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Do fleet sales hurt automakers or help them?
Turns out that all the talk early this year of domestics gaining back lost market share was solely on the back of heavily boosted fleet sales. In fact, market share of retail sales at GM and Ford has been falling steadily, while it has held flat at Chrysler Group, the automaker that was so celebrated last year for boosting its market share so much and having such a great year.
Also turns out that more than 20% of Hyundai's overall sales mix is to fleets - here's another that has been a raging sales success story over the last few years. Perhaps that story has another side.
Toyota is listed at 7%, and the last numbers I saw (a while ago now) for Honda showed 1% or less.
For the domestics, about 2/3 of all fleet sales are of the kind generally considered to hurt profitability heavily: sales to daily rental fleets. Interestingly, Ford is better off here, as a lot of its fleet sales are Crown Vic sales to government entities, which have a higher profit margin.
Anyway, analysts seem to think that fleet sales are generally a bad thing:
"And Wall Street is starting to worry.
As the Detroit automakers' retail market shares tumble, their dependence on fleet sales grows more pronounced," said John Murphy, an analyst with Merrill Lynch in New York. "Soaring fleet sales do not bode well for earnings or residuals."
The biggest fleet sellers apparently agree, as both GM and Ford have made public announcements in the last year or so that they are trying very hard to reduce fleet sales - GM has even given a specific target this year, according to the article: 100,000 less than last year.
GM has the individual brand with the highest fleet sales by year: Pontiac, which was at 41% of total sales to fleets for 2005.
Will the domestics (and Hyundai) be able to increase their retail sales and reduce their sales to fleets? If so, how? And how long will it take them to do it? Does it even matter?
2013 Civic SI, 2009 Outback Sport 5-spd (stick)