Fleet: The Other “F” Word

[Variance]

Fleet: The Other “F” Word

-Variance

May 3, 2006

Fleet sales have been a part of the automotive sales industry for some time. Typically, fleet sales are defined as car sales to companies rather than individual consumers. Rental car companies like Enterprise, Thrifty, etc. are usually the first things that come to mind when people talk about fleet sales. Some cars (more than others) are sold by automakers to fleet companies to contribute to their bottom line. In fact, Hyundai recently announced they were going to increase their sales to fleets in Europe to aid in the company’s growth.

Now, some people will say things along the lines of fleet sales don’t count or they aren’t real sales. Either that or that car companies should avoid them like the AFA avoids reality. For some reason, they are seen by some to be something to be ashamed of. To those of this opinion, I have one question:

Who the hell cares?

Sales Are Sales

One might say fleet sales are worth less than sales to individual customers. Technically, they have a point. Cars sold to fleets are typically sold at a discounted rate because they are bought in bulk. For instance, small businesses can purchase up to 4 vehicles at one time from GM and 5 or more can be sold to larger companies. As a result, companies gain less revenue on each fleet car sold and in turn make less profit on each car.

However, my feeling on the matter is that no matter what the profit margin, a sale is a sale. I mean, it’s not like the companies are selling them at a loss whoring them out like many “ladies of the night”. The car is built; if it gets bought, it’s a sale. Seems pretty cut and dry to me. I really don’t see how sales to...

• Construction companies/contractors

• Police departments

• Hospitals

• Fire departments

• The federal government

• ...and more...

...don’t count for anything. Which conveniently brings me to another point...

Fleet Sales Are a Necessity

Just what is any company supposed to do without fleet vehicles? Fleet cars and trucks exist because companies need them. How can a rental car company possibly exist without any cars to rent? How can a contractor possibly haul his equipment and otherwise conduct their business without a fleet of trucks and vans to do so with? The simple answer is: They can’t.

That’s why fleet sales exist. They give the hospitals the ability to rush Grandpa to the hospital after taking his Viagra (interpret that how you want). They give the police an important tool in fighting crime and in providing great footage for “Cops”. And where else are they going to get these vehicles except through purchasing vehicle fleets from automakers? And as car companies are of course in business to make money, they are of course all too happy to provide them with the ability to do so.

Besides, think about it: Horses are a bit unsuited to haul a contractor’s hundreds of pounds of building materials and tools, don’t you think? You’d probably kill them trying. Then you’d have PETA all over your ass. They’d call you a horse-murderer and print up T-shirts with your face with devil horns on your head on them. You don’t want a bunch of smelly hippies protesting, chanting and smoking weed outside of your home and/or place of business, do you? Well? Do you?!

Of course you don’t. That’s why we need fleet sales. So we don't have to deal with PETA.

Potential Positive Possibilities

One more thing I’d like to note that some people either forget or don’t realize to begin with is that the sales of fleet cars can yield some positive dividends for auto manufacturers that provide them. They have the potential to aid individual car sales in the long run. Let’s look at a scenario:

You’re out one night with a friend in your car. You’re shooting the breeze and having a good time ragging on your Physics professor that has a face that would make Michael Jackson say, “Damn, you’re jacked up.” The conversation then turns to drifting. Your buddy reckons anybody with half a brain can do what “professional” (his quotes) drifters do. You tell him it’s slightly more involved than he gives it credit for. He flat-out disagrees and says he can prove it. He tells you to find a vacant parking lot. You oblige and head to the mall which is closed at this time of night.

Arriving at the mall, he tells you step outside and let him drive. You do so. Now he says he can drive up and drift around a traffic island in the parking lot. Skeptical, you tell him to give it his best shot. He proceeds to reverse and then takes an aggressive running start. He jerks the wheel and pulls the handbrake to make the car slide. Much to your surprise, he indeed successfully drifts it around the island. Then to your horror, you watch as the car continues to slide and hit a second traffic island sideways, flipping the car and sending it tumbling over and over. It finally lands wheels down, completely totaled. Your buddy, dizzy but otherwise fine, lumbers out of your trashed vehicle and says “Did I f@#k up?”

Now minus one car and one friend, you need a new car. In the meantime, you’ll need to get a rental. You head over to your local rental car agency and make a request for a four-door sedan. The agent hands you the key to a Chevy Impala and sends you on your way.

