DETROIT -- For decades, the rental-car market served as a security blanket for the Detroit 3. Weak sales month? Just dump some cars onto Enterprise or Avis lots to prop up the totals.
But over the past few years, General Motors and Ford Motor Co. have become less reliant on that profit-eroding habit, according to a review of industrywide rental sales data by Automotive News. Picking up the slack has been a mix of Asian automakers -- most notably Hyundai-Kia, and to a lesser extent Nissan and Toyota. American Honda's fleet business is negligible.
The chaos of often-sporadic bulk sales to rental companies distinguishes the rental market from the more predictable and profitable commercial and government segments of the fleet business.
For both GM and Ford, rentals account for a significantly smaller percentage of their overall U.S. sales volume than a few years ago -- 13.6 percent for GM through November this year vs. 18.6 percent for all of 2012, according to data from Bobit Business Media, publisher of the trade magazine Automotive Fleet. While still the top rental provider by volume, GM is the only automaker among the top seven to reduce its rental sales this year -- down 11 percent through November -- and company executives vow more of the same for 2016.
Ford's rental business likewise is downsized from years past, despite a 23 percent jump this year through November. Rentals accounted for 11 percent of Ford's sales through November vs. 15.4 percent for all of 2012.
For both companies, the shift reflects revitalized car lineups that are better able to compete with Asian rivals for retail customers. It also shows their reluctance simply to keep their factories running regardless of demand and a stronger emphasis on resale values and brand health, analysts say.
Hyundai-Kia's surge in rental business, meanwhile, coincides with a tough market for car sales. As consumer demand shifts to pickups, SUVs and crossovers amid lower gasoline prices, the market shares of the car-heavy Korean brands are under pressure, says Jessica Caldwell, an analyst for Edmunds.com.
Combined rental sales for Hyundai and Kia have risen each year since 2011, more than doubling over that period to about 237,000 vehicles through November this year, according to Bobit data. For Hyundai alone, rentals through November equaled 22.4 percent of overall sales vs. just 9.9 percent for all of 2012.
Hyundai and Kia "were on a roll following the financial crisis but have lost some momentum" as the Detroit 3 regained their footing, Caldwell says. "Anytime an automaker is under pressure to protect market share, it's tempting to count on the daily rental business to dial up more volume."
FCA US, the No. 2 rental provider in volume behind GM, has not throttled back as much as GM and Ford, the Bobit data show. Rentals accounted for 16.7 percent of overall FCA US sales through November this year, down from 21 percent for all of 2012. But unlike GM and Ford, FCA is on pace to sell more rentals this year than in 2012.
FCA's car lineup is improved with the redesigned Chrysler 200 and other recent entries. But it still lags rivals in an increasingly competitive car market, pressuring FCA to divert more cars to fleets to sustain production and sales volumes, analysts say.