Big 3 fleet sales hid October retail collapse, helped to keep domestics afloat
11-15-05, 07:54 AM
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Big 3 fleet sales hid October retail collapse, helped to keep domestics afloat
Big 3 fleet sales hid October retail collapse, helped to keep domestics afloat
MARY CONNELLY | Automotive News
Posted Date: 11/15/05
DETROIT -- This may be hard to believe, but the Big 3's October sales collapse was even worse than it looked.
Retail sales -- normally the most profitable automotive sales category -- fell far more than the weak total sales figure that the automakers announced. Fleet sales to businesses, governments and daily car rental companies kept the Big 3 afloat.
"No one is happy with the retail numbers inside these (October) industry numbers," said Chrysler group sales boss Gary Dilts in a conference call. "It is severe. A double-digit (decline) on retail is something we have not had much of."
Overall, sales of the Big 3's domestic brands declined a cumulative 20.7 percent. But retail volume at General Motors, Ford Motor and the Chrysler group collapsed. GM's retail sales fell about 30 percent last month, while Ford Motor reported a 34 percent drop. Chrysler said only that retail sales fell by "a double-digit decline."
Steering clear of showrooms
Retail customers simply steered clear of Big 3 showrooms in October. "The traffic is off all the way around," says Glenn Hartzheim, owner of Hartzheim Dodge in San Jose, Calif.
Fleet sales include vehicles sold to businesses, government agencies and daily car rental companies. Automakers often lose money on sales to daily rental fleets, but other fleet sales can be profitable.
For each of the Big 3, fleet sales accounted for an unusually big chunk of total sales.
GM's fleet sales generated 33.5 percent of its total October volume, up from 25.8 percent for the period a year earlier. Ford Motor's fleets also accounted for 33 percent of October sales, up from 24 percent a year earlier.
The Associated Press reports that Chrysler's fleets shot up to 40 percent of its October sales. Chrysler doesn't report precise figures for monthly fleet unit sales. Dilts acknowledged that commercial sales -- excluding sales to daily rental fleets -- rose 119 percent in October. He did not indicate whether Chrysler increased sales to rental fleets.
Chrysler also notes that fleet sales for the third quarter totaled 17.2 percent of its U.S. sales, up from 13.8 percent in the third quarter of 2004.
For the industry as a whole, fleet sales represented more than 25 percent of the light-vehicle market in October, says Bob Schnorbus, chief economist for J.D. Power and Associates. In the first nine months of the year, fleets accounted for about 22 percent of industry sales, he says.
The Big 3 sell an estimated three out of every four fleet vehicles, Schnorbus says.
Toyota Motor Sales U.S.A. Inc.'s monthly fleet percentage typically remains in the single digits, the company says.
"Our fleet runs between 6 and 7 percent," says Xavier Dominicis, company spokesman. "October was typical."
The Big 3 traditionally have sold a higher percentage of vehicles to the fleets than the imports. And Chrysler's Dilts defends the practice, noting that commercial fleet sales are "good business."
Chrysler did well selling minivans, Jeep Grand Cherokees, Dodge Chargers and Chrysler 300s to commercial fleets last month, he says.
Poor residual values
But heavy fleet sales can hurt a vehicle's residual values. That's why Ford has tried to limit fleet sales of its new Five Hundred sedan.
General Motors also has tried to limit fleet sales. "We have increased our commercial fleet sales -- which are profitable sales and good sales for us to increase -- and we've decreased our daily rental," says GM spokeswoman Deborah Silverman.
Schnorbus says the "strength on the fleet side is partly due to some legitimate strength in the commercial side of the market. But I wouldn't rule out the possibility that they're pushing fleet to smooth out their production and soften any weakness on the retail side."
Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore., says autumn is a strong season for commercial fleet sales. And Spinella says heavy fleet sales are actually a sign of the economy's strength.
"The fact that fleets are back in the business is good, primarily because they have some confidence that the economy is back," Spinella says.
"In 2001 and 2002, fleets -- whether business or governmental -- were all pretty much out of the market," he says. "In bad times, they will hold on to vehicles for a long time trying to squeeze out every mile."
MARY CONNELLY | Automotive News
Posted Date: 11/15/05
DETROIT -- This may be hard to believe, but the Big 3's October sales collapse was even worse than it looked.
Retail sales -- normally the most profitable automotive sales category -- fell far more than the weak total sales figure that the automakers announced. Fleet sales to businesses, governments and daily car rental companies kept the Big 3 afloat.
