Market Insight: Fleet sales slip

POOR supply has placed a severe dent in the prospects of tens of thousands of private new-car buyers, but it has also placed the fleet industry on alert as replacement times blow out and product selection becomes increasingly difficult.

There are allegations that some OEMs and dealerships are giving preference to private buyers because, simply, there is more profit in selling to individual customers than volume sales to fleets, including rental companies and government agencies but also novated lease clients.

The first quarter sales of new vehicles for 2023 show elements of this allegation, although there are other factors affecting the ratio of fleet to private, including vehicle type and the ability of a particular brand to overcome production shortages.

There are also the erratic shipping schedules, including the hold ups at Australian ports attributed to quarantine issues that not only froze ships from certain markets, but choked most other shipments.

The fleet industry is now having to push the replacement timetable out from three- or five years to seven as it awaits delivery of its orders.

Much of the blame is levied at the COVID-19 pandemic. The virus literally went viral and clogged much of the free trade and production of most goods, obviously including vehicles as demand continued.

In the past five years, fleet business – including rental, government, and private business – has seen its passenger car volume crumple by more than half, down 58 per cent since 2018. By comparison, private passenger car sales have also fallen but only by 35 per cent.

It is a similar issue with SUVs. The fleet market for SUVs from 2018 to 2022 (the full calendar years), is down 16 per cent with most of the buoyancy attributed to the sheer popularity of SUVs.

The only upside is light-commercial vehicles. In the same five years, fleet sales are up 1.3 per cent. Clearly, fleets are big on LCVs.

Yet in the same period, sales of LCVs – and we are talking mainly utes – to private buyers are up 20 per cent. Traditionally, fleet sales outpace private sales.

The top-selling Ford Ranger 4x4 has seen its sales rise by 17 per cent in the five years; the Isuzu Ute D-Max 4x4 is up 35 per cent; and the Toyota HiLux 4x4 is up 20 per cent.

Sales of SUV to fleets are also down compared with those to private buyers, with the period from 2018 to 2022 showing a 32 per cent increase. 

Much of this is related to the growth of the SUV sector but the increase is still sharply higher than the 19.7 per cent decline in fleet sales. Consider that a portion of the SUV sales are through novated leases – where the driver chooses the car – and it indicates another fall off in the vehicles being bought by, or delivered to, fleet businesses.

The passenger car purchases by fleets are down across the board, with the volume going to rental companies down by 47 per cent in the five-year period.

Rental companies are also finding it hard to get SUVs, with deliveries down 19.5 per cent in 2022 compared with 2018. 

However, these companies are up on their stocks of LCVs with a 69 per cent increase in deliveries in the period. The increase to the 12,092 LCVs for rental companies in 2022 is also up almost 50 per cent on the deliveries made in 2020, when supply started tightening.