Skip to comments.DETROIT FEELS THE HEAT: Big 3 fleet sales hid Oct. retail collapse
Posted on 11/14/2005 1:29:03 PM PST by BurbankKarl
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."
Chrysler ought to be ashamed for selling vehicles as bad as their minivans. Poorly made, overpriced and 9 times out of 10 whenever I see a trail of blue exaust smoke going down the road, you can be sure it is coming out of a Caravan's tailpipe.
Probably had a lot to do with gas prices. Last month would have been a good month to buy a big car.
I thought I was the only one who noticed this. Dead on, accurate. Get behind a Chrysler minivan and it almost always chugs blue smoke.
I understand how a car blows blue smoke, but what is it about Chrysler minivans that so many of them - over many production years - spew blue exhaust smoke? Valves? Rings? What? And, why in the world would they not correct something so obviously flawed? But hey, if that's what they want to sell, then don't come begging me to buy your defective product!
Wow. That IS a beautiful car.
Cadillac is GM's best division I think.
Not my Ford Lightning buddy. Sorry.
Don't be surprised when a gasket goes on the engine of the Buick. Motors aren't exactly a strong suit for Buick.
I've been thinking of getting a Ford Expedition, I'm NO FAN of fords, i actually hate them. The only reason i've been thinking of getting one is because the resale value sinks like a rock, the Expedition has been out for a while and so by now they have got to have the bugs worked out.
If i get a used late model onei can get it dirt cheap and drive the hell out of it like i do my current car, a salvaged subaru which i've put close to 75,000 miles on it with NO Problems,
i believe in getting my moneys worth out of my car. My current car has been driven very hard and is jap it is foreign after all and maybe is why it's held out, i've been wanting for it to die and thats why i've driven it so hard, (try over 100mph high speed mountain driving, fast take offs, and just pound on that gas pedal) So i don't care if the price of gas is over 3.00 gallon)
I'm not trying to brag but the big 3 should learn a lesson from the japs, a car that's got over 70,000 on it and i still haven't changed the brakepads (i've got all the maintenance reciepts).
This is the only thing that has kept me from getting a newer american car, ( i do own a american truck i never drive, so i'm not bashing american).
I am really leaning to a Ford Expedition though, reasons being: Safety-Big car-, comfort. The jap car is just too small and uncomfortable, and since i'm getting old, i want something where i can relax and have an automatic car.
I hope the expedition works out when i get one, the other car i'm considering is the Chevy Tahoe.
Oh, you folks are making me feel like crap. I just picked a Town & Country as my new company car! The Ford I've been driving for 100,000 miles hasen't been the best. I was looking forward to the new one now I'm on a downer.
I would encourage you to look at the Chevy Tahoe. I have my fourth GMC Yukon XL 2WD (were called Suburbans earlier) and they are wonderful. Just bought my new one the end of June and it's better than any earlier ones. Also gets good mileage on the road (at legal speeds) generally about 23 mpg.
1983 Toyota Corolla.. paid $300... worth: priceless.. purhased in 2000... spnt only about $500 on tires and repairs,so far... 269,000 miles... still runnin strong.. wonder if Detroit can make a car that good?
GM carefully engineers their products to last one mile past warranty.
I doubt it, the funny thing is that...Im from detroit. I hate unions and what they are/have done for the industry.
And this is exactly why American auto makers fail. It is why the public doesn't buy their wares anymore. The Solstice is a great example. As you mentioned it is gorgeous, but then they - as usual - put cheap plastic crap in the interior, and then skimp on the engineering angles! WHY??? Why do that? Why do they constantly hit a grounder double when a little more effort would be a grand slam? It certainly isn't because they don't have the know-how.
Man, that is just so perplexing.
Ah, don't be bummed. They're not that bad. In fact, truth be told, we're still hanging on to our 98 Grand Voyager.
For all my complaining, ours really hasn't given us any problems. And, I don't think it's blowing blue smoke, but we don't put a lot of miles on that vehicle and I maintain it pretty meticulously.