The rental car image is a bad one to garner. Chevrolet in particular has bestowed us with more than a few vehicles to fit the portrayal, but image isn’t the only thing to hurt an automaker when selling in the masses to rental and fleet companies.
General Motors has used the rental sector for years to bolster its overall market share in the industry at the expense of lower profit margins. This is a trend the automaker has vowed to kick, and the cuts are going deeper recently. Automotive News reports GM made an 11-percent reduction in rental sales last year alone, or about 50,000 vehicles.
However, just this past January, rental sales dropped 13,000 vehicles, a sign of further cuts to come.
GM’s rationale, and a sound one at that, is the low margins from rental sales hurt residual value of its vehicles and decrease a brand’s favorable image. Now, GM said it will chase more profitable sectors and really push to sell more to the retail market.
“We’re not going to chase share for share’s sake. We want to see profitable growth,”GM CFO Chuck Stevens said last week. The rental business “is not an overly profitable segment,” he added. GM expects to bring the share of rental sales down from 22-percent in 2015, to 20-percent in 2016.
The results mean less vehicles potentially sold in overall market share, but positive growth in other sectors. Chevrolet posted a 0.4-percent gain in retail market share last year, the largest of any mainstream brand, despite overall share falling from 12.3- to 12.2-percent.
It’s not only the retail market, though. GM said it will also look to small businesses and big corporations to “relocate” the rental volume with more commercial van and truck sales.
Comments
Unfortunately, enthusiasts lose in the process. Pontiac was buoyed by rental sales. Cars like the Impala kept going too.
Now we are in a state where Impala may get the axe, and Pontiac is no more. No 300 horsepower G6’s, no RWD large sedans.
Just Cascada. Oh boy.
Very true, we lose out on cars that need a percentage of fleet sales to prop up total sales to a profitable level.
We lose when we go on vacation too. There was a time where you could book a rental from Avis or Alamo and be all but guaranteed a GM vehicle. The only question was will it be a Bonneville, Eighty-Eight or Lesabre? …or Venture, Montana or Silhouette? Last time I got a rental, I had to fight for an American car, let alone something from GM. Having to drive a Sonata or Camry is a vacation ruiner.
Sadly, the Cascada won’t even be available to rental fleets.
BBB,
no doubt driving a Sonata or a Camry is a vacation ruiner!
My understanding is Cascada will be open to (and discounted for) rental fleets. Buick managers even said during the launch interviews that it is serving as a brand ambassador in that purpose.