Ford Motor Co. and Fiat Chrysler both had their best February for U.S. sales since 2006, and Nissan North America posted its highest market share for any month ever. Meanwhile, General Motors is on pace to lose share for a fifth consecutive year.
For all four companies, the explanation largely comes down to one word: fleet.
GM’s fleet deliveries dropped 24 percent last month, resulting in a 1.5 percent drop in the company’s overall sales. In contrast, FCA’s fleet sales surged 39 percent, Ford’s jumped 42 percent, and Nissan’s soared 54 percent.
Those gains helped push the U.S. light-vehicle selling rate to its highest level for any February since 2000. Sales rose 6.8 percent from a year earlier, rebuilding some of the momentum that had ebbed amid January snowstorms and setting the stage for a boisterous start to the traditional spring selling season this month.
GM said it’s making a strategic cutback in less profitable fleet sales — and that the approach is paying off through healthy margins and inventories. Ford attributed its February fleet bump to order timing and production capacity, saying lower deliveries to rental-car lots later in the year will make up for higher volumes in the first few months.
But Ford also defended its use of fleet, which accounted for 36 percent of February sales, with more than half of those vehicles going to rental-car lots.
“We like this business. It’s profitable business for us. We manage it very well,” Mark LaNeve, Ford’s vice president for U.S. marketing, sales and service, told analysts and reporters. “For Ford, it’s product exposure. It’s very good business for us, and it’s run in a very disciplined fashion.”
Fleet sales took on a negative connotation in years past when the Detroit 3 used bulk sales as a convenient way to unload excess inventory, often at a loss. Since the recession, analysts say, fleet sales generally have been less abused, but February was the industry’s most fleet-heavy month in almost six years.
“Not a bad thing’
Because retail sales also improved, and fleet volumes haven’t been rapidly escalating month after month, February’s results shouldn’t necessarily raise any red flags for the industry, said Thomas King, a vice president of the Power Information Network at J.D. Power.
“The key question is, what kind of discounts are being offered to win the business?” King said. “Fleet, in isolation, is not a bad thing. It’s a very legitimate sales channel.”
Fleet accounted for 21 percent of GM’s sales, down from 27 percent a year ago. It was 31 percent of FCA’s sales, the most in three years. And at Nissan, whose retail sales were flat in February, fleet was 28 percent of sales, the highest since 2010, when Automotive News began keeping records of those sales.
Nissan spokesman Josh Clifton said the company has not strayed from its strategy of keeping a “healthy balance” between fleet and retail. He attributed the February increase to launches of the freshened Altima and Sentra at the end of 2015.
“These late-year launches meant that we had to deliver on our commitments to our corporate partners in a short period of time, which was not ideal,” Clifton wrote in an email. “Over the course of the year, we expect our fleet delivery curve to flatten back to our normal running rate of 16-17 percent for the full calendar year.”
Including both fleet and retail, sales of light trucks rose 13 percent in February, while car sales slipped 0.6 percent. Light trucks accounted for 58 percent of sales and 73 percent of the Detroit 3’s sales as gasoline prices continued to fall in much of the country.
“Gas prices are the biggest issue,” said Felipe Mendiola, dealer principal at Hodges Subaru in Ferndale, Mich. “It’s putting an extra $20 to $30 per week in people’s wallets.”
Luxury race
Among luxury brands, Lexus squeaked into first place for February, outselling Mercedes-Benz by 149 vehicles and BMW by 592. For the year, Mercedes leads the race by about 3,600 vehicles.
Sales by Lincoln, Land Rover and Volvo each jumped more than 30 percent in February, but total luxury-brand sales rose just 0.5 percent.
Total industry sales are up 3.4 percent so far in 2016. The seasonally adjusted, annualized selling rate was 17.53 million in February, up from 16.39 million a year ago but slightly less than the January rate of 17.55 million.
“You can’t argue with the fact that the industry is very, very robust,” King said.
But we’re seeing some of the leading indicators starting to slow down, and the industry growth is going to slow down. The market is extremely competitive.”
Read the article in Automotive News
