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Reuters Morning Auto Report
September 21, 2022

Before the pandemic, bulk sales to rental car companies were a low-margin crutch for automakers scrambling to sustain production of vehicles that didn’t score with retail customers. GM is aiming for a different dynamic with EVs. Selling EVs to rental car fleets gives GM more control over the cadence of EV deliveries, and where those vehicles go. The focus of initial sales to Hertz will be Los Angeles...which helps GM build up clean vehicle credits with California regulators who want to ban combustion vehicle sales by 2035.









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In GM's defense, we also do not know what the selling price of any of those vehicles will be.

I think the days of the "rental dump" are very much over.
Last I checked, which admittedly was awhile ago, rental car prices are a lot higher. By raising their prices gives them the pricing power to pay higher amounts to the car companies. I think in the past there was both pricing pressure from the car rental industry - one rental company couldn't raise their prices, they'd lose all of their business to the other rental companies. Which in turn meant they couldn't pay any additional money to the car companies. But at the same time many of the weaker car companies supply the rental car companies, they couldn't afford to lose the volume - kind of a self feeding loop where the low prices sort of benefited both industries, but the practice contributed to keeping them all around in a semi-zombie state - not healthy. But, a huge benefit to the consumer...

So I'd say the higher prices helps both industries, but at the expense of the consumer and other unrelated businesses. Those extra dollars coming out of the average consumer pocket is probably being taken away from another business - like a restaurant.
 

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In GM's defense, we also do not know what the selling price of any of those vehicles will be.
The retort is that because GM didn't disclose the selling price of any of the Hertz fleet vehicles, it's very likely "dumping" them in order to garner ZEV credits from CARB. If GM indeed plans to sell those vehicles at or near MSRP to Hertz, GM's PR dweebs would have emphasized that in the press release.

"Zero, Zero, Zero" here we come...
 

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The retort is that because GM didn't disclose the selling price of any of the Hertz fleet vehicles, it's very likely "dumping" them in order to garner ZEV credits from CARB. If GM indeed plans to sell those vehicles at or near MSRP to Hertz, GM's PR dweebs would have emphasized that in the press release.

"Zero, Zero, Zero" here we come...
Well, if GM sells them at a discount, but also avoids paying hefty CAFE fines, it could be a wash at the bottom line. It's been a while since I checked, but the big three were paying hefty fines and buying credits from Tesla and others to offset those fines. This could just be another way to avoid that hit if they're selling at a discount.
 
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I believe GM's new mantra is zero CAFE fines, zero ICE vehicles sold below MSRP and a hopeful zero loss on EV's sold.
If that's the case, GM currently scores "zero, zero, zero". The company has yet to attain any of those three goals.
 

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Reuters Morning Auto Report
September 21, 2022

Before the pandemic, bulk sales to rental car companies were a low-margin crutch for automakers scrambling to sustain production of vehicles that didn’t score with retail customers. GM is aiming for a different dynamic with EVs. Selling EVs to rental car fleets gives GM more control over the cadence of EV deliveries, and where those vehicles go. The focus of initial sales to Hertz will be Los Angeles...which helps GM build up clean vehicle credits with California regulators who want to ban combustion vehicle sales by 2035.









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Because Tesla did it and GM is vying for Tesla's position in EV sales?
 

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I don't know about GM, Hertz Deal is most likely Direct from GM-Hertz. A "Buy Back" Program, Hertz merely pays $XXX in depreciation to GM, After a term GM gets them back.

As for Fleet, the Fleets that don't have a National Account, requiring Our Dealership's Allotment, are paying MSRP. - any Fleet Incentives. So for Us at the Dealership Level, they are just a Retail Deal.

I have a few on Order for fleets, Commercial Fleet Discount is $2500 on a F150, $500 on a F250/550. There are also some that are set up for CPA (Competitive Price Assistance) that range from $8000-$10000 most because of the RAM Classic.
 

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The retort is that because GM didn't disclose the selling price of any of the Hertz fleet vehicles, it's very likely "dumping" them in order to garner ZEV credits from CARB. If GM indeed plans to sell those vehicles at or near MSRP to Hertz, GM's PR dweebs would have emphasized that in the press release.

