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.”
01/09, 5:57 PM
posted by:
affliction
Chrysler really has to focus on quality, design, and fuel economy. If they can just focus on one car at a time and make sure that vehicle has a legitimate reason for existence. WTF is up w/ the Sebring? What were they thinking??? Jeep commander? OMG utter garbage! Here’s a tip for Chrysler – if you can’t be a leader, then follow the leader.
01/09, 6:46 PM
posted by:
F3INT))AP3X
Rakim says it all
01/09, 6:49 PM
posted by:
johnnycanuck
Chrysler was well on it’s way to becoming a leader about a dozen years ago, and we all know what happened next. Just how many times can you rise from the ashes?
01/09, 6:54 PM
posted by:
Brendino
So has anyone rented a car lately? The fleet companies have to be hurting…
01/09, 7:35 PM
posted by:
Commodore
Just concentrate on your car’s interiors.
I don’t care who you sell them to. For Chrysler, a case can be made to NOT reduce fleet sales. I would go as far as saying that their cars aren’t good enough to compete in the retail market. They are just not good enough. Until you make great cars like the Malibu or even just decent cars like the Fusion, fleet sales might be Chrysler’s only way to sell anything at all.
01/09, 7:53 PM
posted by:
corvette
Chrysler is in a crippled stage at the moment. and nothing their doing seems to be helping them. other than a slight increase overseas they don’t seems to be doing to well.
01/09, 8:59 PM
posted by:
autonut
I believe Chrysler has much better chance of comeback then Ford. the quality of the company is based on the quality of its management team. The bankers who bought Chrysler have their livelihood dependent on the survival in the short run and re-sale of the company in the long run. They are in it for the money and they put their money where their mouth is. Mr Home Depot will not have long leash to screw up: he either will fix it or will be fixed. You can always buy designs and hire good engineering talent from competition, if you have management that knows what needs to be done and pragmatic about it.
Ford is dead meat. The management team is afraid to provoke the managing family and family (Ford and bunch of foundations) owns only 5% of the shares but 60% of vote. Right here you have a recipe for disaster.
01/09, 9:58 PM
posted by:
lucklaster
What the hell are people going to rent?
Is this what Chery is going to be good for?
01/09, 10:23 PM
posted by:
Veda
autonut is right. Ford needs to just go at it all out and bet on some really groundbreaking styles and designs that would actually attract the market. Playing conservative like this would only impede their going forward plan.
01/10, 10:05 AM
posted by:
gizmo2
Believe it or not I think Ford has a better chance than Chrysler. Even with their recipe for disaster ( 60% Voting rights of the Ford family and small bunch)I am certain Allan Mullaley didn’t take this job to be dictated to. So far he has made most of the decisions and you can tell the difference. Ford still has some products that does well in the market. What does Chrysler has? The best they have going in the Mini Van which is in a declining market that will only become more competitive. Who are their competitors? Companies with money to spend. (Toyota & Honda).
01/10, 12:20 PM
posted by:
autonut
It is a lively debate, which will be solved by time. Yes, Ford has a decent pipeline in Europe. And I do believe that Cerberus will purchase the pipeline somewhere else. I think Cerberus are bright guys: they did not inherit their billions, they made it old fashion way. Ergo, they will be more inclined not to lose it. Besides, minivans for US, they do have Caliber platform, which perhaps will pick up speed with price of gas and Chrysler always had a decent body design studio. They have access to Benz engines (V6 and diesels) for mid-size and up market cars and they just completed family of world engines with Mitsubishi and Hyundai (1.8, 2.0 & 2.4L). Even GM does not have such line up of fuel efficient engines. In $90-100/barrel of oil prices it is golden asset. And they are partners in 2 mode hybrid transmission.
As far as labor relationship Chrysler in very unique position: part of capital for purchase company was obtained from union pension funds. There is a limit to what auto unions can do against other unions money (and maybe their own).
Again, I can be 100% wrong as time may tell.
01/10, 5:20 PM
posted by:
jackjimturkey
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