Ford Leads the Charge in Fleet Sales as Detroit Automakers Rethink a Once-Dismissed Business
The automotive industry’s view of fleet sales has done a complete 180. Once considered a low-profit, "dirty" business, fleet sales are now a major battleground for US automakers, with Ford Motor emerging as a dominant player. Ford’s "Ford Pro" fleet business has become a financial powerhouse, demonstrating the huge potential in this segment. While competitors like General Motors and Stellantis are scrambling to catch up, Ford’s focus on profitability and innovation is driving its success.
Key Takeaways:
- Fleet sales are booming, prompting major automakers to re-evaluate their strategies.
- Ford Pro is a key driver of Ford’s profitability, generating billions in revenue and adjusted earnings since 2021.
- The aging vehicle fleet on US roads presents a massive opportunity for fleet sales.
- Electric vehicles are increasingly becoming a critical component of fleet operations.
- Software and services are creating new revenue streams for automakers in the fleet market.
Ford Pro: A New Era of Profitability
The success of Ford Pro can be attributed to a strategic shift towards prioritizing profitability and catering to the unique needs of fleet customers. The business leverages the popularity of Ford’s Super Duty trucks, which are popular with commercial and government buyers. Ford’s Transit vans, Ranger midsize pickup in Europe, and service parts, accessories, and services further expand its offerings.
Ford Pro is taking a leading role in pushing electric vehicle adoption in the fleet market. The ability to optimize routes and schedule charging overnight when electricity rates are lower makes electric vehicles a viable option for many fleet businesses. While the initial investment in EVs is high, automakers emphasize the long-term benefits in terms of fuel savings and reduced environmental impact.
Ram and GM Revamp Their Fleets
Recognizing Ford’s dominance, Stellantis is relaunching its "Ram Professional" unit with a focus on profitability and eventually claiming the top spot in light-duty commercial vehicles. Stellantis’ CEO Christine Feuell emphasizes the profitable nature of the fleet business, highlighting the growth potential in software and connected services.
GM is not letting Ford take the lead. Their revamped fleet and commercial business, GM Envolve, focuses on providing end-to-end services including sales, financing, fleet management, and logistics. GM Envolve’s vice president Sandor Piszar highlights the competitive advantage of a single-point-of-contact approach, offering a comprehensive portfolio of products and services. However, neither Stellantis nor GM disclose their fleet earnings, leaving their performance compared to Ford’s success unclear.
The Future is Electric and Digital
GM Envolve’s BrightDrop, an all-electric van business aimed at last-mile deliveries, highlights the potential of EVs in the fleet market. EV startup Rivian has also captured a significant share of the all-electric cargo van market.
The Detroit automakers are making significant investments in new technologies to remain competitive in the fleet market. Ford’s plans to electrify its Super Duty trucks demonstrate their commitment to staying ahead in this rapidly evolving sector. While traditional vehicles remain important pillars, the focus on multi-energy platforms offering customers a choice between gasoline and electric options shows the adaptability of these automakers.
The future of fleet sales lies in innovation and a customer-centric approach. Software and services are becoming crucial revenue streams, offering fleet customers greater efficiency and data insights. As the competition intensifies, automakers are determined to push the boundaries and redefine fleet sales, transforming a previously undervalued market into a vital driver of future growth.
