Last Updated Aug 13, 2010 1:37 PM EDT
It was the term "dirty" that got under Marchionne's skin. "To suggest that fleet sales is sort of a dirty word is a bizarre concept," he said in an Aug. 9 conference call with analysts and reporters. He said in several different ways he took exception to calling fleet sales "dirty."
Marchionne correctly pointed out that Chrysler is hardly unique in selling plenty of cars to fleets, and he said that money from fleet customers is just as good as anybody else's.
(By the way, though I had nothing to do with that coverage or that particular choice of words, I should point out I also write regularly for Automotive News.)
Marchionne's reaction aside, what's important about fleet sales is that they're typically less profitable per unit than sales to individual retail customers, However, the car companies typically report a single monthly sales number, with fleet and retail mixed in. According to AutoData, U.S. auto sales are up about 15 percent this year to about 6.7 million. That increase looks less impressive, if it includes a high proportion of fleet sales.
Precisely how much less profitable fleet sales are is a closely guarded secret. For that matter, per-unit profits are a trade secret all around, for fleet or for retail sales.
Within the fleet number it's also important to distinguish between sales to government and commercial fleets, which are said to be relatively profitable, versus sales to daily rental fleets, which aren't. That detailed breakout is another trade secret. The car companies can purchase registration data that provides a detailed breakout for daily rental fleets, but that data rarely gets publicized.
Having said all that, Ford (F) and General Motors are pretty open about how much of their sales are fleet, lumping together all categories, versus retail. Chrysler won't disclose even that number. To repeat, none of the companies routinely shares how much of their fleet sales go to daily rental cars. Chrysler isn't unusual in that respect.
Meanwhile, on Monday, Automotive News reported that 39 percent of Chrysler's sales in the first seven months of 2010 were fleet sales, up from about 16 percent in the year-ago period. The story wasn't just about Chrysler. Automotive News cited "automakers and industry sources" to say Ford sales were about 35 percent fleet, and GM sales at 31 percent. When I checked later this week, Ford said its actual number is 34 percent, and GM confirmed 31 percent was correct.
To be precise, Marchionne's reaction this week wasn't to the story itself, it was in response to a video promotion over the weekend for Monday's print and online issue of Automotive News. In the promotion, which was e-mailed to subscribers who had opted-in to get the weekly blurbs, Editor Jason Stein called fleet sales a "dirty little word in the sales recovery of 2010."
Personally, I hadn't seen the blurb and wondered during the conference call what Marchionne was so angry about. Even now, I can understand why he didn't like it, but I still don't get why he was quite so ticked about it. Ironically, in my case at least, I never would have seen the item that offended Marchionne so much, if he hadn't called so much attention to it.
- Chrysler Sales Rise But Problems Lurk Behind Gains
- Chrysler Posts Quarterly Loss as Sales Lag
- Fleets Fuel Surge at GM, Chrysler