fleet by 46%, but they didn’t add to the fleet mix for the month, so if you back out the fleet numbers their Retail (and I’m assuming that anything not fleet is retail) performance was +46%.
    GM picked up 32% at retail and the big C was up 64% at retail

    I’m not saying I agree with their current mix – but in month of September the retail growth outgrew the fleet at a faster pace for the Big 3

  • avatar
    John Horner

    As has been said many times, not all fleet sales are created equal. Ford, for example, sells a lot of cop cars, taxicabs and Town Car/Limos. Ford also sells a lot of cars and trucks to government and corporate buyers. Those are not the same kind of sales as daily rental units are and do not result in 6-18 month old used cars flooding the market. Not having the breakdown as to the type of fleet sales involved, you can’t make much sense of the impact of these numbers.
    I bet, for example, that Toyota would be freaking thrilled to have the share of the business, taxi-cab and government vehicle sales market in the US as it has back home in Japan.
     

  • avatar
    Rod Panhard

    Now, if we could only know what the “Friends & Family” sales are to Chrysler, I think we’d have a true picture as to the company’s chances of survival.

  • avatar
    Ion

    I don’t know. Provided the old Hertz sell to fleets at discount prices and destroy resale value scheme isn’t involved I don’t see what the big deal about fleets is. Am I to believe that the other automakers don’t have high fleet sales in their own home markets? Furthermore how many average joes are expected to buy a panel van or a half-ton for personal use?

  • avatar
    MrGreenMan

    It seems like somebody has to make the vehicles when there’s a fleet order.
    And it seems like, if these could not be sold at a positive impact to the bottom line than not doing the sale, it wouldn’t be done.
    Therefore, we chase the idea that everything sold to a fleet must be junk, and then play the game of guessing which domestic model we hate must be sold to fleet.  I really hate that Crown Vic! I really hate that Impala!
    At the same time, in bizarro world, we regale the brilliance of the German marques: selling their brands as luxury abroad while making garbage trucks and cheap fleet rubbish at home, and don’t see that the thing America gets wrong in the international game is being good at exports.  Everybody sells to the home market, and everybody buying a fleet is going to consider the home team.  It’s bad PR for Google or the State of Indiana to buy up a bunch of foreign cars — although Alabama and Hyundai is probably OK.
    Oh, yeah, and my nicely-appointed, gently-used Impala from a fleet sale, one year used, low miles, has been a great car filling the niche of reliable, unflappable transport.

  • avatar
    SherbornSean

    You can see the impact of the new Sonata in lowering Hyundai’s need to dump product in fleet sales.  But the Sebring and Altima are at the other end of the spectrum.

    GM, at least, is showing some discipline.  They aren’t Honda, but then, there’s only one Honda.

  • avatar
    bomberpete

    I see a lot of Nissan Sentras in fleets lately. Altimas too, although the hybrids are pretty cool-looking as squad cars and taxis. I’d also bet that Titan pickups, now a 6y.o. design and dead at retail, goes to fleet buyers.
     

  • avatar
    Z71_Silvy

    Good to see Ford’s sales numbers finally put into perspective.  There is a reason the Taurus sold so well last month (well…’sold well’ for Taurus standards…it’s sales are still dismal).
     
     

  • avatar
    654

    But wait! where are all the comments from Buickman and others on how all of GM’s sales are fleet? Where are they?

  • avatar
    bomberpete

    Buickman’s over at Automotive News‘ comments page bitching about the Verano and how all Buicks should be big with cushy rides and whitewalls. You should go bother him there and make him feel at home.


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