August 9, 2006

Fleet sales strong in 2006, analyst says

Richmond Hill, Ontario – Fleet sales for the first half of 2006 have been a lot stronger than the consumer market, according to industry analyst Dennis DesRosiers, which he says “is as expected.” Consumer sales are up only 0.2 per cent this year, while fleet sales are up 3.4 per cent.

“Once the consumer incentive-laden July and August sales are factored into this year’s sales, I suspect you will find the consumer market down by a good five to eight per cent by the end of the summer,” DesRosiers says. “Fleet is where the action is and should be up solidly by the end of the summer. Not enough to offset the decline in consumer sales, though, since we know the total market is now down to the end of July and is not looking good for August.”

DesRosiers says that some aspects of fleet sales, such as commercial, executive and government fleets, can be good for the industry, but often manufacturers dump underperforming vehicles into daily rentals, which eventually end up in the used vehicle market. “Overuse of fleet of any kind can also seriously deflate resale values, as they increase the supply of used vehicles in the market,” DesRosiers says. “This is the root of much of the low resale values at GM, Ford and DaimlerChrysler, for instance. I would also argue that Honda’s high resale value is partially due to their staying away from fleet. And Honda beating Toyota resale value is also due to Toyota playing in the fleet market, while Honda does not.”

DesRosiers says that among consumer sales, import nameplates control 53.9 per cent of the market, while GM, Ford and DaimlerChrysler have a 46.1 per cent share; but the “Big Three” account for 89.2 per cent of the fleet market, with GM number one at 39.7 per cent, DaimlerChrysler two at 25.5 per cent share, and Ford third with 24.0 per cent share.

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