SAVANNAH, Ga. -- General Motors plans to decrease sales to rental car companies this year but maintain its sales of more than 1 million fleet vehicles by increasing sales to commercial clients such as private companies and the government.
David Hansen, general manager of GM Fleet and Commercial Operations, said sales to rental companies make up more than half of GM's fleet sales, but commercial sales are more profitable. To increase commercial sales, GM is piloting a program to help commercial customers remarket vehicles. GM will not buy back vehicles from commercial customers as it does with rental customers.
"We have too big a component of our total GM share in rental," Hansen, 55, said at the 2003 Product Preview Show for GM's fleet and commercial customers here May 12-18.
GM's fleet and commercial division sold 1.2 million vehicles last year, 602,000 of them to rental car companies. The company wants to pare that number to 550,000 this year.
GM's commercial fleet customers buy five or more vehicles annually. Nonfleet commercial customers buy fewer than five annually. The rest of the fleet business comes from rental car companies
In 2001, GM's fleet and commercial division accounted for 24 percent of the company's 4.9 million sales of cars and trucks.
GM was the fleet and commercial market share leader last year with 32.9 percent of that market, according to R.L. Polk & Co. In 2000, GM's fleet and commercial sales were 1.4 million units, 34 percent of the segment.
Rental car sales are less profitable than other sales because 60 percent of the rental units GM sells are program vehicles, which GM agrees to buy back after they are retired from fleets. It must remarket those vehicles and is subject to volatile market conditions.
Also, rental car companies buy so many vehicles that they can negotiate volume discounts. Enterprise Rent-A-Car in St. Louis is GM's largest customer. It buys about 200,000 cars and trucks annually, Hansen said.
GM still wants to increase fleet sales. One way to do that, Hansen said, is with the pilot program GM started during the first quarter to help commercial customers remarket retired vehicles. That includes helping them recondition the vehicles and send them to auction.
Hansen said the program is limited to commercial customers that do not use the services of professional fleet management companies, which is about 10 percent of GM's commercial business. He said the pilot would continue through the fourth quarter of the year. At that time, GM will tally sales and survey customers about their experiences with the service.
Said Hansen: "We're going to try it, and if a lot of people use it, we'll keep going; if they prefer to continue doing it themselves, then fine."