Rental struggles expected to take a big bite out of fleet sales

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Automakers typically sell about twice as many vehicles to be used as rentals as they do to commercial and government customers, ALG said.

ALG projects total U.S. new-vehicle sales in May to be 1,080,075, down 32 percent from a year earlier. Some automakers plan to report May sales Tuesday, June 2.

“The lack of fleet demand does mean that more production can be sent directly to the retail channel,” Tyson Jominy, J.D. Power’s vice president of data and analytics, told Automotive News. “But, that said, there are a lot of automakers that do rely on that channel. It provides a lot of steady volume — a lot of cost-absorbing units.”

Hertz said it doesn’t plan to buy any more vehicles this year, and Avis Budget has reduced its planned purchases this year by 80 percent.

Losing those sales could cause a significant hit to the bottom line for automakers, even as retail demand for new vehicles continues to recover, Jominy said.

“Even though they’re not highly profitable sales, they do enable the other vehicles to be much more profitable that are sold at retail because you do have that base that’s absorbing the cost,” he said.

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