Can declining sales ever amount to a good-news story? Yes, if you're talking about used-vehicle auctions.
Last month, automakers sold about 63,000 used cars and trucks to dealers in closed auctions. That's down sharply from the 96,000 units sold in September 2006. In part, the downturn is the result of a sharp decline in the volume of vehicles returned to manufacturers from daily rental fleets such as Hertz, Avis and Dollar Thrifty.
The Detroit 3 traditionally have used the rental fleets as safety valves, selling them vehicles at subsidized rates when retail sales start to flag. That practice has a pernicious impact on residual values, leaving retail owners with trade-ins that are worth little or nothing.
Over the past year or two, General Motors has been the most disciplined of the Detroit 3, with fleet sales — including daily rental fleets and corporate fleets — that average 25 percent of total sales.
This year, Ford Motor Co. also has cut back on fleet sales, even though its retail sales remain shaky. Chrysler LLC has been more ambivalent about its fleet sales. During the past year or so, Jeep has kept fleet sales at reasonable levels, while the Chrysler brand has allowed its monthly fleet sales to spike as high as 50 percent.
But now Chrysler LLC appears ready to pledge sobriety. According to a company press release, fleet sales in September declined 20 percent from the year-ago month.
To be sure, Chrysler did not indicate its overall ratio of fleet sales to total sales. But lower sales at the nation's auction lots offer independent evidence that the daily rental fleets are shrinking.
The Detroit 3 have yet to stabilize their retail sales. And until they do, it would be premature to declare victory. But their newfound discipline on fleet sales is a major step in the right direction.
If the Detroit 3 can avoid backsliding, residual values will begin to firm up. Dealers will sell more new cars and trucks, and the automakers won't be tempted to dump unsold vehicles into the daily rental fleets.