Now generally, you don’t have high expectations of rental cars. In fact, you’re kind of indifferent about the whole thing. However, looking at the car, you notice it looks pretty good. It’s nothing exciting but it’s handsome. Heading out, you notice it has a pretty good ride and the power from the V6 is pretty good – better than the wheezy 4-banger that was in your murdered ride. You take note of all of the features it has and notice how much roomier it is than your old car. Overall, you come off impressed by the car and almost don’t want to give it back a week later.

The next thing you know, you’re in an Impala again. Only this time it’s yours. The Impala you rented earlier left such a good impression on you, you decided to buy one to replace your old car and you couldn’t be happier.

Basically, the moral of my mini-story is that fleet sales give the end-users of them the opportunity to experience them first-hand. Given a positive experience, there is a good chance the user will consider (and possibly buy) the same car (or brand) for themselves when in the market for one. The more exposure and chances a manufacturer gives people to do so, the better.

Freedom to Fleet

To summarize my point: “Fleet” is an “F”-word, but it isn’t dirty.

[VenSeattle]

Completely Agree.

I get tired of the bashing against Fleet sales.

Media complains that GM has high fleet sales.

GM cuts back on Fleet sales.

Media complains GM's market share has dropped.

Can't win.

[Intrepidation]

I agree, I think the main problem with fleet sales is that they tend to drag down the overall resale value of the car. But I guess that's unnavoidable.

[ZL-1]

I agree, I think the main problem with fleet sales is that they tend to drag down the overall resale value of the car. But I guess that's unnavoidable.

And cars are sold to fleets at lower profit margins too. At least they were when I worked at Renault. On the othet hand, fleet sales are useful in keeping plants running near 100% capacity...

In the end it all comes down to balance, and the US automakers have let the balance sway to the fleet side of the business. Hopefully, fleet sales will be more evenly spread between manufacturers in the future.

[Snate]

Fleet sales aren't really bad....and every manufacturer does them to varying degrees.

Domestics get attacked for this more than they should...although they do bring it upon themselves for dumping of certain models into rental fleets. Even though some asian companies like Nissan and Hyundai are increasing their fleet sales, that never gets brought up in sales reports.

[Flybrian]

Its good to see GM is wising up in regards to rental fleet sales. Lower total amounts and a much better mix of midrange, well-equipped cars. The Impala you pick up at Enterprise is more likely to be a 5-seat spoilered, sunroofed LS rather than a white bench-seat FBI car.

[enzl]

Regardless of model or manufacturer, I've never felt like buying a model of car I just rented (and I've rented a few really nice cars)...I only can speak for myself, but its my gut feeling that seeing your new ride with an Enterprise sticker is depressing.

I'm not sure where others stand on this issue, but, to me, high profile, low margin sales that advertise the fact that your vehicle is taxi-grade or rental worthy or telephone repairman useful don't help send a good message. I realize that fleet sales keep factories running, but it doesn't create an aspirational message, nor does it aid the big 2.5's attempts to counter current trends regarding its more marginal product.

[Flybrian]

Regardless of model or manufacturer, I've never felt like buying a model of car I just rented (and I've rented a few really nice cars)...I only can speak for myself, but its my gut feeling that seeing your new ride with an Enterprise sticker is depressing.

This means you would only consider German marques and...

Corvette

GTO

SSr

XLR

Solstice/SKY

Ford GT

Lincoln Mark LT

Mazda RX8

Mazda Miata

Honda S2000

Honda Ridgeline

Jag XJ, XK

Mitsubishi Raider

Dodge Viper

Dodge Sprinter

Chrysler Crossfire

Saturn

Infiniti

Lexus

Acura

SAAB

Isuzu

Because everything else on the market has been rented to some meaningful extent.

[bowtie_dude]

Rental cars HAVE to be bought from someone. GM/Ford just needs to move away from being the majority supplier and let Toyota/Honda pick up the slack.

[Variance]

Rental cars HAVE to be bought from someone.  GM/Ford just needs to move away from being the majority supplier and let Toyota/Honda pick up the slack.

Maybe not Honda. I believe they restrict their fleet involvement to as little as possible (if they're involved at all).

[VenSeattle]

This means you would only consider German marques and...

His first trip to Europe, and every trip after, probably eliminated those to.

