GM to Cut Sales to Rental Fleets in 2007

General Motors' January U.S. sales will be lower in 2007 largely because of a significant drop in sales to daily rental fleet companies, according to Automotive News.

Mark LaNeve, GM's vice president of vehicle sales, service and marketing, says that even if retail sales improve, the reduction in daily rents will result in an overall downturn.

GM's sales to daily rental fleet companies will drop by 120,000 units in the first half of the year compared with the year-ago period—25 percent of that will take place in January, LaNeve says. GM's other big reductions in its daily rental fleet sales this year will be in May and June, Automotive News reports.

GM plans to sell 596,000 daily rental units in 2007. The 2008 model negotiations with rental companies have not been completed, so that could affect GM's plans this year. In 2006, GM sold 700,327 units to daily rental fleets.

GM's go-to-market strategy is aimed at reducing daily rental fleet sales in order to improve residual values on its vehicles.

"Daily rental is good business," LaNeve said. "You get the benefits if you can take it down over time and not oversupply the used market, which impacts prices. 2007 will be our third year of significant declines. We've discontinued Buick Rendezvous, Pontiac Grand Ams and Pontiac Azteks from rental. We don't do as many (Buick) LaCrosses."

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