While not all fleet contracts are negotiated in the third quarter, many have traditionally been done at this time of year because it is mutually beneficial for automakers and large fleet operators, Betts said.
“The people buying fleet cars want to get on the front end of the new model year, because they hope to dispose of them before they become an old model year, because their biggest cost is depreciation,” he said. The timing helps automakers because “January and February are not usually great consumer selling months, so you know that you can fill those [fleet] demands in that window of time and keep your factories operating efficiently.”
Toyota’s Carter said that last year the automaker talked with its dealer council about the need to fulfill contractual obligations to fleet customers that were made in the third quarter of 2020.
But as those contracts come up for negotiation this year, Carter said the company’s traditional practice of dedicating 8 to 10 percent of its production volume to fleet is likely to come under pressure.
Toyota’s total fleet volume through July was just over 175,000 vehicles, up about 71 percent over 2020. Included in that number were about 28,000 sales to traditionally more lucrative commercial fleets, and the remainder to rental car operators, a spokesman for Toyota confirmed. The Japanese automaker’s year-over-year jump is the highest of any large mass-market automaker. Nissan’s fleet business is up by about 48 percent this year, while fleet sales for General Motors are down 6.9 percent, Ford Motor. Co.’s are off 10 percent, and Stellantis’ are down 18 percent, according to industry sources and confirmed by Automotive News.
Charlie Chesbrough, senior economist with Cox Automotive, said automakers that are able to keep factories operating are in the best position to capitalize on the outsize demand from consumers and fleet buyers.
“It’s an interesting situation that is a real plus for the manufacturers,” he said. “They can keep their retail channels stocked, and when and if retail demand starts to wane, they can shuffle the production off to the fleet operators at an increased price.”