We've rented Volvos and every cab seems to be a Mercedes.

[enzl]

I literally meant that no rental inspired me to purchase that particular model...

....and, since many of the best models in each segment are only sold to rental agencies on a limited basis, my opportunity to actually rent those cars is close to zero...

And, in a sense you're right, I wouldn't buy any fleet queen. Why would I want to see my new car next to me at a stop light with an 'e' sticker on it? A car may not be an investment, but I can't see throwing away another 10-15%of the retail cost in depreciation...trust me, you do not want to be the guy trading in a popular rental model 1-3yrs. in to your loan...just one of the issues that kills GM, Ford and others come trade-in time at local dealers...I can't tell you how many people freak when their mint, 2 year old car is worth less than 50% of purchase at trade. It just one more way that they feel F'ed over by their ownership experience!

[Sixty8panther]

Good article. I agree with most of your points.

We rented a 2006 Chrysler 300 with the 3.5 last week.

It was a great car and now Marcia wants one even more

than before. I'll post a video of the car when I get it

uploaded... it involves the "TRAC-OFF" button. :wink:

[CARBIZ]

We can't just blame fleet sales on depreciation. The J-cars outsold the Civic in their last year - even though they were horribly outdated. Supply and demand are going to effect resale, too. If you want a 2002 Civic you won't find as many of them around as a 2002 J-car.

Toyota and Honda's success is recent. You will still find a lot more used GM products on the road than Honda, Toyota, Mazda, Nissan COMBINED. Throw in a little (?) negative press from the usual media hacks designed to sink resale further.

Fleets sales are a double-edged sword: they provide dealers with a steady stream of relatively clean, low-mileaged used vehicles which drive most of the profits in the dealers these days, yet they do have a negative impact on resale.

Our Toyota store makes tons of profit on their used vehicles, but they can't get their hands on as many current models as our GM store can.

As Toyota's market share climbs, the pool of used vehicles will also increase and, inevitably, resale numbers will drop.

Simple market economics.

[enzl]

We can't just blame fleet sales on depreciation.  The J-cars outsold the Civic in their last year - even though they were horribly outdated.  Supply and demand are going to effect resale, too.  If you want a 2002 Civic you won't find as many of them around as a 2002 J-car. 

  Toyota and Honda's success is recent.  You will still find a lot more used GM products on the road than Honda, Toyota, Mazda, Nissan COMBINED.  Throw in a little (?) negative press from the usual media hacks designed to sink resale further.

  Fleets sales are a double-edged sword:  they provide dealers with a steady stream of relatively clean, low-mileaged used vehicles which drive most of the profits in the dealers these days, yet they do have a negative impact on resale.

  Our Toyota store makes tons of profit on their used vehicles, but they can't get their hands on as many current models as our GM store can.

  As Toyota's market share climbs, the pool of used vehicles will also increase and, inevitably, resale numbers will drop.

  Simple market economics.

I'm not just picking on GM in this regard...I just think fleet sales are bad for numerous reasons, including the ones I outlined above.

As far as residuals go...supply and demand are clearly at work, but, as you state, there are more 2.5'ers in fleet duty, thus popping up as supply that much quicker in the used car market versus typical Hondas or Toyotas...that being said, any company would rather retail nearly ALL of their production.

Fleet sales are currently propping up the domestics and reducing overall margins. Unfortunately, I don't see that changing, as the factories must keep up with an artificial level of SUPPLY in order to pay fixed costs...therefore, while the Japanese may have MORE vehicles coming into fleet service than historically, you'll still have a disproportionate number of domestics in the supply chain (due to over-production), thus there's little hope of avoiding the problem in the near term.

Dealers will always have margin to work with in the marketplace, so I'm not concerned about their interests. It's Mr. Joe Lunchpail that takes it in the shorts as a thank-you come trade-in time. If you don't think this excessive loss weighs heavily on his/her future decision-making, than you're not looking at the overall picture clearly. Nobody wants to hear they're $5k upside down on their 'bargain' 0% loan...if that same person had previous negative equity, you're talking 5 figures!

Try packing 10K of dead money in a $25K transaction....at 0% over 4 years, that's $200.00/month. That's just one of the reasons you'll find Mr. Lunchpail at the Honda place next time.

