General Motors is intensifying its push to acquire US commercial fleet sales amid weakening retail demand.
According to executives at GM, the company is looking cut into the lead of rival Ford’s lead in fleet sales in a bid to help prop up profit margins. The automaker will count on its new medium-duty Silverado 4500 and 5500 outfitted as tow trucks, utility bucket trucks, and delivery trucks to penetrate the market. According to Reuters, for every medium-duty truck a corporate fleet customer buys, they’ll potentially purchase up to six additional pickup trucks, SUVs, or passenger cars.
GM has weaned itself off relying on rental fleet sales to make up the numbers, a practice which many felt was integral to the company’s headfirst dive into bankruptcy ten years ago. But the need to bolster sales was emblazoned across the headlines last week when GM unallocated five North American factories, cut jobs and canceled models that have fallen out of step with American vehicular tastes.
GM posted a 24.1 percent jump in commercial fleet sales this past November compared to the same month in 2017. The gains helped offset a 1 percent drop in retail sales. The automaker claims it’s still following a long-term strategy to cut lover-margin rental fleet sales while boosting lucrative commercial contracts. Over the past five years, GM’s rental sales have fallen from 15.8 percent of total sales in 2013 to around 10 percent this year. Over the same period, the automaker has increased the share of commercial sales from 7.8 percent of the total nut to just over 11 percent.
The new medium-duty trucks are scheduled to enter into production this week as part of an agreement with Navistar and will represent the top rung of the Silverado family. GM exited the segment amid bankruptcy proceedings in 2009 but announced its plans to return in late 2015.
GM, along with rival American automakers Ford and FCA control around 77 percent of commercial fleet sales. Ford is believed to hold a 40 percent share, with GM accounting for 25 percent, and FCA the remainder.
Comments
Wasn’t it just a few years ago that cutting back on fleet sales was GM’s key to a retail-based, bigger margin, more profitable existence?
Out in California, if you see a new GM car or SUV it is probably a rental. The company has totally given the market to the imports, Ford and FCA. When the market get competitive GM cuts and runs. Like they have been doing all over the world. GM is led by Cowards! Pretty soon there is going to be nowhere to run.
Commercial sales have been the foundation of F series sales. This is where they move big numbers.
GM holds an advantage here as they are much more profitable on 5neir trucks so they should be able to bid under Ford on contracts and still make money.
Ford going to the all aluminum has raised the cost to build their trucks and hurt their profit margins with higher material cost.
The one thing GM needs to do as Ford is to be willing to tailor trucks to specific needs of industry’s. That has been Fords strong point. You order enough trucks they will make em like you want them.
So before people get all worked up on what they don’t know they need to dig deeper and understand th e cost cutting at GM has changed things and if there was no money to be made they would not be doing fleet sales.
The automotive IQ around here has dropped so much. Sad!
What they do not comprehend is the fleet truck sales generally make money because of scale.
Where GM failed in fleets was when they took cars that were not selling like the Pontiac GP and dumping the excess Inc inventory on Enterprise.
The reason they had excess inventory was due to union contracts that required them to pay workers 80% of 5beir wages if they were laid off. GM was in a situation where they lost money either way but less with the plants open.
Today those deals are gone so now they close a plant that is under capacity and are not forced into making cars they would have to dump on Enterprise like the Cruze.
People need to use all the facts not just their hate.
The Silverado 4500, 5500, and 6500 look awesome.
I’m glad that GM want’s to challenge Ford, but can GM deliver a strong enough punch? I think that GM needs to get more aggressive and offer what consumer want. why is the GVW is low with these medium duty’s? 6500 should at least go up to 26k and could potentially replace fords in Uhaul, etc and many other outfitters that want the highest payload without having to have CDL.
More grandiose delusions from GM. Just recently they were running from fleet sales because they said they couldn’t make any money there.