Domestic Fleet Sales Hit the Skids

by Robert Farago

Published: July 23rd, 2009

Back in roaring 20s (or thereabouts), TTAC highlighted American automakers’ tendency to use fleet sales to keep expensive factories running. The practice eroded vehicle quality (why bother making better fleet fodder?), eroded margins (a little profit on a lot is better than nothing!) and corroded brand equity (badge it up and send it out!). As The Big Three became The Big 2.8, as GM headed for bankruptcy, we gave the automakers grief for claiming they were abandoning fleet sales to address these issues when, in fact, the fleets were abandoning them. Point of clarification: the “look at us we’re so responsible” BS was a bad thing, even though fleet reductions are a good thing—provided the automakers switch to retail-competitive products, meaningful brands and, thus, larger margins. Which hasn’t happened. And the domestics’ fleet sales continue to disappear. In other words, whichever way you look at the fact that Detroit’s share of fleet sales has slipped from 80 percent to 48.4 percent, they lose.

The stats come from the Chicago Tribune. “Agencies increasingly want cars their customers prefer rather than the cheapest vehicles available and, as important, ones that will hold value over time.” While the paper provides little in the way of compelling evidence that rental customers are turning up their noses at domestic products, it’s certainly true that rental car companies can’t get enough money from the sale of low mileage pre-loved Ford, Chrysler and GM products to make it worth their while to buy them in the first place.

Ford is, apparently, down with that.

“For some models, we’d find ourselves selling 50 percent to 60 percent of our production into rental,” George Pipas, chief sales analyst at Ford, said, citing the last generation of the Taurus in particular. “That’ll kill you.”

George should talk to Chrysler. Soon. (Last rites?) Meanwhile, GM is caught between a rock and a hard place. Again. Still. [Thanks to FloorIt for the link.]

Robert Farago

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Andrew van der Stock on Jul 25, 2009

When I was living in the USA, I'd rent with Enterprise about once a week, giving me many one week review opportunities. I was stuck in a few different cars not of my choosing, but the worst were: * Aveo. HATE HATE HATE. * Dodge Nitro. Unroadworthy @ 3000 miles old. I've written about this one before. * Challenger V6. Hopeless blind spots. Smaller than I expected trunk. Pretty good hwy fuel economy. Blah everywhere else. * Nissan pretty much everything, with the exception of the Maxima. I liked the Maxima. The Altima was so-so particularly in CVT form, but the Versa sedan was bottom scraper, boomy, and terrible at taking even my small amount of luggage. Cars I loved and asked for again and again Ford Focus Hatch. Best driver car in a rental fleet bar none. Might have 10 year old fundamentals, but those fundamentals beat all the other cars I drove in the USA. Prius. Had to drive a lot of long distances occasionally, and during the days of $3.50 gas, this car made a lot of sense. Not a great interior (although I do like the instrument cluster), it's a very reasonable upgrade from a compact if you're Enterprise Plus. Just ask. Most of the time on a Sunday night, it's free or about $5. It has remote central locking, cruise, and climate control and a huge luggage compartment. It's also has a pretty good stereo and AUX port for the iPod. Mazda 6. Good all round car, if a little noisy at 70 mph. Sedan version had only moderate trunk space. I once managed to hire my own car, a VW Golf. I owned the 2.5 model with a sunroof and ESP whilst I lived in the USA. The rental was the bottom scraper 2.5. The driving experience was basically the same, but missing all the bits and pieces that make you want to OWN a car. Here in Australia, the fleet situation is interesting. A Holden CEO once said, it's better to be in the police car fleet business than in the taxi fleet business. I think a lot of folks could learn from that. thanks, Andrew

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SpaniardinTexas on Jul 26, 2009

I am not sure what was the problem but I tried to rent a minivan this week end in Houston and they had NONE, outside the airport... I need it for Monday and I have to pay extra and go to the airport to pick it up... because they didn't have any in the city...

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