Car companies hope for rescue in 2010 from fleet buyers

Paul McVeigh is News Editor of Automotive News Europe
Car companies will be chasing Europe's fleet buyers in earnest this year as scrappage subsidies that paid private customers to swap old cars for new models run out.

Government-funded scrappage bonuses of up to 5,000 euros in major western European automakers attracted thousands of customers to showrooms last year and saved automakers from the worst of the economic crisis.

But with new-car sales in western Europe forecast to fall by 1 million to 1.5 million this year compared with 2009, automakers have no choice but to turn to fleet sales, a hard-fought market that is typically less profitable than private sales.

PSA/Peugeot-Citroen has appointed 12 key account managers in Germany to boost fleet sales in Europe's biggest market while French rival Renault is offering better deals to business buyers.

About 2.8 million of the 3.8 million new-car sales in Germany in 2009 were to private customers. This year the figure will halve, experts say, while fleet sales are likely to climb to 1.5 million from 1 million in 2009.

Neither French company expects to make a huge dent in Volkswagen's 21 percent share of the German fleet market, or to persuade German executives to cast aside their traditional loyalty to homegrown brands such as BMW and Mercedes-Benz.

Instead they are targeting cost-conscious small to mid-sized businesses that run fleets of up to 100 company cars.

The French automakers also hope to sell more of their popular car-derived vans such as the Renault Kangoo or Citroen Berlingo to tradesmen such as plumbers. Such models are arguably Europe's most profitable vehicles with margins of about 10 percent, according to Sanford Bernstein automotive sector analyst Max Warburton.

Car companies hope that by selling more vehicles to business customers they will bring more repair and maintenance work to their dealers' workshops, helping to keep them alive during the downturn.

If 2010 becomes as terrible for new-car sales in Europe as many experts predict, maybe automakers should be asking other European governments to follow Italy's example and fund scrapping bonuses for fleet buyers.