Ford is continuing the Taurus (primarily for fleet sales), although they are also making both the 500 & Futura next year. Even though Chevrolet has a new Malibu later this year, they are also continuing with the old one, again mainly for fleet sales. Ironically, Chrysler (normally the fleet sales car company) is moving upscale across the board, and is completely elimating the LH line before the LX is in production (the plan is to overproduce LH in the final months, then completely gut the plant & set up for LX).

Are we comming into an age where fleet cars sold to government & rental agencies are different (and older) models than the models offered to the general public?

 

I think what we're seeing today is more a result of model timing than a change in strategy.

Fleet sales are not very profitable to automakers, though they are great for helping to level load the assembly plants. If the manufacturers had a model dedicated solely to the fleet market then they would forfeit the economies of scale, and what little margins they might have had would evaporate.

Also, all fleet cars eventually end up in consumer hands. If a model was known to be *only* a fleet model, its resale values would probably suffer (who wants to buy an ex-rental car?) which would negatively affect the price the cars can be sold for when new, and further reduce the profit potential.

On the other hand, it makes great sense to do it to outgoing models because most of the tooling is paid for, and you don't have to worry about diluting the used market so much (and screwing up residual values) because you have an entirely different car in the showroom. But I think you can only pull this off for a year or two at most.

Another factor to consider is that, for the rental market anyhow, driving that fleet car might be the only exposure many drivers have to an automakers wares. If it's a POS, then they're going to get that impression about your entire company. This was GM's mistake with the A-cars, IMO. So you don't want to leave your old tech cars in production for too long.

 

If so, what an idiotic strategy!

Let's waste valuable resources producing multiple models, rather than consolidating on a single model for the economy of mass production. Let's divert ourselves from producing the highest-quality cars, period, and make some old outdated ugly things that will send a mixed message to our consumers.

Let's watch while fleets move to Toyotas, because they concentrate on making a single model the best it can be, rather than producing plain-label, econo-crap, fleet-only stuff.

(Not to mention that if they're fleet-only, the resale value at the end of fleet use will be roughly comparable to a Lada or Yugo.)

 

JUST SUPPOSE....

That Ford and GM were in negotiations with Hertz and Enterprise for future purchases. Hertz offers Ford a deal for 50,000 Taurus units this year at $15k each. OR, they will take 200,000 units over the next 3 years at $13,500 each. Same goes with Enterprise and GM for the Malibus.

As a sales guy, you'd jump at the chance to push a guaranteed sale for 200k units. The lines are tooled, your costs are well-established, and your profitability is now more in your control since you KNOW you are guaranteed this much volume. It now becomes a marketing and scheduling issue... if the car/line is going to exist for a while - no problem. You could also go ahead and produce the cars now and store them for blanket deliveries, but that would create inventory and management costs - unattractive.

So you mix the two alternatives... you run the larger lots of parts and order the larger quantities of outside parts NOW, so you can leverage the buy on the bigger quantities (just like Hertz did to you!), and specify to the suppliers that you want JIT deliveries - forcing the suppliers to eat the overhead of inventories and management. (Boy, do I see this alot these days... )
You now need to keep the vehicle platform alive and the assembly line tooled for it, but you can afford to carry the existing model for an extended period and build out of suppliers' inventory.

I know it's a goofy thing, and the rental companies should want to have the latest models on their lots, but to save (200k units x $1500 each = ) $300-million over 3 years, wouldn't you try this approach too?!?!

I agree with centric here too... I think Ford and GM may be shooting themselves in the foot by going with these approaches of old/new models simultaneously, because rental cars are a major source of exposure to new vehicles for many. I myself try to get anything new that I don't own when travelling for just that reason - to try something besides what I already know.

It's even scarier to think that rental car companies might have enough clout to affect what car models are offered by the manufacturers now too, eh?
Wal-Mart come to mind in that context for some reason...

 

Can you imagine that. All kinds of commercials with smilies slashing the MSRP on cars. That would haunt me in my dreams at night.

 

This wouldn't suprise me one bit. think about it, Enterprise buys new Malibu's at 13,500 each lets say, they rent then for two years at what $19 a day plus milage. so at 2 years lets say the car is rented at least 1/3 of the time, not counting milage they get $4,600 for the car over the two years. then sell the car thru their auto buying at 11,500, what did they pay for the car??? nothing... and they made money in the process. sounds like a win, win to me.

 

While the profit might be slim when selling those fleet cars at a low price but GM and Ford will make the money when it comes time to replace and buy parts for all those abused fleet cars.

For most dealers the real profit is in the additional options on new cars and the parts and repair business on used ones.