Analyst Recommends U.S. Automakers Reduce Fleet Sales

American automakers General Motors and Ford Motor Co. could better revive their businesses by reducing the number of vehicles they sell to rental car companies and other corporations, according to a Monday report by Banc of America Securities.

Fleet vehicle sales are less profitable, taint a company's brands and, over the long term, reduce the value of the automobiles, Forbes reports.

It would cost the automakers tens of billions of dollars to fully restructure the businesses properly, as the Big 3 have publicly committed to doing.

Thus far, GM, Ford and even Daimler-Chrysler have simply focused on downsizing their respective businesses, rather than spending the money to eliminate brands and buy out dealers, says Ronald Tadross, an analyst for Banc of America.

Tadross contends that the solution with the shortest lead time is to cut back on fleet vehicle sales.

Honda, for instance, frowns on both corporate and rental fleet sales and it has the best retail value in the industry, the analyst said.

Indeed, while fleet vehicle sales comprise roughly 30 percent of U.S. sales for the Big Three automakers, they comprise 1 to 2 percent of Honda's and only 5 percent of Toyota's, according to the research firm.

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