Edited May 5, 2006 by enzl

[CARBIZ]

Let's not forget that Mr. Lunchpail financed the ENTIRE vehicle for 60 months including the taxes. It is a double edged sword to put money down when the interest rate was zero percent. Why would you use your money when GMAC would give it for FREE. However, the obvious downside is that you will be upside down for 35+ months before you can think of getting out of it.

However, over at Honda, where they have been gouging consumes at 5.9% forever, Mr. Hardhat put down $4,000 because he realized he was being stiffed on interest and then he doubled up his payments.

I have done many cost analyses between Toyota and GM, and when you actually use transaction prices, add in cost of money, insurance, maintenance, GM is not as bad as you would think. It would be interesting to see someone (CR, for example) with the resources (but not the bias) take a sampling of real people and follow their fate from car buying to trade in, including all the costs, to see just how much owning a Toyota or a GM REALLY costs.

[enzl]

Let's not forget that Mr. Lunchpail financed the ENTIRE vehicle for 60 months including the taxes.  It is a double edged sword to put money down when the interest rate was zero percent.  Why would you use your money when GMAC would give it for FREE.  However, the obvious downside is that you will be upside down for 35+ months before you can think of getting out of it.

  However, over at Honda, where they have been gouging consumes at 5.9% forever, Mr. Hardhat put down $4,000 because he realized he was being stiffed on interest and then he doubled up his payments.

  I have done many cost analyses between Toyota and GM, and when you actually use transaction prices, add in cost of money, insurance, maintenance, GM is not as bad as you would think.  It would be interesting to see someone (CR, for example) with the resources (but not the bias) take a sampling of real people and follow their fate from car buying to trade in, including all the costs, to see just how much owning a Toyota or a GM REALLY costs.

0% is a gimmick...a come-on...just another rebate in disguise....I was using real world examples from the 100's of deals I've seen that concern Lunchpail's transaction price for the vehicle,( not a laydown that finances taxes or buys extended warranties)...and the trade-in value for his 2.5'er.

It's just common sense that if your vehicle is worth more at trade, assuming you've financed at a reasonable rate, your negative equity will be less....

...if you're suggesting that the 0% or subvented interest rate offers will continue indefinitely, thus preserving a deal 'advantage' for domestics, I've got some news for you: They can't. GMAC is no longer just GM's captive finance arm and Ford's is also in danger...

And, to be fair & honest, if you to buy a popular product with a domestic nameplate, those interest rates are also at 5.9% or more, since the incentives to sell generic rent-a-car aren't needed for those models! And, glory, the residuals are dramatically better as well!

Oh, and BTW-5.9% isn't gouging..it's the going rate for money in general...Mortgage rates just went above 6%!

[CARBIZ]

Somebody is a little testy!

Subvented or not, I am talking reality of what has happened over the past 4 or 5 years. If a customer is offered 0%, why would they use their own cash? Remember: there is no such thing as CASH. If you are breaking bonds, investments, etc., then you are losing income. However, if you are going to finance the entire vehicle, then you are going to face a negative equity situation for some time - especially up here where you pay an additional 15% in taxes on top of the price of the vehicle.

If your choices are pay cash, or finance at 0% (and there is no offer of "cash" rebate), then the 0% wins EVERY time.

I am not particulary fond of "gimmicks" myself, but they do work. As long as the perception exists that Toyota and Honda are better vehicles, then "gimmicks" will have to do as tools to assist salespeople in closing the sale until GM gets their act together and the media get off its back.

And BTW, I have sold lots of vehicles to customers who walked out of a Toyota or Honda store BECAUSE they wouldn't give any kind of deal or didn't have subvented financing. Perception is reality. IT WORKS BOTH WAYS!!!

[enzl]

Somebody is a little testy!

  Subvented or not, I am talking reality of what has happened over the past 4 or 5 years.  If a customer is offered 0%, why would they use their own cash?  Remember: there is no such thing as CASH.  If you are breaking bonds, investments, etc., then you are losing income.  However, if you are going to finance the entire vehicle, then you are going to face a negative equity situation for some time - especially up here where you pay an additional 15% in taxes on top of the price of the vehicle.

  If your choices are pay cash, or finance at 0% (and there is no offer of "cash" rebate), then the  0% wins EVERY time. 

  I am not particulary fond of "gimmicks" myself, but they do work.  As long as the perception exists that Toyota and Honda are better vehicles, then "gimmicks" will have to do as tools to assist salespeople in closing the sale until GM gets their act together and the media get off its back.

