Fewer fleet sales to dent GM March results

[importedtuna]

Fewer fleet sales to dent GM, Ford March results
By August Cole, MarketWatch
Mar 30, 2006

SAN FRANCISCO (MarketWatch) -- Monthly U.S. auto sales figures due out next week likely will be the weakest yet in 2006, as American automakers reduce their reliance on corporate and rental sales, analysts say.
At the same time, high gasoline prices are making a big dent in sales of big trucks and SUVs.
General Motors' waning dominance of the U.S. market will again be a highlight in the March results, scheduled to be reported Monday. Analysts expect lower sales from GM, and Ford Motor, while foreign rivals are expected to report increases.
Bear Stearns expects GM (-4.9% ) sales to fall 8% from last year, according to a research note.
"While fleet sales have been cushioning the blow of weak retail sales (particularly for Ford and Chrysler in February), the Big Three have been promising to de-emphasize this side of the business and headline numbers could suffer as a result," Bear Stearns analysts wrote in a new report for clients.
The spotlight will be on GM's redesigned large SUVs like the Chevrolet Tahoe and GMC Yukon.
"We believe the success of the GMT900 platform is integral to the turnaround of GM's ailing North American automotive operations," Calyon Securities analysts wrote.

[stormwatcher]

GM has not reduced their reliance on fleet sales in spite of what they say. But there are only so many vehicles that the rental companies need to buy and those channels were stuffed with new vehicles the last few months so there is a drop off now. But given a chance would GM stuff the fleet channels agains? Oh yeah.

[mikesright]

I don't think GM will be plowing into rental sales again. They've got a strategy and a plan, which calls for less rental cars, and you can point to the last two months to see that they are sticking to it. If they really wanted to plow back in fleet sales, they could have done what Ford and Chrysler did last month, and they didn't. The short-term loss will be a long-term gain for GM, and they are being smart and realizing it. GM has the potential to sell more fleet, they just don't want to.

[redimpss5]

Rental fleets must buy from someone.

[MCGARRETT]

I dont really understand the hate for fleet sales that some have, yes they are not ideal, but as far as I know, Hertz, Avis, Enterprise and other rental car companies, along with other fleet buyers still do pay with cash right, not magic beans or fairy dust correct?

GM used to sell cars to rental agencies back in the halcyon days too.

[Bravada]

Yup, but now GM and the Other Big Two were so stuffed with unsold cars that they needed to compete with each other with bargain-basement prices, which meant they ended up selling at a loss. Besides, they needed to push out everybody out of the fleet market, as they needed to stuff as much as they could there. Therefore, it's mostly them that suffer from "rental" stigma and dents in resale values.

If they cut back output and will be able not to agree to sell at the prices as low as before, the fleet business might become more profitable again, bcause, as it was pointed out, rental compeanies need to buy somewhere.

[01cavalier]

It's good that the emphasis is shifting to regular sales, this should mean better profits, though it will definitely take some time to get resales good enough to get attention from buyers that watch this.