Auto industry now sees fleet sales as source of profit

Article by Anita Panait, on September 6, 2013

Fleet sales of cars and trucks used to be unprofitable transactions for carmakers, earning it a reputation as an unpleasant aspect of the industry. But that perception is changing as carmakers are starting to make good money from fleet sales, which account for $65 billion of annual vehicle purchases in the United States and for a fifth of the industry’s total.

Carmakers had been losing money on fleet units – first when they sold them too cheaply, and second when they repurchased them back and resold them. But as carmakers shut down unnecessary sites and bring in vehicles that appease both retail and fleet buyers, they exercise more restraint in doing too many sales to fleet customers and now see profits out of fleet sales. Maryann Keller, an auto industry consultant and former director at Dollar Thrifty Automotive Group, remarked that fleet and even rental fleet are “no longer dirty words deserving of blanket criticism.”

She said that fleet sales are not unprofitable transactions, “or at least for the manufacturer, they don’t have to be.” According to analysts at LMC Automotive and Goldman Sachs Group Inc., vehicle sales to rental-car companies, utilities and governments are expected to account for around 15 percent of the auto industry’s total in August.

LMC expects August 2013 to be the best month for industry-wide sales since May 2007, citing “consistency in the fleet environment.” The industry is expected to post a 14-percent jump in overall sales in August 2013 to 1.47 million, according to the average of 10 analyst estimates surveyed by Bloomberg News. Carmakers are expected will report August results tomorrow. The annualized industry sales rate, adjusted for seasonal trends, is seen to surge to 15.8 million, according to the average of 17 estimates. [source: automotive news - sub. required]

Topics: profit

If you liked the article, share on:


Login or Create new account to add a comment!


Wondering what the Fantasy Gift in Neiman Marcus’ annual Christmas Book this year could be? If you are generous enough to give others or yourself this special present, then behold...
by - October 24, 2016
It wasn’t too long ago when Maserati took the wraps off what appears to be the most gorgeous concept coupe ever made. The Alfieri coupe premiered at the 2014 Geneva...
by - October 23, 2016
Many have been excited with the impending arrival of the next-generation Jeep Wrangler and the new 2019 Jeep Grand Wagoneer, which is slated to be the brand’s new range-topping model....
by - October 21, 2016
Chevrolet has taken the wraps off its new Chevrolet Colorado ZH2 at the fall meeting of the Association of the United States Army (AUSA). Tagged as the most extreme fuel-cell-powered...
by - October 21, 2016
Honda has unveiled the fifth generation of its hot-selling SUV – the 2017 Honda CR-V. The latest iteration of the CR-V should help it maintain its benchmark status in the...
by - October 21, 2016