Quote Of The Day: I Can Stop Any Time Edition

by Edward Niedermeyer

February 15th, 2011 6:39 PM

Bloomberg [via AN [sub]] reports that Chrysler’s fleet sales mix was at 25% in the month of January (according to Edmunds anyway, as Chrysler doesn’t release fleet numbers), the lowest level since a Cash For Clunkers-fueled August 2009. According to the same Edmunds data, however, the industry average fleet mix is just under 20%… and Chrysler’s 2010 average was 38%. But now that Chrysler’s been under 30% fleet for three months, sales boss Fred Diaz figures meeting the industry average is just a matter of time. Specifically:

By the end of the year, we will definitely be at industry average. That’s the goal; that’s our plan.

Considering Chrysler’s fleet sales fell from 56% to the 25%-range over the course of the last year, it sounds like the last few steps of this journey will be the most difficult. Especially when you remember that Chrysler’s also trying to increase volume some 45% this year. That means some 300,000-450,000 more Americans will have to decide to buy Chrysler Group products this year than did last year if the Pentastar wants to achieve both its volume and fleet goals. That’s going to take some serious selling…

#Fleet #NewCars #PR #Sales

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6 of 16 comments

Doctor olds on Feb 16, 2011

Fleet sales have the same up front margin as any other for the carmakers, at least up front. There are no volume discounts for anyone from the makers, and every sale has to go through a dealer, who typically takes a small margin to win large fleet business. I knew of a Chicago Olds dealer who sold cars to Avis for $17 over cost. He made more money on the pre-delivery inspection labor allowance! It more than covered all his costs to process the deal and gave him sale volume bragging rights. He just saw it as plus business. The problem comes in on the other end of the transaction when the carmakers guarantee the resale value to the biggies like Avis and Hertz. The cars are sent to auction when they come out of service. The carmaker makes up any shortfall betwen the actual auction price and the guaranteed price. If residual values are low, the whole transaction could be loser. That is how it was done in the past, though I can't vouch for the details today, for sure.

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- Motorhead10 on Feb 16, 2011
  
  When you write "same up front margin as any other for the carmaker" - do you mean if the same vehicle was sold retail? I ask because it seems to me that a fleet vehicle would be a less optioned vehicle (typically). And it would also seem to me that the critical driver of operating margin of the specific vehicle would be level of content. So, a sale to dealer of a "fleet" vehicle versus the sale of a higher optioned vehicle would not have the same margin, correct? The operating profit contribution would obviously be higher from the unit priced higher - if the margin % was the same. But I would expect a couple hundred basis point difference between a retail vs fleet vehicle just on the level of additional optional content. No?
  
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Jpcavanaugh on Feb 16, 2011

These fleet sale percentages are from a Chrysler lineup that was the least appealing since perhaps the 61 Studebakers. This is old news. Also, the Charger is becoming the police car of choice in the US. Come back to us in a year on this. If Chrysler's new stuff is getting dumped into rental fleets or as strippo GSA cars, then we have an issue. Personally, I am betting that Chrysler's new stuff will see some substantially increased retail sales.

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- Roundel on Feb 16, 2011
  
  Lets be honest. There will always be a standard level of fleet sales. I work for a rental car company, and judging by the brisk business, their will always be the need for cars. This continued obsession with fleet numbers ignroes the fact mentioned above, sales are sales. With Chrysler introducing better products and then putting them into rental fleets, consumers are then given a test of the product, and if its good, it could possibly lead to a future sale. We have Grand Cherokee's in the fleet and they don't stay on the lot for more than 5 mins. People adore them and ask for them specifically when renting an SUV. I've had more than one person tell me that they are going to purchase one based on their fantastic experience with the rental. I think this is the right plan for Chrysler.... let the product speak for itself.
  
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Vent-L-8 on Feb 16, 2011

I really wish that Chrysler had the designs to back up their recent commercials. I want to like Chrysler, I really do. Growing up our neighbor always drove new (70s-80s) Chryslers. A steady string of Imperials, New Yorkers, 5th Avenues and LeBarons. I remember (lots) of chrome and interiors that were plush to almost absurd extremes. Kudos to whoever is making this year's Chrysler TV adds. They are striking and emotional, everything that I wish Chrysler's new cars would be.

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Zackman on Feb 16, 2011

Make my car with a "saddle brown" interior color, please. Chevy always had the best one, as far as color was concerned. The 1976 Chevy truck I once owned had that. My Impala has a grey-ish, two- or three-tone interior with a hint of khaki(?) to it. Not bad for the times. I have the "sport appearance" package, which has the faint, paisley-like pattern to the seats. At least it's different. I like it. It goes well with the Cappucino Frost exterior.

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