GM Sees Rental as a Marketing Opportunity

General Motors Corp. is putting into rental fleets some of its best models with high-end options and features, The Detroit News reports.

With more than 1.7 million rental cars on the roads last year, GM hopes to use rental to attract new customers and make more money by selling better-equipped, higher-priced cars to rental companies.

Most automakers, including GM, are trying to reduce sales to daily rental fleets because they're less profitable. Also, having a lot of vehicles in rental lots can erode their image and cut into resale values, according to The Detroit News.

Comprising a sizeable but shrinking portion of its annual 1 million fleet vehicle sales, GM has sold 647,000 cars and trucks to rental agencies in 2006 and expects to finish the year with sales down about 10 percent from last year's tally of 719,000 units, officials say.

What might be good news for car renters hasn't gone over as well with rental companies, which are faced with higher fleet costs and shrinking profits as automakers add more features and raise prices on their vehicles.

In a competitive market that makes rate increases risky, many rental companies are dealing with the added vehicle costs by ordering fewer vehicles and keeping them for up to eight months rather than the average of four to six months, according to Edmunds.com.

Ford said rental cars have a role in the company's marketing strategy, even as the automaker tries to reduce fleet sales and focus on building retail sales. The Ford Shelby GT-H, designed specifically for Hertz by Ford's Racing Performance Group and Carroll Shelby is available as a rental at select airport locations around the country. Overall, though, Ford says it makes little sense to cater to the rental car industry.

At Chrysler, some new models typically get shipped out to rental companies to help drivers become familiar with them. Edmunds.com cited Chrysler's decision to push its popular Chrysler 300 sedan into rental fleets as a factor in creating excitement about the vehicle. But Chrysler, like Ford, is focused on cutting fleet sales, officials say.

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