Chrysler, an industry leader in U.S. fleet sales, has announced that it will be implementing changes to its fleet sales mix in an effort to increase resale values. Chrysler plans to dramatically lower the proportion of its sales specifically being made to rental fleets – aiming to drop the number by more than half.
According to a report by Automotive News, Chrysler has big changes planned in regards to its long-time reliance upon low-margin fleet sales, particularly to rental car companies.
Chrysler’s top dealer executive, Peter Grady, delivered a speech during the 2010 NAFA Fleet Management Association expo earlier today. Grady acknowledged the automaker’s heavy reliance on fleet sales, but said the automaker is taking action and laying out a plan that aims to drastically cut back on fleet and rental car fleet sales.
“Our growth will come from large commercial and government markets,” said Grady.
Grady was referring to Chrysler’s need to retain a crucial and strong fleet sales element, but to shy away from the low-margin sales to rental car companies. As Automotive News explained, not all fleet sales are created equal – government and business fleet sales typically offer higher profit margins than the sales to rental car agencies.
Chrysler currently relies heavily on fleet sales, with 58 percent of its total February sales being sold to various fleet customers, according to documents obtained by Automotive News. Previously, Chrysler officials said that their optimal mix would include only 25 percent fleet sales.
Grady also mentioned during his speech that the first quarter was particularly heavy with fleet sales industry-wide, as many agencies replacing aging models with high mileage. Grady believes that the mix of fleet sales will begin to normalize and taper off for the rest of 2010 with about 2.1 of the estimated 11 million total vehicle sales in the U.S. being fleet-based.
Chrysler does plan, however, to use the late 2010 introduction of the new 2011 Dodge Charger to drive fleet sales with law enforcement departments nationwide.
References
1. ‘Chrysler exec: We’ll cap rental…’ view
Source: Leftlane