Welcome Extreme Investor Network readers! Today, we are diving into the world of fleet sales in the automotive industry, a topic that has transformed from a “dirty” word to a multibillion-dollar battleground for U.S. automakers. Leading the charge is Ford Motor, based in Dearborn, Michigan, which has successfully turned its fleet business into an earnings powerhouse, surpassing competitors like General Motors and Stellantis.
Traditionally, fleet sales, especially daily rentals, were viewed as less profitable than retail sales. However, Ford has defied this norm by showcasing impressive financial results for its “Ford Pro” fleet business, generating billions in earnings and revenue since 2021. Wall Street has taken note, with analysts praising Ford’s fleet business as a “hidden gem” and comparing it to Ferrari due to its profitability.
Ford CEO Jim Farley expressed confidence in Ford Pro’s future performance, highlighting its dominant role in the company’s recent earnings calls. Fleet sales play a significant role in the U.S. automotive industry, accounting for 18% to 20% of annual light-duty vehicle sales, with ample opportunity for growth given the aging fleet vehicles on American roads.
While Ford leads the pack in fleet earnings, competitors like GM and Stellantis have also revamped their fleet operations to capitalize on this lucrative market. Stellantis, in particular, is relaunching its “Ram Professional” unit with the goal of becoming the top seller of light-duty commercial vehicles. GM, on the other hand, has introduced GM Envolve, focusing on digital telematics and logistics for commercial customers.
One key aspect of fleet sales is the potential for electric vehicle adoption, which offers automakers additional revenue streams and sustainability benefits. Ford aims to achieve $1 billion in sales of software and services by 2025, driven by its fleet business. GM’s EV commercial business, BrightDrop, is also making strides in the market, showcasing the potential of all-electric vans for last-mile deliveries.
As the automotive landscape evolves towards electrification, Ford, GM, and Stellantis are emphasizing the advantages of different powertrains, including hybrids and plug-in hybrid electric vehicles. Ford’s recent announcement to expand Super Duty production and electrify their trucks demonstrates a commitment to offering customers a diverse range of options.
At Extreme Investor Network, we recognize the transformational impact of fleet sales in the automotive industry and the pivotal role it plays in driving revenue and innovation for U.S. automakers. Stay tuned for more insights and analysis on the latest trends in business news and investment opportunities.