Chrysler will slash its fleet sales to just 20% in 2008 — down from 30% in 2007 — a new report finds. Chrysler – along with Ford and General Motors — has already announced that it will cut vehicle production in 2008. The cut could result in 200,000 fewer fleet sales for Chrysler.
“We’re looking for a very small increase in retail but we’re going to be reducing our dependency on fleet substantially,” Chrysler President Jim Press told the Detroit Free Press. “That’s part of a plan that we have to become a more of a retail-oriented company, improve our residual values and improve our focus in terms of production, to meet retail demand versus fleet demands.”
Chrysler ’s fleet sales were about 7% above the industry average in 2007.
A reduction in fleet sales will not only increase the resale value of Chrysler vehicles, but will also boost the company’s profitability. “Fleet sales are notoriously either unprofitable or low profitable,” said Rebecca Lindland, an analyst with Global Insight. “Typically it’s just to keep factories running.”
However, analysts remain skeptical that Chrysler can reduce its fleet sales by 10% in such a short time period. “It’s going to take them a few years to get there,” Jesse Toprak, executive director of industry analysis for Edmunds, told Automotive News. “Reduction of fleet sales, I don’t think is going to be extremely dramatic in ’08 unless they decide to cut production more than we already know.”
But Press feels strongly about a reduction in fleet sales. “Fleet doesn’t do anybody any good except dump a lot of used cars into the market to compete with new cars,” Press said. “Companies that are running their production levels to support fleet-only do not have a long-term good strategy.”