  And BTW, I have sold lots of vehicles to customers who walked out of a Toyota or Honda store BECAUSE they wouldn't give any kind of deal or didn't have subvented financing.  Perception is reality.  IT WORKS BOTH WAYS!!!

I'm not testy, you're just stacking your argument with questionable assertions that are represented as fact....

1st-Most people put money down, regardless of finance rate..

2nd-I was talking about the vehicle's value, not the taxes or extras folded into the deal...Ex. you bought it for $17k before taxes and aftermarket...you traded it in for $8k

3rd-Those 'gimmicks' have cost the big 2 every cent of their profit for the foreseeable future...and the residual income from an interest bearing loan is completely eliminated...forever...on those deals.

4th-Those 'tools' are necessary because the product isn't worth a premium (like the hypothetical Honda or Toyota

5th- Most importantly-- and you make my point for me in your last paragraph---you're selling the deal, not the car or truck!

Which makes my usual point: Selling an aspirational vehicle (see Lexus, see DCX LX's for Americana done right) eliminates the need for fleets, subvented deals, rebates, etc...all of which conspire to reduce the value of your vehicle both at sale and at trade...

Ask any industry expert and they'll tell you you can't cut or fire sale your way to profit...It's product, product and product...since the product isn't lining people up at the doors, you have to pawn off these unwanted and overproduced vehicles to coupon clippers and fleets.

To say that fleet sales are useful is true, to say they don't hurt US makers in the long term is just being an ostrich.

Edited May 5, 2006 by enzl

[CARBIZ]

Questionable assertions is YOUR OPINION.

No two markets are the same, to claim otherwise is ignorance.

To deny taxes, fees (not extended warranties, rust proofing, etc) as a cost of owning a vehicle is just lunacy. If I buy a $20k Malibu equipped the same way as a $25k Camry, then the $20k becomes $23k IN THIS MARKET and the $25k becomes $28,750 - increasing the difference to nearly $6,000, not just $5,000.

I AM TALKING ABOUT REAL WORLD NUMBERS IN MY MARKET. I WOULDN'T DARE PRESUME TO SPEAK FOR YOURS.

My point is that without factoring in these other costs the BIG 2.5 aren't being given a fair shake when factoring in the COST OF OWNERSHIP.

AND COST OF MONEY IS A FACTOR IN COST OF OWNERSHIP. CALL YOUR CA.

To say that a Corolla holds its value better than a Cobalt is both unfair and probably untrue when taken out of context.

AND IN MY EXPERIENCE, MOST PEOPLE DON'T PUT MONEY DOWN. IN FACT, LEASE PENETRATION IS OVER 50% in my area. People barely can come up with their first payment. Toronto has the highest insurance rates in North America. How about paying $450 a month to drive a Cobalt or Corolla for insurance?????? That is what a new driver is facing in THIS MARKET.

I wish I lived in your world where we can all race around in fancy new Lexus' and pay cash for them, but the average Joe cannot.

I agree that these "gimmicks" are regrettable, but will be necessary for the short term, I fear, for all the reasons I've already stated.

As to the "stacking" of my argument: just because you don't like the conclusions, doesn't invalidate the logic.

[enzl]

Questionable assertions is YOUR OPINION. 

  No two markets are the same, to claim otherwise is ignorance.

  To deny taxes, fees (not extended warranties, rust proofing, etc) as a cost of owning a vehicle is just lunacy.  If I buy a $20k Malibu equipped the same way as a $25k Camry, then the $20k becomes $23k IN THIS MARKET and the $25k becomes $28,750 - increasing the difference to nearly $6,000, not just $5,000. 

  I AM TALKING ABOUT REAL WORLD NUMBERS IN MY MARKET.  I WOULDN'T DARE PRESUME TO SPEAK FOR YOURS.

  My point is that without factoring in these other costs the BIG 2.5 aren't being given a fair shake when factoring in the COST OF OWNERSHIP.

  AND COST OF MONEY IS A FACTOR IN COST OF OWNERSHIP.  CALL YOUR CA.

  To say that a Corolla holds its value better than a Cobalt is both unfair and probably untrue when taken out of context.

