New-car sales for March of Nissan and Ford has proved the surge in shared mobility. A dirty little secret that was belied in this month’s report was that automakers have been selling more vehicles to rental fleets in recent months to prop up the volume.
Deliveries to rental-car companies and other non-retail buyers made up more than one-third of the total sales last month for Ford and Nissan, research by Cox Automotive revealed. In March alone, deliveries to rental companies alone were the highest in two years.
In the modern market, rental car sales tend to have lower profit margins and are potent to erode used-vehicles prices once those models hit the resale market. “Any favourable view we have of the market is because of sales into fleets,” said Zohaib Rahim, manager of economics and industry insights at Cox. “The market peak of 2016 is behind us and retail sales are softening more and more now.”
The American auto giant is discontinuing car models including the Focus compact that has returned healthy sales for the company in the past.
Car manufacturers sold a total of 550,000 models to rental-car companies in the US in the first quarter, hitting an all-time high since the first quarter of 2016 and up six per cent so far this year, Rahim said. The increase comes on top of a 7 per cent gain in 2018 to 2.7 million.
Amid a major line-up overhaul, Ford credited 39 per cent of its sales to fleets including 19 per cent from rental-car companies, according to Cox data. The American auto giant is discontinuing car models including the Focus compact that has returned healthy sales for the company in the past.
Nissan’s total fleet share was close to 36 per cent where most of the volume went to rental lots.
Mark LaNeve, Ford’s U.S. sales chief, said the first-quarter jump in fleet deliveries was dictated by the timing of orders from rental companies. He expects these sales to smooth out over the course of the year.
“Our plans are to end 2019 down slightly in the rental channel,” he told analysts on a conference call Thursday. “The retail performance was strong where it needed to be, in trucks and new SUVs.”
Similarly, Nissan’s total fleet share was close to 36 per cent where most of the volume went to rental lots.