Report: Detroit 3 cutbacks curb rental-fleet sales
Arlena Sawyers
Automotive News
February 18, 2008 - 12:01 am ET
SAN FRANCISCO — True to their word, the Detroit 3 are trimming fleet sales. General Motors, Ford Motor Co. and Chrysler LLC accounted for fewer than three out of four new vehicles sold to the U.S. rental industry last year — down from more than four-fifths in 2006 — a new report says. In 2007, they cut sales to rental fleets to 1.4 million cars and trucks, from 1.7 million units the previous year, according to Manheim's 2008 Used Car Market Report. Manheim, the largest U.S. vehicle auction company, released the report at the NADA convention. Largely because of cuts in fleet sales by the Detroit 3, overall sales by automakers to rental fleets declined 8 percent last year to 1.9 million vehicles, the Manheim report says. A separate report by ADESA Inc., the No. 2 vehicle auction company, notes that the Detroit 3's reduced sales were only "partially offset by increases from Japanese and Korean manufacturers." The Manheim report says 49 percent of rental fleet sales last year were program vehicles — cars and trucks that automakers buy back after they leave rental service. The rest were risk units, vehicles that rental companies remarket themselves. Last year was the first time in nearly two decades that program vehicles represented less than half of rental fleet sales, the report says. Nearly 2.5 million vehicles came off lease last year — 145,000 more than in 2006, the Manheim report says. The report projects increases in off-lease volumes to almost 2.7 million vehicles this year and 2.8 million vehicles in 2009. Auto leases typically last three years. The increased number of off-lease volumes is unlikely to depress used-vehicle values, Manheim says. "Lease contracts in recent years have been (for the most part) written with more conservative residuals, and all remarketers now have much improved end-of-term processes," such as certified used-vehicle programs, the report says. Last year U.S. used-vehicle sales totaled 41.4 million units, according to ADESA's Pulse Latest Economic Indicators report. That figure was down 2.7 percent from 2006 and the lowest in the past decade, ADESA reports. ADESA is scheduled to release its report at the convention tomorrow. |
You can reach Arlena Sawyers at asawyers@crain.com.
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