Bloomberg News

Ford Defends Fleet Sales, Boosts Market Share of Bulk Business

March 27, 2012

Ford Motor Co. (F:US), which sells more than three out of every 10 vehicles to fleet buyers, has boosted its share of U.S. fleet market to 27 percent, from 22 percent five years ago.

“It’s a very productive and profitable business,” Kevin Koswick, director of Ford’s North American fleet, lease and remarketing operations, said today in Detroit in a speech to the Automotive Press Association. “It’s something that’s good for our business.”

Ford sold 675,901 cars and trucks to fleet buyers last year, according to Koswick. About 41 percent of those vehicles went to daily rental companies, which buy in bulk and typically pay less than individual customers. Ford depends less on sales to rental companies than General Motors Co. (GM:US) and Chrysler Group, LLC and attempts to take a “balanced” approach to protect resale values, Koswick said.

“We’re very disciplined about what we want to do,” Koswick said in response to a question about the stigma of the rental lot hurting resale values of Ford models. “I don’t see it as an issue as long as you manage your fleet and you’re balanced in what you do.”

Koswick valued the industrywide U.S. fleet business, including government and commercial sales, at $57 billion last year. Ford and other U.S. automakers have attempted to back away from rental-car sales, which generate lower profit margins.

Ford slid 1.3 percent to $12.32 at the close in New York.

Ford Share

The second-largest U.S. automaker sold 15 percent of its vehicles to rental companies in February and 17 percent to commercial and government fleets, according to Erich Merkle, the company’s sales analyst. Last year, 13 percent of Ford’s U.S. sales went to rental-car companies, Koswick said.

So far this year, Ford’s fleet deliveries have accounted for 31 percent of its total U.S. vehicle sales, down from 33 percent a year earlier, Merkle said.

Ford’s share of the U.S. fleet market, which includes government and commercial purchases, has grown as the total market has declined, according to data Koswick presented during his speech.

Automakers sold 3.3 million vehicles to U.S. fleet buyers in 2007, with Ford accounting for 725,351, or 22 percent, of those sales. Last year, Ford had 27 percent of the U.S. fleet market, which totaled 2.5 million vehicles, according to Koswick.

Ford’s fleet sales rose 10 percent last year, while its total U.S. sales gained 11 percent. Ford’s market share rose to 16.8 percent last year, from 16.7 percent in 2010. That was the third consecutive annual U.S. market share gain for Ford, which hadn’t happened since the early 1970s, the company said.

Ford’s Comeback

In the first two months of this year, Ford’s U.S. sales of cars and light trucks rose 11 percent, while industrywide sales gained 14 percent. The automaker’s U.S. market share so far this year has fallen to 15.3 percent from 15.6 percent in the same period last year, according to researcher Autodata Corp. of Woodcliff Lake, New Jersey.

Ford, based in Dearborn, Michigan, on Jan. 27 reported its 11th consecutive (F:US) profitable quarter, with net income of $13.6 billion, or $3.40 a share, compared with $190 million, or 5 cents, a year earlier. Ford earned $29.5 billion in the last three years after $30.1 billion in losses from 2006 through 2008.

Chief Executive Officer Alan Mulally, 66, turned around the automaker by globalizing operations, cutting costs, improving quality and expanding the lineup with fuel-efficient models such as the Fiesta subcompact.

To contact the reporter on this story: Keith Naughton in Detroit at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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Companies Mentioned

  • F
    (Ford Motor Co)
    • $16.65 USD
    • 0.07
    • 0.42%
  • GM
    (General Motors Co)
    • $33.94 USD
    • -0.09
    • -0.27%
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