DETROIT — U.S. automakers are increasing sales to rental car companies and other fleet customers — a strategy that can prop up overall sales, but erode a company’s bottom line and brand image, according to a report this week in the Detroit News.
At General Motors, fleet and rental agency sales are 26.1 percent of all car and truck sales this year, up from 21.3 percent of all sales a year ago. And 37.7 percent of GM’s passenger cars are sold to fleet customers, a 10-year high, according to the story.
At Ford, fleet sales account for 28 percent of all Ford, Lincoln and Mercury sales this year, up slightly from a year ago. Chrysler fleet sales remain at a level 23 percent of all sales, according to J.D. Power and Associates.
By contrast, Honda sells less than one percent of its U.S. vehicles to fleet customers, and Toyota’s fleet sales are less than 10 percent of overall sales.
For a look at all manufacturer’s fleet sales in 2003 as a percentage of total sales, click here.
Despite pouring more cars and trucks into fleets, GM and Ford have lost U.S. market share this year. Chrysler’s market share is up slightly. Combined sales at GM, Ford and Chrysler are off 0.3 percent this year, while overall new car and truck demand is up 2.3 percent.
At the same time, demand for vehicles produced by Asian automakers is up 8.4 percent, including a 23.2 percent increase in light truck sales.
Exposing a car or truck model to rental customers is an important way to introduce buyers to vehicles, though high fleet sales to rental companies damage the brand value of a model if customers begin to think of it solely as a rent-a-car. And resale values can suffer when fleet vehicles are dumped back into the open market as used cars, the Detroit News says.
On the other hand, sales to commercial and government fleets tend to be more profitable. Commercial vehicle sales dropped 30 percent during the recent recession but have bounced back this year as evidence the economy is recovering.