"No one is happy with the retail numbers inside these (October) industry numbers," said Chrysler group sales boss Gary Dilts in a conference call. "It is severe. A double-digit (decline) on retail is something we have not had much of."
Overall, sales of the Big 3's domestic brands declined a cumulative 20.7 percent. But retail volume at General Motors, Ford Motor and the Chrysler group collapsed. GM's retail sales fell about 30 percent last month, while Ford Motor reported a 34 percent drop. Chrysler said only that retail sales fell by "a double-digit decline."
Steering clear of showrooms
Retail customers simply steered clear of Big 3 showrooms in October. "The traffic is off all the way around," says Glenn Hartzheim, owner of Hartzheim Dodge in San Jose, Calif.
Fleet sales include vehicles sold to businesses, government agencies and daily car rental companies. Automakers often lose money on sales to daily rental fleets, but other fleet sales can be profitable.
For each of the Big 3, fleet sales accounted for an unusually big chunk of total sales.
GM's fleet sales generated 33.5 percent of its total October volume, up from 25.8 percent for the period a year earlier. Ford Motor's fleets also accounted for 33 percent of October sales, up from 24 percent a year earlier.
The Associated Press reports that Chrysler's fleets shot up to 40 percent of its October sales. Chrysler doesn't report precise figures for monthly fleet unit sales. Dilts acknowledged that commercial sales -- excluding sales to daily rental fleets -- rose 119 percent in October. He did not indicate whether Chrysler increased sales to rental fleets.
Chrysler also notes that fleet sales for the third quarter totaled 17.2 percent of its U.S. sales, up from 13.8 percent in the third quarter of 2004.
For the industry as a whole, fleet sales represented more than 25 percent of the light-vehicle market in October, says Bob Schnorbus, chief economist for J.D. Power and Associates. In the first nine months of the year, fleets accounted for about 22 percent of industry sales, he says.
The Big 3 sell an estimated three out of every four fleet vehicles, Schnorbus says.
Toyota Motor Sales U.S.A. Inc.'s monthly fleet percentage typically remains in the single digits, the company says.
"Our fleet runs between 6 and 7 percent," says Xavier Dominicis, company spokesman. "October was typical."
The Big 3 traditionally have sold a higher percentage of vehicles to the fleets than the imports. And Chrysler's Dilts defends the practice, noting that commercial fleet sales are "good business."
Chrysler did well selling minivans, Jeep Grand Cherokees, Dodge Chargers and Chrysler 300s to commercial fleets last month, he says.
Poor residual values
But heavy fleet sales can hurt a vehicle's residual values. That's why Ford has tried to limit fleet sales of its new Five Hundred sedan.
General Motors also has tried to limit fleet sales. "We have increased our commercial fleet sales -- which are profitable sales and good sales for us to increase -- and we've decreased our daily rental," says GM spokeswoman Deborah Silverman.
Schnorbus says the "strength on the fleet side is partly due to some legitimate strength in the commercial side of the market. But I wouldn't rule out the possibility that they're pushing fleet to smooth out their production and soften any weakness on the retail side."
Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore., says autumn is a strong season for commercial fleet sales. And Spinella says heavy fleet sales are actually a sign of the economy's strength.
"The fact that fleets are back in the business is good, primarily because they have some confidence that the economy is back," Spinella says.
"In 2001 and 2002, fleets -- whether business or governmental -- were all pretty much out of the market," he says. "In bad times, they will hold on to vehicles for a long time trying to squeeze out every mile."
11-15-05, 04:24 PM
#3
Lexus Champion
Originally Posted by magneto112
[URL=http://www.autoweek.com/news.cms?newsId=103587]
For each of the Big 3, fleet sales accounted for an unusually big chunk of total sales.
GM's fleet sales generated 33.5 percent of its total October volume, up from 25.8 percent for the period a year earlier. Ford Motor's fleets also accounted for 33 percent of October sales, up from 24 percent a year earlier.
The Associated Press reports that Chrysler's fleets shot up to 40 percent of its October sales. Chrysler doesn't report precise figures for monthly fleet unit sales. Dilts acknowledged that commercial sales -- excluding sales to daily rental fleets -- rose 119 percent in October. He did not indicate whether Chrysler increased sales to rental fleets.
Chrysler also notes that fleet sales for the third quarter totaled 17.2 percent of its U.S. sales, up from 13.8 percent in the third quarter of 2004.
