US: General Motors backs away from lower-profit rental fleet deliveries image

General Motors, the largest US automaker and the third largest in the world, could announce slower sales than some of its competitors for the July month because the company is now selling fewer autos to rental-car agencies.

In search for higher earnings margins, Kurt McNeil, vice president of sales says General Motrs could see slightly negative or modestly positive sales for the month that analysts and industry experts see delivering strong gains across the auto market. The major issue is that July will be the company’s worst month in terms of sales to rental and corporate fleets since the start of the year, according to figures from the company. “We would be enjoying better headlines if we were doing more of that business,” commented McNeil. “In the short term we are giving up market share.” Chief executive officer Mary Barra ahs asked for such strategic planning to shed reliance that lasted for more than a decade on high discounting and retail-car sales that kept up the appearance of high market share while killing off the earnings margins and the overall corporate image.

The president, Dan Ammann, has been in turn focusing on shedding the low-yield businesses across the world as the company focuses globally on profit instead of sales. Rental-car sales are traditionally less profitable than retail deliveries because the former have huge discounts when dealing with big-volume buyers. And in turn the latter also sell off the autos about a year later, competing then with new vehicles offered by dealerships.

Via Bloomberg