Fleet Sales Grow with Tax Changes

Last year’s tax law changes may have created a permanent change in fleet sales.

During a recent presentation, economists from Cox Automotive discussed how the reform impacts who buys fleet cars and why.

The new law makes it much attractive for all businesses to purchase fleet vehicles, said Cox Automotive chief economist Jonathan Smoke, including small businesses. This creates new opportunities for all dealers, including independents.

In fact, local businesses have become the biggest fleet buyers this year.

In the past, analysts viewed higher fleet sales as a negative as they sold at a steep discount and hurt residual values with a floor of poor selling cookie-cutter vehicles.

“This time it looks different,” Smoke said.

He said rather than dumping vehicles on the cheap, many companies are doing something they are starting to call “fleetailing.” In other words, they are selling vehicle that closely match consumer preferences at prices closer to retail.

This is especially true for some of the biggest fleet customers, rental companies, which now retail almost half of their off-fleet units.

The industry could feel more effects as time goes by, Chesbrough said. For example, companies might provide fleet vehicles as a form of compensation for executives, a practice common in Europe.

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Last modified on Monday, 15 July 2019 16:40