For the industry as a whole, fleet sales represented more than 25 percent of the light-vehicle market in October, says Bob Schnorbus, chief economist for J.D. Power and Associates. In the first nine months of the year, fleets accounted for about 22 percent of industry sales, he says.
The Big 3 sell an estimated three out of every four fleet vehicles, Schnorbus says.
Toyota Motor Sales U.S.A. Inc.'s monthly fleet percentage typically remains in the single digits, the company says.
"Our fleet runs between 6 and 7 percent," says Xavier Dominicis, company spokesman. "October was typical."
The Big 3 traditionally have sold a higher percentage of vehicles to the fleets than the imports. And Chrysler's Dilts defends the practice, noting that commercial fleet sales are "good business."
Chrysler did well selling minivans, Jeep Grand Cherokees, Dodge Chargers and Chrysler 300s to commercial fleets last month, he says.
Poor residual values
But heavy fleet sales can hurt a vehicle's residual values. That's why Ford has tried to limit fleet sales of its new Five Hundred sedan.
General Motors also has tried to limit fleet sales. "We have increased our commercial fleet sales -- which are profitable sales and good sales for us to increase -- and we've decreased our daily rental," says GM spokeswoman Deborah Silverman.
Schnorbus says the "strength on the fleet side is partly due to some legitimate strength in the commercial side of the market. But I wouldn't rule out the possibility that they're pushing fleet to smooth out their production and soften any weakness on the retail side."
Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore., says autumn is a strong season for commercial fleet sales. And Spinella says heavy fleet sales are actually a sign of the economy's strength.
"
For each of the Big 3, fleet sales accounted for an unusually big chunk of total sales.
GM's fleet sales generated 33.5 percent of its total October volume, up from 25.8 percent for the period a year earlier. Ford Motor's fleets also accounted for 33 percent of October sales, up from 24 percent a year earlier.
The Associated Press reports that Chrysler's fleets shot up to 40 percent of its October sales. Chrysler doesn't report precise figures for monthly fleet unit sales. Dilts acknowledged that commercial sales -- excluding sales to daily rental fleets -- rose 119 percent in October. He did not indicate whether Chrysler increased sales to rental fleets.
Chrysler also notes that fleet sales for the third quarter totaled 17.2 percent of its U.S. sales, up from 13.8 percent in the third quarter of 2004.
For the industry as a whole, fleet sales represented more than 25 percent of the light-vehicle market in October, says Bob Schnorbus, chief economist for J.D. Power and Associates. In the first nine months of the year, fleets accounted for about 22 percent of industry sales, he says.
The Big 3 sell an estimated three out of every four fleet vehicles, Schnorbus says.
Toyota Motor Sales U.S.A. Inc.'s monthly fleet percentage typically remains in the single digits, the company says.
"Our fleet runs between 6 and 7 percent," says Xavier Dominicis, company spokesman. "October was typical."
The Big 3 traditionally have sold a higher percentage of vehicles to the fleets than the imports. And Chrysler's Dilts defends the practice, noting that commercial fleet sales are "good business."
Chrysler did well selling minivans, Jeep Grand Cherokees, Dodge Chargers and Chrysler 300s to commercial fleets last month, he says.
Poor residual values
But heavy fleet sales can hurt a vehicle's residual values. That's why Ford has tried to limit fleet sales of its new Five Hundred sedan.
General Motors also has tried to limit fleet sales. "We have increased our commercial fleet sales -- which are profitable sales and good sales for us to increase -- and we've decreased our daily rental," says GM spokeswoman Deborah Silverman.
Schnorbus says the "strength on the fleet side is partly due to some legitimate strength in the commercial side of the market. But I wouldn't rule out the possibility that they're pushing fleet to smooth out their production and soften any weakness on the retail side."
Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore., says autumn is a strong season for commercial fleet sales. And Spinella says heavy fleet sales are actually a sign of the economy's strength.
"
Your company sells 100 total (gross) units one month
25% of those units are "fleet units," = 25 fleet units
The next month, you sell 80 total units
Say you sold 25 "fleet units, " the same as the comparison month
Now 33% of your gross units were fleet units. You didn't sell any more fleet cars- just fewer retail cars
They can spin it any way they want... it's all a numbers game. They are still hurting.
11-15-05, 10:48 PM
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Originally Posted by BlkGS3
Do you guys think there will be an Anti-Japanese back lash?
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