General Motors sees more room to cut rental sales

General Motors aims to keep reducing the flow of vehicles from its plants to U.S. rental lots at least through 2018, continuing a strategy that has helped the automaker’s North American operations pile up more than $26 billion in profits under CEO Mary Barra even as its overall market share keeps sliding. Alan Batey, GM’s president of North America, said that sales to daily-rental fleets would fall by about 50,000 units this year and an unspecified amount in 2018. That would represent four straight years of declines for GM’s rental deliveries, which already dropped from 16.1 percent of its total U.S. sales in 2014 to 11.7 percent in 2016.

They like the rent-a-car business because it’s a great opportunity to expose new people to their products. They don’t like it when it’s bringing too many nearly new vehicles back into the market to compete with their new business and compress our resale values. Such discipline represents a major philosophical shift for a company that used to rely on money-losing fleet sales to keep its assembly lines running because its union contracts made cutting production extremely costly — and often because executives’ bonuses and bragging rights hung in the balance. Read more

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