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Ford to decrease rental fleet sales to boost resale values
February 20, 2007

Dearborn, Michigan - Ford has announced that while its fleet sales in the government and commercial sectors increased in 2006, it will continue to de-emphasize rental fleet sales to improve the residual value of its vehicles.

By significantly limiting its presence in the rental market, Ford says it is minimizing the price-cutting impact that ex-rental units have on new car sales. Rental units are more damaging to residual value than other types of fleet vehicles because they typically return to market within a year of being built, enticing buyers away from new vehicles with their low prices and low mileage. Comparatively, commercial and government fleet vehicles stay in service for three to five years and do not compete head-to-head with new cars, with a resulting minimal impact on residual values.

"Reducing our rental volume to improve our vehicles' residual value is part of our Way Forward strategy," says John Felice, director of North American Fleet, Leasing and Remarketing Organization. "We anticipate and plan an overall decline in fleet volume this year, but it's almost exclusively attributable to a decrease in rental volume."

The company's fleet share increase of 0.4 per cent led the industry in 2006; it delivered nearly 900,000 vehicles, up 6 per cent from 2005, outpacing the industry sales increase by 5 per cent. The company says its increase was fueled by the popularity of its F-Series trucks, E-Series vans and Crown Victoria taxicab and police interceptor sedans in commercial and government fleets. Rental fleet sales will decline further with discontinuation of the Freestar minivan and the last-generation Taurus sedan; the 2006 Taurus production was 100 per cent fleet last year and represented a third of Ford's total rental volume. The company is replacing it in fleet sales with a limited number of 2007 Five Hundred and Fusion sedans.

The company says that in recent years, the Taurus held only 30 per cent residual value after 36 months due to its high-volume rental presence, while the Fusion, Five Hundred and Lincoln Zephyr/MKZ, with a limited volume in the rental market, held between 45 and 50 per cent after 36 months.

Meh, I dunno if I totally agree with this strategy..

Here's my thinking, by reducing their fleet sales they may in fact increase residual values, but at the same time, they're lowering their visability to the consumer and giving other automakers a way into the market with their cars.

EG: Instead of a Ford Focus, a Hyundai Accent, renter likes the Accent & buys one = lost sale opportunity for Ford.

The fact that the car is in rental fleets may be an issue, but I think the build quality and percieved value has more do to with the poor residuals that some Ford Vehicles have (I'll just bet that rental Ford Mustangs have no issue with poor residuals)

NefCanuck

I have a hard enough time getting a Focus as a rental here in North Bay. Hell, when I'm in Reno it's normally cake to get one.

And your "rent it, like it, buy it" analogy is quite right... a lot of folks do that as an inexpensive way to test-drive vehicles over a longer period of time. I've done it too. :)

When it comes down to it, the big 3 built mostly crummy cars from the late 70's up until the late 90's, and they lost a lot of "street cred". That "street cred" lost was from developing a word of mouth stigma that they aren't as good as imports in one way or another, lost face value, etc.

Unfortunately, the general car buying public thinks this stigma is the status quo, and are ignorant towards domestics. What I mean is, they won't bother to look at newer domestics which are actually pretty great cars, because they assume they are still gonna be junk, etc etc. That, and a lot of people are too lazy anymore to do some actual pavement pounding and research and testdrive multiple vehicles...they'd rather have the 12th Camry or Civic on their street, because they think the car MUST be good if everyone has one.

I think that reducing the rental fleet sales is a wise choice. Yes, people will see that there are fewer Fords or other domestics in the rental lots, and wonder if something is wrong at first, but after a while, people will think that maybe some of Fords cars aren't junk, or rental worthy only, but perhaps as half decent. Hopefully someone will know what I mean...

My $.02

Seeing that people who are in the market for new cars look more closely on resale value.... This may help a focus be worth more in the log run...

Then again....

Drivesthebeast,Feb 20 2007, 12:38 PM Wrote:Unfortunately, the general car buying public thinks this stigma is the status quo, and are ignorant towards domestics.  What I mean is, they won't bother to look at newer domestics which are actually pretty great cars, because they assume they are still gonna be junk, etc etc.  That, and a lot of people are too lazy anymore to do some actual pavement pounding and research and testdrive multiple vehicles...they'd rather have the 12th Camry or Civic on their street, because they think the car MUST be good if everyone has one.right

I think that people are smarter than that they actually walk up to there neighbours and ask for an honest to god reply as to the reliability of there vehicle(I've had this happen on many occasions now regarding my Hyundai Santa Fe). There must be a reason why there are neighbourhoods full of Camry's and Accords word of mouth is a powerfull advertising tool and Ford and other manufacturers should know this by now. It should be pretty obvious that in some categories that reliability and service at there dealership are far more important than HP and looks. The other thing that Domestic manufacturers have failed to sway is the recent tide of Asian immmigrants and when they do buy a car they don't bother to look at Domestics because over in Asia Toyota, Honda rule the roost and they go buy what they have been brought up on. It's not to late for the Domestics but the hole is getting deaper every day just look at Chrysler and ask yourself how far behind is Ford and GM in comparison?

my .02

Laterz :)

I dunno for me to by a rent al it would be totally a race car ie stripped and rebuilt... b/C I know what I do to rentals.. I KILLED a chevy cobalt LMFAO that thing was soooo pooched when I was done.. I flat spoted at least three tires ....

and well if some one rents a hyundai,, instead of a fcus there gonna ask why the car feels like a tin can... I rented a couple accents,,, haven't tried the senata which seems to have a much nicer fit and finish,,,,

a guy in my friends progam has a charger rental for 2 weeks, he picked up a 50 wet shot nitrous kit for it that is going in today :lol: :ph34r:

thats why i dont buy rentals!! :)

ZX5focused,Feb 21 2007, 03:43 PM Wrote:a guy in my friends progam has a charger rental for 2 weeks, he picked up a 50 wet shot nitrous kit for it that is going in today :lol: :ph34r:

thats why i dont buy rentals!! :)
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that's a lot of work,,, not worth it in my eyes,,,

Geez, at least I know my ex rental wasn't treated like that :P

NefCanuck

HEHEHE!!!! those are good if you guys think you treat rentals like s*** the employees beat them to death as well. My brother back in '97 used to work for Enterprise and one day shows up at the Keele Valley power plant with a brand spanking new F150 with less than 100 clicks and lets me take it for a boot around the Keele Valley garbage dump and man that is one best times I've had behind the wheel. :D

Laterz :)

It's not even the deliberate damage, it's the accidental damage that follows them around.

Case in point - 3 Chevy mini-vans (the latest ones, can't remember the name) up a 75km trip on a mine road for a site visit, all came back with a thorough suspension workout and ours came back with a golf ball-sized stone throw impact web near the bottom passenger side of the windshield.

Went to get my rental one day at the Delta Chelsea, valets parked Pontiac Pursuit at the Bay Street entrance. Some guy (from North Bay!) backs into it as I approached the car to load my bags. Propeller-shaped bumper hitch covers make great spearing attachements! :lol:

Rentals are rentals, short-term windows into the extreme service capabilities of a vehicle. However, if I get one within 20,000 or so of being new I tend to evaluate it as a fairly representative mark of a certain model.