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Ford Maintains Focus on Commercial / Government Fleets, While Reducing Rental Presence

February 20, 2007

DEARBORN, MI – Ford Motor Company grew its fleet sales in the government and commercial sectors in 2006 while reducing its presence in the daily rental market to improve the residual values of its vehicles. This year, Ford will continue to de-emphasize rental fleet sales while continuing to grow its government and commercial fleet sales. By significantly limiting its presence in the rental market, Ford 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 because of an ex-rental unit’s low prices and low mileage. Ford Fleet’s market share and sales performance increased 0.4 percent and delivered nearly 900,000 sales, up 6 percent or 48,000 units from 2005, outpacing the industry sales increase by 5 percent, according to Ford. Ford Fleet’s sales increase in 2006 was fueled by the popularity of its F-Series trucks, E-Series vans, and Crown Victoria taxi cab and police interceptor sedans in the commercial and government fleets, despite flat sales growth in the rental market, which will decline further in 2007. The discontinued production of the Freestar minivan and previous-generation, Atlanta-built Taurus sedan will account for the majority of the rental decline in 2007. In recent years, Taurus cars held only 30-percent residual value after 36 months due to its high volume rental presence. Comparatively, the Fusion, Five Hundred, and Lincoln Zephyr/MKZ hold residual value between 45 and 50 percent after 36 months, because Ford has limited their volume in the rental market. Another key to increasing residual values, according to the manufacturer, is putting the right equipment in rental units for maximum return on the auction block. Unlike in the past, Explorers are getting third-row seats and Lincoln Navigators get power lift gates and chrome wheels — attributes that are proven to command higher bids at dealer auctions. Also, in response to customer demand for crossovers Ford Fleet is accelerating the migration of minivan fleet users to the Freestyle and Edge. With its rental sales in a holding pattern, Ford increased its government sales by 15 percent in 2006. The company holds a 47-percent share of the segment, according to Ford. A key government fleet vehicle for Ford is the Crown Victoria Police Interceptor, with a 10-percent unit sales increase in 2006. Among the improvements made to the Police Interceptor based on customer feedback were redesigned front seats for increased comfort during long patrols and bullet-proof doors.
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