Ford Motor Company recently announced that 15 to 20 percent of the total sales of the 2008 Taurus, a replacement for the Five Hundred sedan, will be distributed to daily rental companies, Ward’s reports.
John Blair, CEO of Automotive Lease Guide, agrees with the basic premise of placing newly launched vehicles in rental fleets to create awareness. However, he says 15 to 20 percent of initial volume is too high.
“Fifteen percent is a pretty large number to sell to fleets for exposure purposes. Typically, it’s a smaller (percentage),” says Blair, noting such a large influx reduces residual values, the very thing Ford has been trying to avoid.
To date, Ford has reduced its daily rental fleet sales 32 percent, noting such sales now account for only 14.5 percent of total volume.
If Ford were to abandon the practice of placing new models early in the production run into rental fleets, it would be left solely to its dealer body to familiarize potential customers with the vehicle, which is not always possible, the company says.
According to Ward’s, with the previous-generation Taurus, over-selling to rental fleets not only degraded residual values but also tarnished the car’s image.
Originally posted on Auto Rental News