Toyota is the car company with the most problems right now, right?
With 8.5 million recalled vehicles, Congressional hearings, an alleged “runaway car” in California, and sinking sales, Toyota seems to be in a pretty bad place right now.
Could any other carmaker possibly be worse off?
The car company with the worst start to 2010 is Chrysler, at least according to an article at CNNMoney. The article says,
Industry experts say that even though Chrysler’s overall sales are down only 3% during the first two months of the year, estimates show more than half of Chrysler’s sales have been to fleet customers, such as rental car companies.
That’s not good, folks. Chrysler’s sales to consumers are down more than 44 percent.
Compare that number to Toyota’s: Despite not being able to sell its best-selling models for more than a week, Toyota’s sales are down only 14 percent.
Selling over half your cars to fleets is not only bad for business, it can kill it. First off, those cars are sold at massive discounts. Second, when they hit the used-car market in a couple of years, they will be discounted again, further eroding the value of new models.
High sales to rental fleets is only causing consumer demand for Chrysler, Jeep, and Dodge products to fall, and fast. Massive fleet sales might prop up sales figures temporarily, but it will only lead to disaster if it continues.
The CNN article quotes an unnamed Chrysler spokeswoman as saying,
We have to rebuild consumers’ confidence in the company. The fact that large companies are willing to buy our vehicles helps rebuild that confidence, so fleet is part our businesses strategy [sic].
I’m sorry to say, Ms. Spokeswoman, but supplying thousands of low-quality rental cars is not going to build confidence. Confidence is built by offering high-quality cars that people want to buy. See your neighbors GM and Ford as examples.
The good news here is that if Fiat’s attempt to save Chrysler with new product doesn’t work, maybe the company can just become the sole supplier of America’s rental cars and not even worry about retail sales anymore.
What does Chrysler have to do to rebuild demand for its product? Will selling to rental fleets do it?