DETROIT (Bloomberg) -- General Motors will probably report weaker sales than some key rivals do in July. The largest U.S. automaker said that’s because it’s selling fewer vehicles to rental-car agencies -- not a lack of love in dealer showrooms.
GM may report a sales decline or small gain in a month that analysts have predicted to be strong for the U.S. market, said Kurt McNeil, vice president of sales. The big culprit is that July will be the company’s lowest month for sales to rental and corporate fleets so far the year, according to data provided by GM.
“We would be enjoying better headlines if we were doing more of that business,” McNeil said in an interview. “In the short term we are giving up market share.”
It’s a strategic move by the company to reverse more than a decade of reliance on deep discounts and rental-car sales to retain market share at the expense of its margins and brand image. GM President Dan Ammann has been weeding out low-margin activities across the globe as he focuses on profit over sales volume.
Sales to rental companies tend to be less profitable than retail deliveries because the high-volume buyers get substantial discounts. Rental-car companies then sell the cars about a year later, which floods the market with models that compete with new cars at dealerships.
TrueCar Inc., a website that tracks auto sales and pricing, estimated that light-vehicle sales rose 2.6 percent in July and GM’s fell 1.9 percent. GM is the only automaker that TrueCar projected with a decline. Strong truck sales may lead to a small gain, said Jim Cain, a GM spokesman.