Nissan revs up fleet sales as production returns

Nissan's U.S. sales to rental companies swung skyward in the new year, despite tight retail supply and a vow to dial down the fleet business.

The automaker's first-quarter fleet sales surged 83 percent to 67,577, compared with a 36 percent increase for the overall industry, per TrueCar estimates based on data through mid-March.

TrueCar forecasted Nissan's fleet penetration to be the second highest among major manufacturers after Stellantis in March and above the industry average of 16 percent.

Nissan said the higher Q1 fleet volumes were to meet its contractual obligations with commercial customers.

"There's always some seasonality in the industry as fleets stock up for the busy spring [and] summer seasons," spokesman Brian Brockman told Automotive News.

But the uptick is raising eyebrows among dealers, some of whom say they have a less than 30-day supply of the entry-priced models that fleets like, such as the Sentra, Kicks and Versa.

Affordability is a significant issue for Nissan's price-conscious customers with rising inflation and interest rates, said a Nissan retailer who asked not to be identified.

"The market is clamoring for less expensive, rental fleet favorites," the dealer said. "Selling low days' supply cars to rental agencies is absolutely disastrous for our retail market share."

Dealers want Nissan to prioritize retail over fleet as economic headwinds price customers out of the market.

"The only way we can sell new Nissans to many customers is with the less expensive models, because they can't afford the $30,000, $40,000, $50,000 vehicles that are too expensive with the current interest rates," the dealer said. "They're not buying the Armadas or Titans; they want the rental cars you see at the airport."

Nissan's average pre-pandemic fleet mix hovered at about 30 percent, a TrueCar spokesman said, declining to disclose specific volumes. During the pandemic and subsequent supply chain shortage, which dramatically cut fleet sales across the industry, that share dropped to 18-to-20 percent. In recent months, the fleet share increased to about 25 percent.

Nissan, which in the past decade relied on aggressive sales to fleets to boost its North American volumes, has been on a multiyear effort to kick that habit, acknowledging that high fleet sales can hurt a brand's residual values and dealer profitability.

Nissan said it isn't wavering on that effort.

As production rebounds in 2023, Brockman expects retail availability of the Versa, Sentra and Kicks to "improve significantly."

"We continue to prioritize sales through the retail channel," he said, "while managing fleet to be a positive contributor to our results and gain visibility with potential new customers for the brand."

Nissan's fleet ramp-up mirrors an industry trend as production volumes recover from the pandemic and factory shortages of the past few years.

General Motors said its fleet sales rose 27 percent to 150,000 units in the first quarter, representing 25 percent of its volume. Ford did not break out its fleet sales but reported an 86 percent jump in sales of Transit vans, most of which go to commercial buyers.

Tyson Jominy, vice president of data and analytics at J.D. Power, said automakers, faced with limited inventories, prioritize fleet customers to maximize revenue.

"As production decisions are made many months in advance, changing market conditions may mean automakers are stuck with higher trim and option builds when they need the opposite," Jominy told Automotive News. "The profitable fleet channel can be an outlet for more expensive products as the more aggressively priced units make their way through the supply chain."

But some Nissan dealers are wary of the manufacturer slipping back to an overreliance on commercial fleets as production recovers and the industry market share wars heat up.

David Wright, principal at Dave Wright Nissan in Hiawatha, Iowa, said prioritizing fleet over retail can have a domino effect.

"We don't get cars to retail to our customers to bring them back to the lot," Wright said. "We don't get service; we don't get a chance to trade them into a new car three years from now."

But a disciplined fleet business can still help with affordability as rental companies typically rotate vehicles in six to nine months, Nissan dealer Ayman Moussa said.

"Fleet is a healthy way for us to do volume because it brings a good amount of used cars back into the market, which will drive prices down," said Moussa, CEO of Carnamic of Hayward, Calif. "Fleeting can neutralize the high ticket customers now pay for a new car."