• Bloomberg


Nissan Motor Co. and Toyota Motor Corp. both kicked off the year reporting strong U.S. demand. What they didn’t reveal was how many vehicles were sold to rental-car companies to hit those numbers.

Deliveries to fleets surged 48 percent last month for Nissan and 69 percent for Toyota, according to Cox Automotive. Of Nissan’s 41,550 and Toyota’s 24,281 vehicles sold to fleets in January, all but a few thousand were to rental-car companies.

Investors frown upon automakers relying too much on fleet deliveries because they tend to be bulk orders that are discounted. Rental cars often also end up in the used-vehicle market and can depress the value of autos owned by retail customers. Nissan, which set a target years ago to reach 10 percent market share in the U.S., has boosted its fleet business to get there.

“If you want to claim 10 percent market share, that’s a way to do it,” said Maryann Keller, an independent auto industry consultant in Stamford, Connecticut. “The danger is that you create a large number of late-model used cars that will compete with your new cars and bring down prices and profits.”

Both General Motors Co. and Fiat Chrysler Automobiles NV have been reigning in this part of their business. Fleet sales have been less than 20 percent of GM’s U.S. sales each of the last two years, though the company did boost these deliveries last month.

Fiat Chrysler has been pulling back on fleets since late 2016, and the automaker reduced these sales by half in January.

Nissan’s big jump in fleet sales is explained by the company clearing out 2017 model year vehicles to make room for 2018s, said Judy Wheeler, the automaker’s vice president of U.S. sales.

“It’s really just a timing situation for us,” she said.

The rental car business isn’t as unprofitable as it used to be, Keller said, because companies are buying nicely-equipped models that hold their value better. But it still doesn’t look good to some consumers when they see rental lots packed with too many of the same badge of vehicles.

“It really does affect the perception of the brand,” she said.

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