  AND IN MY EXPERIENCE, MOST PEOPLE DON'T PUT MONEY DOWN.  IN FACT, LEASE PENETRATION IS OVER 50% in my area.  People barely can come up with their first payment.  Toronto has the highest insurance rates in North America. How about paying $450 a month to drive a Cobalt or Corolla for insurance??????  That is what a new driver is facing in THIS MARKET.

  I wish I lived in your world where we can all race around in fancy new Lexus' and pay cash for them, but the average Joe cannot.

  I agree that these "gimmicks" are regrettable, but will be necessary for the short term, I fear, for all the reasons I've already stated.

  As to the "stacking" of my argument: just because you don't like the conclusions, doesn't invalidate the logic.

I don't pretend to know anything about the Canadian market....15% taxes is certainly a big first difference.

You're missing my point: If US cars are equal to Japanese in quality, then the variable costs of ownership---maintenance, insurance, repairs, gas, etc...should be a wash...I'll give you that.

If the average transaction price for a Japanese car is higher & it holds its value better (thru a higher residual), then the trade-in value will reflect that situation and the additional costs of financing that extra $ are nominal...for instance, if $5k in your example is actually about $4k US, then at 6%, that's $240/year or $20/ month. Over the 2 years I'm talking about, that $480 cost pales in comparison to the 10-15% difference in residual value on the $25k car....which, given your example, is between $2500 and $3750....

...would I pay $480 to save $2500?...yes, I would.

Note: This assumes that the Japanese product is equally reliable....if it turns out its more reliable or more efficient or less maintenance intensive, then the gap grows even farther. Most independent surveys say this is so...

All of this does not account for the intangible benefit derived from my satisfaction with a superior product...if the Camry and Malibu were my choices, its an easy one...I'd make the argument we could find comparably priced Japanese models such as the Altima or Mazda 6 which would destroy any economic benefit for the 2.5'er....

One other thing...I've never heard of leases or loans that are truly 'no money down'.... The usual qualification for said programs requires that the consumer pay taxes and reg fees, etc...even if they are financing the full price of the vehicle. It's subvented financing or rebates...not both here in the US.

In 'my' world, noone's paying cash for Lexi, but there are very few people truly driving out in a car with 0 down...and, if so many people up north are leasing...they don't own the vehicles and aren't trading them in! So, where's the tradein problem we have here? There shouldn't be one...

[CARBIZ]

First off, let me say the Canadian dollar hit 90 cents U.S., so $5,000 Canadian would be about $4,450 U.S. at this time. However, you cannot convert dollars when trying to make sense of a deal: your customers makes their money in U.S. dollars, mine in Canadian.

I think one of the reasons for leases being more accepted here is because insurance is so high (less money available for the vehicle) and because our colder weather beats the crap out of cars much sooner. You'll never find a Datsun or Civic older than 10 years up here - they all rotted away in our salt a long time ago!

With current incentives, most of our leases are pay the first payment and go. Why wouldn't you do that if the lease rate is 2.4% or less? I demonstrate to customers all the time that it makes no sense to cash bonds, savings, etc. and to lose 4-5-6% on their investments, if the financing or lease rate is below that. Does GM have to prop up the rate to GMAC - yes. Does the customer care? No. If the customer can save 2 or 3 thousand dollars in interest and it only costs GM a thousand dollars to do it, then it is win-win.

As I have stated before, we run a GM and two Toyota stores. I deal in the real world and the GM versus Toyota with respect to future values is largely based on myths and Toyota spin doctoring.

Do fleet sales impact trade in values? Definitely, but then most people don't traded their vehicle in after a year anyway, and the fleet sales we are talking about are to the rental companies who do trade in after 8 months or so. If you keep your vehicle for 6 or 7 years, whether you get $9,000 for a 2000 Camry or $4,000 for a 2000 Malibu is a moot point when you've paid more for the Camry all down the line.

As I tell all my customers: our sister Toyota store has a much bigger service facility and it is never empty!

[enzl]

First off, let me say the Canadian dollar hit 90 cents U.S., so $5,000 Canadian would be about $4,450 U.S. at this time.  However, you cannot convert dollars when trying to make sense of a deal: your customers makes their money in U.S. dollars, mine in Canadian. 

  I think one of the reasons for leases being more accepted here is because insurance is so high (less money available for the vehicle) and because our colder weather beats the crap out of cars much sooner.  You'll never find a Datsun or Civic older than 10 years up here - they all rotted away in our salt a long time ago!

