GM slashed July rental vehicle sales, boosted commercial fleet

Posted August 03, 2017

Sales to rental fleets usually generate thin profit margins.

Several major automakers, including GM, Ford, Fiat Chrysler Automobiles, Nissan Motor Co. and Hyundai Motor Co. said they sharply reduced rental auto sales in July, and they portrayed the decisions as putting profit ahead of sales volume. After an unprecedented seven years of growth, analysts are predicting lower US sales this year. He said GM's decision to cut sales to low-profit rental auto fleets by 81 percent - or 11,200 vehicles - was a big factor.

Ford's sales excluding heavy trucks declined 7.4 percent, as passenger-car deliveries dropped 19 percent. Hyundai, for example, cut its fleet sales by 77 percent in July.

Ford Motor Company's stock price fell almost 3% following the release of its July sales report. The projected rate, which is adjusted for seasonal trends, would be down from 17.9 million a year earlier, though it alsowould be the fastest rate since February.

"New home construction, and the real estate market in general, has been steadily improving and has even surpassed prerecession levels in some parts of the country", Tim Fleming, analyst for Kelley Blue Book, said in a statement.

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Mark LaNeve, Ford Motor Co.'s USA sales chief, said automakers have been preparing for lower sales this year. Ford shares were down three percent, and Fiat Chrysler was down 0.025 percent.

"We're still operating at a very high level", LaNeve said. Fiat Chrysler said its sales fell by 10%.

Auto sales are plummeting, hurt by low gas prices and changing tastes, though automakers continue to see healthy profits thanks to consumers' preference for SUVs.

The average vehicle incentive jumped $279 in July from a year earlier to $3,876, while the average retail transaction price crept up only $42 to $30,772, J.D. Power estimated, based on data from the month's first 18 selling days.

The Explorer SUV, which is made at Ford's Chicago Assembly Plant just across the state line in Hegewisch, saw retail sales rise by 20.4 percent last month, with a third of the gains coming from the premium Limited, Sport and Platinum models. Toyota was offering it for 72 months on a 2017 Camry as the 2018 models arrived in dealerships.