When it was introduced in 2006, the Dodge Caliber was so hot that buyers sometimes waited two to three months for the Belvidere-made sporty crossover.
But the craze faded. And with the auto industry struggling to find U.S. buyers, Chrysler LLC sold more Calibers to fleet customers — 28,256 — than to the general public — 21,682 — in the first six months of the year.
Chrysler officials have taken great pains to say a large part of the company’s 23 percent decline in overall sales this year compared with 2007 are planned reductions in fleet sales. Sales of all of the major automakers are down compared with 2007.
But according to statistics compiled by R.L. Polk & Co., an automotive market research firm, fleet sales aren’t just propping up the Caliber. They’re carrying much of the Chrysler lineup.
Eight of the top 20 vehicles in fleet sales through June were Chrysler-made vehicles, including the Caliber (the company’s flagship vehicle), the Chrysler Town & Country minivan and the PT Cruiser, which introduced the retro era when it hit the market in 2000. The vast majority end up on Avis, Enterprise and Hertz lots nationwide.
R.L. Polk compiles fleet and retail data by tracking car registrations after the vehicles are purchased.
Frank Williams at The Truth About Cars found fleets made up 35.6 percent of Chrysler’s sales. That was the highest of any of the volume car builders selling in the U.S. Kia was a close second at 34.3 percent, then Ford Motor Co. at 32.7 percent and General Motors Corp. at 26.4 percent.
“If it weren’t for the fleet sales, Chrysler wouldn’t be selling much of anything,” said Aaron Bragman, auto analyst with consulting firm Global Insight Inc. “Chrysler has tried to cut back fleet sales a little, but the company still is going to make deals to keep the plants running. They can’t afford to cut fleet sales completely.”
But a reliance on sales to fleet customers hurts the bottom line. Companies buying in bulk usually receive a discount, cutting the company’s profit per vehicle.
Fleet cars, especially those sold to rental car companies, are usually sold into the used car market after one or two years. The flood of high-mileage cars on the used car market hurts their resale value, which can cost dealers future sales because some buyers take resale value into account when buying a vehicle.
“In the age of $4 a gallon gas, there’s a big demand for subcompact cars,” said Eric Merkle, an analyst with Crowe Chizek and Co. In 2006, 35 percent of the Caliber sales were to fleets, and it was 40.8 percent in 2007. So far in 2008, fleet sales make up 56.6 percent of the Caliber sales.
“Look at what Ford is doing with the Focus and GM is doing with the (Chevrolet) Cobalt. The Caliber isn’t anywhere near those cars. That tells me it has some real shortcomings. The powertrain is not competitive. The interiors are unpopular.”
Through June, according to the Polk data, Ford sold 62,611 Focuses to the general public compared with just 19,664 into fleet, and GM dealers had 59,310 retail Cobalt sales versus 37,463 fleet sales. The retail sales of the Cobalt are running about 9 percent below 2007’s pace while the Focus is down about 1.3 percent. The Caliber’s retail sales, however, are nearly 30 percent behind its 2007 totals.
“(Chrysler) needs to make major improvements to the Caliber, but they’ve already missed their window of opportunity,” Merkle added. “When the Caliber came out, it was very different, and people were interested. Now, they have to convince them to come back, and that is very hard to do.”
The Jeep Compass and Jeep Patriot, the small SUVs coming out of Belvidere, aren’t nearly as dependent on fleet sales. The Compass had 14,608 retail sales in the first half of the year compared with 3,505 fleet sales, and the Patriot had 23,601 retail sales — more than the Caliber — compared with just 4,786 fleet sales.
Still, of the three vehicles, the Caliber was designed to be the volume car, the one that needs to sell to keep workers busy. Sluggish sales in 2007 convinced the company to convert the plant from a three-shift operation with 3,800 workers to a two-shift operation with about 2,700 in March.
“Chrysler made a huge investment in that plant, and my guess is because of that they’ll eventually move something else in there,” Merkle said. “But there are no guarantees. Automakers have made big investments and then closed the plants when the vehicles didn’t sell.”
Bragman of Global Insight is less pessimistic.
“I have a feeling that Chrysler has been able to get good enough deals that they are making money on the fleet sales,” Bragman said. “Rental car companies are now holding on to their cars a little longer, but they are always going to need more. The sales are there when Chrysler needs them.”