Some automakers are struggling to meet fleet demand as the COVID-19 pandemic and semiconductor shortage hamper production output.
According to a new report from Automotive News, the desperation of fleet customers is currently “just as palpable,” as retail customers, who are buying up new vehicles in droves and paying top dollar to lock them down.
Many rental car agencies sold off their inventory early last year as business collapsed amid the COVID-19 pandemic and are now left with hollowed-out fleets. These companies are struggling to restock their fleets, with many automakers experiencing lower-than-usual production output and extremely high retail demand. AN says some customers have even resorted to renting out moving vans as a method of transportation, as many rental car companies have no passenger cars to offer.
Fleet sales at General Motors are down 6.9 percent from last year, according to data from AN. It’s a similar story with Ford and Stellantis, which have seen their fleet businesses shrink by 10 percent and 18 percent, respectively. A GM spokesperson said that in a typical year, “about 10 percent of fleet business is sold out of dealer stock,” and that fleets “generally order vehicles as needed to ensure timing of the unit and equipment.”
The incentive to serve fleet customers over retail buyers is low for many automakers, as the profit margins on fleet sales are typically lower than retail. Fleet customers will likely have to get used to higher prices, explained J.D. Power automotive president Doug Betts, as retail prices have risen dramatically in the past seven months.
“Fleets are in a situation right now where the pricing that they could normally get is just not going to be available because there are plenty of customers out there right now who want these cars,” he said.
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Comments
Ahh…the continuing infamous chip shortage. Never let a great crisis go to waste. The Asian chipmaking homeboys are taking care of their Asian bros automakers, Toyota, Nissan, Hyundai, et. al. No shortage of chips for these boys. Roll on.
The homeboy Asian chipmakers put their competitive automaking outsiders in North America and Europe in the back seat to help their Asian homeboy automakers.
Makes sense to me in a competitive world, where Asia is seeking to be Number One. They have already achieved it in autos with the lions share of 70 million autos made on the planet each year.
What he said above.
i’d gladly pay a little more for chips made in America.