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SEARCHRepresentatives from four of the major auto manufacturers gathered at the Car Rental Show to talk rental. While rental continues to represent an integral part of the business, OEMs are managing rental fleet sales to protect residuals.
It's been a long time since representatives from the major automakers gathered at the Car Rental Show to talk rental. While "diplomatic answers" ruled the day, it was great to have their contribution to the show, and it underscored the importance of CRS as "the" event to disseminate car rental industry information.
Dave Funston of Funston fleet moderated the panel. Here is an overview of the discussion:
All OEMs made it clear that the rental business is an integral part of their overall sales pie. However, the OEMs were quick to point out that they are now taking a more managed approach to selling into rental to control residuals.
Susan Kizoff of Ford said the company's GLAD (Ford's revenue modeling and global lifecycle analytics) team analyzes the optimal percentage of rental versus total volume for each model. Brand new models are available for rental fleets, Kizoff said.
Steve Sage of Chrysler referenced Chrysler's problems during bankruptcy but said the company has is sticking to a business plan that has been developed through 2014, with rental playing a large part of this plan.
Gary Knapp of Hyundai cited the automaker's struggles with availability but said they're working through those problems. "We will try to get as many cars to you as we can, as quickly as we can," he said.
Thom Gollands of Toyota said the company remains committed to rental, as it has been, with a mix and percentage of rental sales based off of retail sales.
Risk versus repurchase, fleet versus retail
Chrysler will keep a balance of risk and repurchase, though it "won't go strong one way or another." Gage said buyback programs help to control residuals and provide a nice supply for Chrysler dealers.
Kizoff from Ford echoed Gage's comments, saying a goal is to provide dealers with good used cars. The balance of risk and repurchase is in part driven by the RAC customer, and that balance falls into place naturally.
Gollands of Toyota said Toyota has flexibility to manage risk percentages on a customer-to-customer basis. Gollands said Toyota dealers are on the hunt for supply in this tight used car market right now.
Knapp said Hyundai is maintaining a 50/50 or 60/40 split between risk and repurchase. Hyundai is not projecting an increase in its sales to rental for the next three years.
Kizoff of Ford said that an increase of SAAR over 13 million would be difficult right now because parts suppliers are having a hard time keeping up with production demands.
With any growth in SAAR, Toyota will maintain the same percentage of fleet and retail. "There won't be a dramatic shift in the growth of rental," said Gollands. Gollands said Toyota's fleet incentive is generally greater than retail, though retail spiffs may creep greater on a regional basis for one or two months out of the year.
Others said their emphasis will be on keeping fleet incentives greater than street.
Where does the small operator fit?
Knapp of Hyundai said that Hyundai does not have a lot of extra capacity for smaller operators through its dealer network. "Capacity is a very difficult situation right now," he said. When queried about used product to stock fleets for the summer, he responded this could be part of the solution.
Gage said all models in the Chrysler portfolio are available to rental. "We can grow our business with indies and licensees," Gage said.
Kizoff said Ford's 2012 program will have availability for independent and licensee operations. The OEM "plans on growing that business," Kizoff said. Kizoff said Ford's repurchase programs are flexible and longer terms are available.
Availability of leases
Toyota said it will be "conservative with lease packages," while Hyundai, enjoying strong residuals, will make more lease programs available and for longer terms.
Chrysler will make brand decisions as to what vehicles to focus on for lease.
Kizoff said Ford is taking a cautious approach to leasing. "We learned not to do too many leases on a single model," she said.
Product
Chrysler is in the midst of a product onslaught of 16 new vehicles. The Fiat 500 is available now for rental, but only in a GDP program.
The Hyundai Sonata and Elantra will continue to make up the bulk of Hyundai's rental fleet sales.
Gollands pointed out that the Prius will get new versions, including a hatchback minivan-type ("V") as well as an entry-level Prius ("C"). The next generation Camry is coming this fall.
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