  With current incentives, most of our leases are pay the first payment and go.  Why wouldn't you do that if the lease rate is 2.4% or less?  I demonstrate to customers all the time that it makes no sense to cash bonds, savings, etc. and to lose 4-5-6% on their investments, if the financing or lease rate is below that.  Does GM have to prop up the rate to GMAC - yes.  Does the customer care?  No.  If the customer can save 2 or 3 thousand dollars in interest and it only costs GM a thousand dollars to do it, then it is win-win.

  As I have stated before, we run a GM and two Toyota stores.  I deal in the real world and the GM versus Toyota with respect to future values is largely based on myths and Toyota spin doctoring.

  Do fleet sales impact trade in values?  Definitely, but then most people don't traded their vehicle in after a year anyway, and the fleet sales we are talking about are to the rental companies who do trade in after 8 months or so.  If you keep your vehicle for 6 or 7 years, whether you get $9,000 for a 2000 Camry or $4,000 for a 2000 Malibu is a moot point when you've paid more for the Camry all down the line.

  As I tell all my customers:  our sister Toyota store has a much bigger service facility and it is never empty!

I can only speak for NE US consumers and what I see at our stores...your point regarding the unique vagaries of the Canadian market is valid, we just do not share those conditions...

...that being said, I think the economics are only a part of the equation when dealing with GM's fleet problem.

I said it above...seeing my car available at enterprise would only piss me off...I think others share that opinion...I have no surveys or real proof, but it's my experience that seeing gov't plates or a rental bar code on your product says that real people won't buy it.

While the media has teed off on GM, I think that much of their criticism is valid and deserved. I understand that a majority of the posters here are fans, but the core issues in the 'biased' articles are accurate and truthful. The language may be colorful or slanted, but its true....

Seeing your Impala as a taxi, gov't issue transport or rental only reinforces the stereotypes.

Create high demand, interesting, competition topping models and the issue magically disappears.

Costs the same to be daring & creative & bold as it does to copy the Japanese. That's the real issue here.

[The O.C.]

I can only speak for NE US consumers and what I see at our stores...your point regarding the unique vagaries of the Canadian market is valid, we just do not share those conditions...

...that being said, I think the economics are only a part of the equation when dealing with GM's fleet problem.

I said it above...seeing my car available at enterprise would only piss me off...I think others share that opinion...I have no surveys or real proof, but it's my experience that seeing gov't plates or a rental bar code on your product says that real people won't buy it.

While the media has teed off on GM, I think that much of their criticism is valid and deserved. I understand that a majority of the posters here are fans, but the core issues in the 'biased' articles are accurate and truthful. The language may be colorful or slanted, but its true....

Seeing your Impala as a taxi, gov't issue transport or rental only reinforces the stereotypes.

Create high demand, interesting, competition topping models and the issue magically disappears.

Costs the same to be daring & creative & bold as it does to copy the Japanese. That's the real issue here.

Example.....since the new Impala came out, in southern California I've seen one (1) SS and one (1) LTZ. EVERY single other Impala has been a rental with a bar code in the window.....and I've seen literally TONS of those on the roads around SoCal.

On the other hand, every single new Camry I've seen has appeared to be a retail unit with no bar code in the window, or it's been an upscale SE or XLE (usually not put into rental fleets.)

NOW...obviously Toyota does fleet and rental units also....but the percentage is so much lower, the Camry is not seen as a "rental queen" as most of GM's compact-to-midsize products are.

I'd rather have a "bland Camry" than I would a "rental queen Impala."

[enzl]

http://online.wsj.com/article/SB1147230415...tml?mod=autos_1

More great news from General Motors--41% in the first Q!

[evok]

"It is crucially important that they see this through," said Michael J. Jackson, chief executive of AutoNation Inc., the U.S.'s largest auto-dealer chain and a major retailer of GM, Ford and Chrysler cars. He added, "If you're producing products nobody wants and you dump them at discounts on rental fleets, you're undermining your chances of success."

That sums it up.

Also that means GM was under 17% retail market share for 2005 and Toyota was at just under 13% with Ford being just under 15%. And Toyota is ahead of DCX (MB + Chrysler group).

That goes to illustrate the true picture of the Big 3.

Edited May 10, 2006 by evok