Ford heaviest in fleet sales in U.S.
Ford sells more cars to fleet buyers than any other automaker in North America, a new report reveals.
Finding a buyer of any sort is generally a success story for an automaker, but a new report reveals that Ford leads the industry in sales to less-lucrative rental and commercial fleets.
Nearly a third of the more than 2 million cars Ford sold in the United States last year went to fleet buyers, Forbes reports. By contrast, General Motors delivered less than a quarter of its new cars to fleets last year.
Ford's fleet darling is its Focus compact (pictured), a model that sees 45 percent of its production wind up in fleet inventories despite being recently redesigned. Focus has struggled in the retail market, where a combination of a rough production start caused by parts shortages and its premium pricing have left dealers with nearly 90 days' inventory supply. Automakers generally consider 45 to 60 days of supply to be "healthy" for a compact car.
Ford posted a modest market share gain last year, but Forbes says that figure was inflated by fleet sales. When figures for only the retail market are included, Ford saw a 0.2 percent share decline despite an opportune market caused by production shortages that hit Toyota and Honda after last March's earthquake and tsunami in Japan.
To be sure, fleet sales aren't necessarily a bad thing. Automakers use rental fleets to build product awareness among travelers and commercial fleet operators are some of the industry's most loyal customers. Rental cars often wind up in the hands of higher-income business travelers, the kind of users automakers hope will spread the word about their products.
But fleet operators buy in bulk and typically only keep vehicles for a year or two. Bulk buying normally guarantees hefty discounts from manufacturers, while a short operation cycle increases the size of the used car market and reduces residual values.
Does this matter to Ford? Even with its dependence on fleet buyers, Ford posted a hefty $8.8 billion global operating profit last year and its North American operations continue to remain perhaps its brightest spot.
Still, Forbes says that high-ranking executive bonuses are tied to increases in retail sales, so it seems likely that the top brass in Dearborn is concerned about fleet numbers.