Lutz Says Fleet Sales Reduced by 100k in '06, Similar Decrease in '07

[69Firebird400]

GM's Lutz Says Rental Cuts
To Reverse 'Damaging' Practices
By TERRY KOSDROSKY
January 9, 2007 12:15 p.m.

DETROIT -- General Motors Corp. Vice Chairman and product czar Robert Lutz said Tuesday that the auto maker reduced its fleet sales to rental car firms by 100,000 vehicles in 2006 and expects the same reduction in 2007 as the company looks to boost the resale value of its cars.

He said the moves are necessary to reverse what he called "damaging" sales and marketing practices early in the decade. The idea is to remove "the last excuse" for consumers not buying an American car.

Mr. Lutz also said that the regulatory environment for auto makers "has never been more challenging" and increases the costs of building cars. While he said he expects the new Democratic-controlled Congress will be more understanding on health care issues, he also said he expects it to be less understanding to GM's concerns about fuel economy regulations.

More at link (WSJ.com subscribers only): http://online.wsj.com/article/SB1168..._whats_news_us

[boblutzfan]

Reducing fleet sales is a good long term strategy. It will help in two ways: #1 - it will reduce the number of GM vehicles that are out there dragging down resale values; #2 - it will draw other automakers into the fleet sale and rental sale business which will in effect equalize the fleet impact on resale values.

Personally I think GM should sell to only the premium rental companies and to corporate fleets. And then only sell mid level or premium level trim vehicles. For example. Don't sell any Cobalt, Malibu or Impala LS models. Only sell the LT or LTZ verisons of those cars. It will help to improve the perception that Chevy/GM makes crappy rental cars.

[lhanse08]

They need to reduce the fleet a lot more. I can by an 06 impala LT1 for $13k, compared to $23k brand new. Is there something wrong there?? YES, get totally out of rental!

[TahoeMikeZ71]

When the Pontiac Grand Prix dies and gets replaced by the G8 I think more fleet sales would reduce.

[vcs2600]

Originally Posted by TAHOE LT

When the Pontiac Grand Prix dies and gets replaced by the G8 I think more fleet sales would reduce.

Well, not necesarily, because I don't think the fleets really care if they get a Pontiac or a Buick or a Chevy.

[sigma]

Well the Grand Prix is primarily sold to fleets as is the LaCrosse. The Impala is actually doing fairly well in retail but with lots of fleet sales also.

When the GP and LC die sometime in the next couple of years it will substantially reduce GM's mid/large car fleet sales.

[69Firebird400]

It's interesting that I just went back to the original article from yesterday, and it's still filled with quotes from Bob Lutz, but the headline and the content of the article, and even the author are different. Hmmm. Anyway, the updated version has some new tidbits, most of which we've either seen before or said before.

"It's better to sell four million [vehicles] at $5,000 profit [each] than five million at no profit," Mr. Lutz said.

He acknowledged GM got supply and demand out of whack with the Chevrolet HHR, a compact, retro-styled wagon that was selling briskly for most of 2006, when gasoline prices that were near or above $3 a gallon. But when GM ended some low-rate loan deals on the car to squeeze a little more profit out of it, sales slumped and HHRs stacked up on dealer lots. People who went to dealerships expecting deals "were disappointed," Mr. Lutz said.

Mr. Lutz said GM will be disciplined with the new Chevrolet Malibu that it unveiled today at the North American International Auto Show. GM plans to limit sales to rental companies and crash sales promotions that would push out more Malibus than the market is willing to buy, he said.

It also had some stuff about how the reason they need to not reduce volume too heavily is because they have to have enough revenue to support the legacy costs.

Here's a link that nonsubscribers can read the entire article for 7 days from now.