Posted Apr 12th 2007 2:09PM by Frank Filipponio

Now here's a story that won't take many Europeans by surprise. Just as GM, Chrysler and Ford get knocked for selling tons of vehicles to rental fleets in the States, BMW and Audi do basically the same thing in Europe. In fact, those two German firms lead the list of automakers who rely the most on fleet sales in their home market. This according to auto motor und sport magazine, which has reported that Audi and BMW "have the fewest private customers of all brands in Germany," with just 33.5% and 32.8% respectively. Mercedes was least likely to send a vehicle to Deutsch Hertz, with 50.1% going to private owners. VW rang in at 47.5%, Ford at 41%, and Opel tallied 39%.

To put those numbers in perspective, in the U.S., Ford sells about 66% of its vehicles now to private buyers, and 34% to fleets, which is almost the complete opposite of BMW and Audi in their home markets. Both Ford and General Motors, as well as the Chrysler Group to an extent, have managed to lower their fleet and rental sales in the first quarter of 2007.

Fleet sales take a toll on automakers because of the big discounts with which they're usually associated. The magazine says that the Focus typically sells to fleets at a discount of 28%! Passats (27%), Renault Lagunas (30+%) and Ford Mondeos (30+%) also go for a song. At 30% off those cars aren't making much if any money for the manufacturers. Essentially, they just keep the plants running, according to one sales director. It's hard to say why the percentage is so huge in Europe compared to US totals, but the fact that Americans have more vehicles per capita is probably one big factor.

The premium carmaker expects the growth to be driven by its new C-class lower-premium sedan,
which went on sale last month, and the next medium-premium E class, due next year.
Klaus Maier, Mercedes’ executive vice president for sales and marketing, said the automaker is
pitching its new C class to fleet operators such as the Siemens industrial group and other major
corporations.

“We are trying to get more speed (in fleet sales) than we have ever had,” Maier told Automotive
News Europe.
2006 fleet leaders
Europe’s top-selling upper-medium/lower-premium cars:
1. VW Passat
2. BMW 3 series
3. Audi A4
4. Peugeot 407
Europe’s top-selling medium-premium cars:
1. Audi A6
2. BMW 5 series
3. Mercedes E class
4. Volvo V70, XC70
‘Attractive’ margins
Fleet sales are important to premium automakers because they can usually achieve profit levels that
are very close to retail prices. Maier said fleet sales have “attractive” margins.
Such sales also give automakers access to affluent customers without having to offer large
incentives. In the UK, fleet sales accounted for 36 percent of all registrations in 2005, according to
market researchers Dataforce. In Germany they accounted for 18 percent in 2005.
Maier said Mercedes’ fleet sales are weak compared with its rivals. Dataforce says 19.1 percent of
Mercedes’ European sales are to fleet customers, compared with Audi’s 32 percent and BMW’s 26.6
percent.
In the last six months, Mercedes has set up new fleet sales organization and invited fleet
decision-makers at large corporations to review the C class before the car’s March launch.
Said Maier: “That was something we had not done at such an early stage.”