General Motors’ Alan Batey has confirmed to Automotive News the company will continue ditching sales to daily rental fleets. For the better part of the last decade GM has been saying it aspires to reduce low-profit rental sales, but now it appears to be executing its lip service. In total, GM plans to reduce total fleet sales by 50,000 units.
Batey went on to confirm the company plans to reduce fleet sales again in 2018, although a specified amount has not been disclosed. A reduction in 2018 will constitute a four-year long decline for the company. In 2014 over 16 percent of GM’s sales were to daily rental fleets, whereas they make up only 11.7 percent in 2016. That figure is expected to reduce to single digits by 2018.
So what’s caused GM to finally get serious about reducing fleet sales? Aside from the fact the company now chases net margins versus sales volume, a lot of it has to do with the company’s finance arm. GM has total control over its financial arm, GM Financial. Having total control over the finance division allows GM to take a more holistic approach to their sales strategy; a strategy that now includes a healthy leasing plan.
GM knows vehicle residuals tank when they dump a ton of vehicles into the Enterprise and Hertz lots, so they’re stopping it. In turn, the company hopes higher residuals will allow for more attractive lease deals. Lease deals, Batey says, put buyers in the market more often.