Fleet sales historically consisted of sales of vehicles to large corporations, rental car firms, utility companies, and government agencies. But the auto industry expanded these sales beyond these entities by extending them to companies in the small business sector.
These sales have traditionally given automakers ways to sell large volumes and find homes for surplus inventory. Before the auto industry started its recovery, however, manufacturers tended to lose money on fleet sales. If they didn't lose money, fleet auto sales were still considered low-profit line items, a way for automakers to pad their budgets and keep factories open.
But just how important are these sales to the industry? This article looks at times, sales figures, and other important factors in this segment of the automotive industry.
- Fleet sales are generally made to large corporations, small businesses, rental car firms, utility companies, and government agencies.
- They allow automakers to sell large volumes of vehicles.
- The car industry had to deal with challenges from the global financial crisis and the COVID-19 pandemic.
- Fleet programs offer buyers better financing rates and terms, special programs, and deeper discounts.
- Depreciation and fuel tend to be the highest expenses in fleet management.
Historic Times for Fleet Sales
Feet sales have been turning much more profitable over time. Like many other parts of the economy, the auto industry suffered a slowdown as a result of the financial crisis of 2007-2008 and the COVID-19 pandemic that hit the globe in 2020.
In order to survive setbacks like these, certain changes needed to be made. In fact, U.S. auto manufacturers responded by producing the kinds of vehicles people want. This allowed companies to charge better prices for cars and trucks in both the retail and fleet markets.
Despite the challenges, fleet sales remain strong. The industry recorded 1.2 million vehicles sold in 2021, which was a 3% increase from 2020. Fleet sales were prominent in the retail industry. Automaker Nissan experienced the largest growth in September 2021.
In earlier days, fleet vehicles were standard models with little to no upgrades.
History of Fleet Car Sales
The majority of car manufacturers have fleet programs in place that allow entities to buy multiple vehicles all at once. These programs offer buyers a series of benefits, including better annual percentage rates (APRs) and financing terms, special parts and repair programs, and deeper discounts.
But many discount programs were often too steep when vehicles were sold to rental car agencies. Pushed by labor contracts and inflexible manufacturing facilities into continuing the production of unpopular models, General Motors, Ford, and Chrysler (now Stellantis)—often called the Big Three—had an overstock of cars and trucks in their showrooms. Needing to move the vehicles off the lots, they used car rental agencies as temporary repositories.
The automakers often lost money a second time. After buying back the fleet vehicles from the rental car agencies at excessively high prices, they were forced to resell the used vehicles at wholesale auctions due to an oversupply. Manufacturers developed new fuel-efficient models such as the Ford Explorer and the Chevrolet Impala with the auto industry's recovery. These proved to be popular with consumers.
Automakers have been exercising greater caution over offering vast discounts in fleet sales, especially in the wake of the COVID-19 pandemic. The shutdown of manufacturing plants and the semiconductor shortage have put a dent in new vehicle production and overall inventories. Fleet spending has also decreased as a result.
Fleet Sales Statistics
The U.S. Department of Transportation keeps records of fleet inventory per sector. According to the agency, there were 8.14 million in use across a number of areas, including corporate business, government agencies, utilities, police departments, taxi services, and car rental agencies. This figure includes both cars and trucks, as well as vans and sport utility vehicles. The majority of vehicles were used by car rental companies and government agencies.
The following is a breakdown of the costs related to fleet vehicles:
- Depreciation (53%): This is the total reduction in the vehicle's value once it enters the fleet after wear and tear.
- Fuel (15%): These costs can fluctuate and is an absolute must in order to keep the vehicles running.
- Interest (9%): Financing rates may be better for fleet customers than they are for retail consumers but they may also change as economic conditions do.
- Maintenance (9%): This category includes regular maintenance as well as surprise issues that may arise. In most cases, this includes parts and labor.
- Other costs, such as taxes, licensing, insurance, and administrative costs, such as those related to fleet management.
Discounts and fleet deal terms depend on the manufacturer. According to FindTheBestCarPrice.com, here are some of those deals:
- Buick: $2,500 off per vehicle and support with a purchase or lease minimum of five or more vehicles in 12 months, a minimum of five medium trucks, or a minimum of 15 vehicles
- Dodge: Discounts and support (no details provided) with a purchase minimum of five of lease minimum of 15 vehicles
- Ford: As much as $5,500 off per vehicle with a minimum of 15 vehicles
- Nissan: Up to $4,400 per vehicle with 10 vehicles or less for small fleets and a minimum of 11 for large fleets
- Toyota: A maximum of $2,500 per vehicle with a minimum order of 10 vehicles
What Is a Fleet?
A fleet is a group of vehicles purchased by a single buyer, such as a company, government agency, or car rental company. These vehicles are important to the day-to-day operations of the buyer. For instance, a utility company requires the use of vans and trucks to install, repair, and do routine checks for their customers.
What Is Fleet Management?
Fleet management is the process of maintaining fleet vehicles so they run efficiently and smoothly. This includes keeping up with regular maintenance and ensuring that vehicles are compliant with state and local regulations—all within a budget.
How Many Vehicles Make a Fleet?
The generally accepted minimum to be considered a fleet is three vehicles. But some insurance companies may have different minimums, so it's important for owners to check with their insurers on the rules surrounding fleet insurance.