General Motors Company and Chrysler Group have both reported robust sales this year, but internal documents obtained by a major industry publication show that a large percentage of those sales have been to rental fleets.
In an August 9 article, AutomotiveNews.com said that the documents showed retail sales for GM down by nearly 1% through July. Chrysler’s retail sales for the period were off by 19%.
Including their increased fleet sales, GM and Chrysler have seen their total sales increase by 13% and 11% respectively compared with last year. Industry-wide, sales have risen 15% this year.
The article says General Motors fleet sales for the year have increased 53% to 400,000 units. Chrysler Group has also seen its fleet sales increase by more than 50% to 242,000 vehicles.
Of the major automakers, Chrysler’s fleet sales have accounted for 39% of its total U.S. sales. Fleet sales for Ford and GM have accounted for 35% and 31% of their total domestic sales respectively.
When asked whether or not Chrysler was depending on fleet sales to drive revenue, CEO Sergio Marchionne admitted “We all are – every one of the Big 3 . . . even the imports.” However, he said, “You’ll start seeing an increasing share of retail” once Fiat-Chrysler begins launching new models.
During the first seven months of 2009, fleet sales failed to break the 1 million vehicle mark. Through July of this year, fleet sales have soared to approximately 1.6 million units. Contractors, auto rental companies and other fleet operators are either feeling more confident about the overall economy and the prospects of domestic automakers, or have no choice but to replace their worn-out fleet vehicles. In either case, there is a lot of pent-up demand.
IHS Automotive head of North American auto research Rebecca Lindland said, “Rental fleets are investing now because they bought very little last year and their vehicles are old.”
General Motors’ vice president of sales, Don Johnson, said his dealers are seeing a rise in fleet sales to contractors which is typically a good sign for the overall health of the economy.
GM spokesman Tom Henderson said the comparison between GM’s current sales of its four surviving brands with last year’s sales, which included Hummer, Pontiac, Saab and Saturn, is “invalid and misleading.” He did not, however, dispute the numbers cited in the Automotive News story.
Ford Motor Company has also benefitted from the surge in fleet sales. Through July, Ford’s fleet sales accounted for 35% of its total U.S. sales. The company’s chief sales analyst, George Pipas, said Ford is focusing on selling to commercial and government fleets instead of daily rental fleets which are typically less profitable.
Chrysler, Ford and GM all expect fleet sales to fall during the second half of the year. Pipas predicts that fleet sales will only account for about 30% of Ford’s full year sales. Henderson said he expects fleet sales to make up between 25% -26% of GM’s annual sales and spokesman Ralph Kisiel predicts fleet sales to account for “roughly 25%” of Chrysler’s total U.S. sales for the year.
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