"Zero, Zero, Zero" here we come...
Why would GM dump the vehicles? Maybe things will change, but EV's are the hot thing and GM can sell pretty much every one they can make, especially with them being supply constrained. So if they can sell all of them to the consumer, why would they sell at below cost to the rental fleets? Does it matter who the consumer is (regular people vs. rental fleets) regarding CARB credits?

To me, one of the new GM's biggest changes is that they are focused on profits, not volume. I'd buy into the dumping theory if this was 20 years ago, but now I think every sale needs to be justified.
 

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Why would GM dump the vehicles? Maybe things will change, but EV's are the hot thing and GM can sell pretty much every one they can make, especially with them being supply constrained. So if they can sell all of them to the consumer, why would they sell at below cost to the rental fleets? Does it matter who the consumer is (regular people vs. rental fleets) regarding CARB credits?

To me, one of the new GM's biggest changes is that they are focused on profits, not volume. I'd buy into the dumping theory if this was 20 years ago, but now I think every sale needs to be justified.
I don't think it's as simple as that. It's a balancing act. One way to get costs down and increase profits is to increase volume. And GM has a steep learning curve they are trying to overcome regarding EVs (reliability, logistics, quality, etc.). And a customer like Hertz isn't going to post bad reviews on a car site if there their new EV isn't perfect or a delivery is a few days/weeks later than promised. So I agree that GM probably didn't give them away like everyone used to do with rentals, but I wouldn't be surprised if they struck some type of discount to make this deal happen and benefit both companies. Hertz could have easily broken this deal up into several smaller deals with multiple companies. So both companies have something to offer the other.
 
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Considering we are at the end of the 2022 model year, and 2023 models are just around the corner, that equates to 35k vehicles a year. What's GM's North American yearly sales on a normal non-pandemic, pre supply chain issue, year? 3 million cars/suv's and trucks per year? 35k vehicles a year would only be approximately 1 percent and hardly a blip on the screen. Why not put them on dealer lots for people to test drive?
 

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It's basically advertising money. Try an EV when you go on vacation, buy an EV when you see just how cool they are.
Or a business trip. Carmakers and rental car firms have done this kind of marketing for decades. Here's an example from about 50 years ago:
Hood Motor vehicle Vehicle Car Automotive design
 

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Why would GM dump the vehicles?
As a hedge against having to paying fines to regulatory bodies such as CARB, EPA, NHTSA, etc., or having to purchase regulatory credits (what TruckMan mentioned in post #5).
 

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As a hedge against having to paying fines to regulatory bodies such as CARB, EPA, NHTSA, etc., or having to purchase regulatory credits (what TruckMan mentioned in post #5).
Certainly possible as a hedge... Though I suspect they will profit nicely from these sales - I don't think the rental fleets get those sweet dirt cheap deals they used to get 10+ years ago.
 

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Why would GM dump the vehicles? Maybe things will change, but EV's are the hot thing and GM can sell pretty much every one they can make, especially with them being supply constrained. So if they can sell all of them to the consumer, why would they sell at below cost to the rental fleets? Does it matter who the consumer is (regular people vs. rental fleets) regarding CARB credits?

To me, one of the new GM's biggest changes is that they are focused on profits, not volume. I'd buy into the dumping theory if this was 20 years ago, but now I think every sale needs to be justified.
That is just it. GM could sell everyone that they make. But how many are they going to be able to make in 4 years time? I bet Mary's Crystal Ball can't even see that number. Mineral Shortages, Plant Build Delays, Worker Shortages, Supply Chain, Transportation Shortages. 175,000 to "1" Company is a VERY Lofty Goal, in a basically Uncharted Area for GM.

My guess is Tesla (already heavily into EV Builds) couldn't pull it of either.

So, why does GM think they can, or why would they want to?

1, No Dealership Portions. GM and others are trying to wean Dealer Network Mark Ups out already.
2, No Time Demand. Sure there is a 175,000 Goal, but not a "Where's my Car" daily issue.
3, If hey are a "Buy Back" with Today's model, Slightly Used are demanding more money with no Incentives.
4, Little to no Warranty Costs involved, little to no Quality Control issues ie. Recalls.
5, Dealer Restructuring. How many Dealers, if Any, are going to Sign Up for the New EV Dealership rules once they are fully disclosed?
6, Proof or No Law Suites, over Range Anxiety
 
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