#Rental

Think BMW sells a lot of cars in the US? The German automaker may have registered nearly 20,000 “sales” in the US last month, but according to the analysts at Polk, over 50 percent of its “sales” in 2010 were actually leases. No wonder BMW’s best-seller, the Dreier (3 Series), occupies a nearly unique position on the price-volume frontier. And apparently BMW will continue to look to non-sales for future sales growth, as Automotive News [sub] reports the firm has launched a new car-sharing joint venture in Europe aimed at bringing in a million new customers by 2020. The pitch: sleek new Bavarian metal, as well as the ability to pick up and drop off vehicles anywhere, thanks to smartphone vehicle tracking. But the biggest pitch, say BMW sources, is to people who would never buy a new BMW… or even lease one. And they’re not just talking about poor folks either…

One of the questions that came up in yesterday’s post, The Truth About The Ten Best-Selling Sedans Of 2010, was how to interpret a high percentage of fleet sales. After all, “fleet sales” could describe a huge variety of sales to diverse buyers at widely varying price (and profit) points. Rental fleet sales are widely seen as being far worse than other types of sales, which is why the resale value trackers at Automotive Lease Guide keep such a close eye on what they call “Rental Fleet Penetration.” In its latest newsletter, ALG notes

ALG tracks several key metrics that impact residual values and brand health. Of these metrics, rental fleet penetration (RFP), which ALG measures as the total number of vehicles sold into rental fleet channels divided by total sales, has been found to have an impact on both residual performance and perception of quality… As a general rule, ALG recommends RFP levels below 10% for Mainstream brands and

NHTSA Investigation Action Number AQ10001, opened November 18, 2010 notes:

The agency, particularly in recent months, has been informed of incidents involving allegations of personal injury and death claimed to have been caused by safety defects and failures to conform to minimum Federal Motor Vehicle Safety Standards (FMVSS) on rental car vehicles for which a safety recall to remedy the safety defect or noncompliance had allegedly not been performed prior to the rental car company’s lease of the vehicle. NHTSA understands that there is presently a petition before the Federal Trade Commission (FTC) seeking to prohibit at least one rental car company from renting vehicles on which safety recall campaign remedies remain outstanding. The purpose of this audit query (AQ) is to investigate recall remedy completion by rental car companies on the above-listed safety recall campaigns. These campaigns were chosen due to their inclusion of vehicles used in the rental market. This information is expected to provide the agency an indication of how completely and how quickly rental car fleets, in general or individually, perform necessary recall-related repairs or other remedies on the vehicles owned and then leased for use on the roadways.

But rental companies wouldn’t risk the safety of their customers for a buck would they? The Enterprise/Alamo/National syndicate tells Bloomberg it grounds cars upon receiving recalls… Hertz and Avis have yet to chime in. The weirdest part of it all: only vehicles made by GM, Ford and Chrysler are being investigated. Why are the Accents and Rios receiving recall repairs while Avengers and Malibus are left to be investigated for “failures to conform to minimum Federal Motor Vehicle Safety Standards”? Whiskey Tango Foxtrot? A list of vehicles under investigation can be found below the fold.

Fleet sales were up 47 percent in the first quarter of this year, driving sales at a number of automakers. Ford, in particular, is targeting fleet sales unapologetically by touting a recovery in resale values for the Blue Oval Brand. Ford’s Mark Fields tells the Freep:

We love fleets at Ford…Ford remains focused on our disciplined approach to daily rental, making sure we help keep growing residual values

At Chrysler, which suffers from some of the lowest resale values in the business thanks in part to a longtime addiction to fleet sales, the response seems a bit more… conflicted.

I’m going down to Memphis

Where they really playin’ the blues

I’m going down on Beale Street

And have a good time like I choose

“Thank you for coming to Budget. I have you booked for a Kia Optima.”

“The hell you do.”

“That is a full-size car as you requested.”

“Well, in that case, I want something that is not a full-size car.” And that is how I came to be rolling through the proverbial Dirty South in a 2100-mile, 2010-model-year Town Car. Yes, they still make ‘em. The current lineup has been rationalized to Signature Limited (117-inch wheelbase) and Signature L (123-inch). There’s absolutely no reason of which I can think to take the SWB car, but that’s what the rental fleets have, and it’s what you can easily buy off-lease. I’ve found plenty of essentially identical two-year-old SigLims for under $20K, so this car is not only a direct used-price competitor for the 2009 Sable I reviewed previously, it’s also in the same ballpark as… a Kia Optima.

I was born in the city

A city with no shame

And when I play guitar

They all know my name

Well, as fate would have it, they only really know my name at the local restaurant where I play lunch gigs on my Gibson CS-336. I don’t consider myself a blues man, but I will go to see the blues played when I have a chance. My plan for last week was simple: drive from Columbus, Ohio to New York City to see Robert Cray perform, and then to head down Memphis way to catch the various acts on Beale Street. Tie in an additional trip to the New York Auto Show afterwards, and we’re talking 4,100 miles and plenty of dicey parking. Might as well rent some cars and do an old-school TTAC rental review or two.

One of the biggest conundrums facing the folks tasked with marketing the forthcoming first generation of mainstream electric cars is branding. On the one hand, firms want their mainstream brands associated with the green halo of having an electric car in its portfolio. On the other hand, electric cars aren’t cheap. From a pure pricing perspective, it makes more sense to brand expensive EVs as luxury products. GM struggled with this problem when it developed its Converj version of the Volt, ultimately deciding that the common-sense arguments for branding the $40k Volt as a Cadillac weren’t as important as boosting Chevy’s profile with an EV offering. Nissan, meanwhile, has decided that it has room for both a Nissan-branded Leaf EV and an Infiniti-branded luxury version.