Automotive News is having problems calculating SAAR—they show September as 12.2m as opposed to 11.7m—but they are dead on in reporting that fleet sales have been buoying this "recovery." This is something we have been reporting for the last few months as well.
Fleet sales are not inherently bad. As Chrysler has shown this year, even high rates of fleet business can be a profitable alternative to incentives.
At least that is true when looking at a single car company. But what about when most of the industry looks to fleet as a way to maintain production levels without resorting to incentives?
To the consumer, a reduction in incentives looks like a price increase. Price increases—especially in this troubled economy—are a sure-fire way to reduce demand.
Raising process and shifting to fleet business are probably good for automaker profitability. But it also occurs to me that one reason why this recovery is so unusual is that along with consumers rebuilding their personal balance sheets, they are balking at these price increases.
Just a thought…