Rental Car Retreat Cuts Sales At Ford And G.M.

DETROIT, Feb. 1 — Sales by Detroit’s two largest automakers fell considerably in January as they pulled back from deliveries to rental car companies to focus on more profitable transactions at dealerships.

The Ford Motor Company said today that its sales last month declined 22 percent in the United States from a year earlier, when adjusted for an additional selling day this year. Ford sent 65 percent fewer vehicles to rental car companies, while retail sales were off 5 percent.

General Motors said its sales declined 20 percent as it reduced rental car deliveries by 35,000. Through June, G.M. plans to sell 120,000 fewer vehicles to rental companies.

Ford has said sales to rental car companies should drop by double-digit percentages every month this year, which would drag down overall sales. Ford expects to sell slightly more than 700,000 vehicles to rental companies this year, down from 900,000 two years ago.

The German-American automaker DaimlerChrysler said sales by its Chrysler Group division fell 3 percent on an adjusted basis. For a second straight month, DaimlerChrysler outsold Ford.

Chrysler has not been as vocal about efforts to cut back on sales to rental car companies. In fact, the percentage of its sales that went to such fleet operators as rental companies increased to 30.1 percent through the first nine months of 2006 from 26.4 percent in 2005.

For Ford and G.M., the reduction in rental sales comes after they already have given up considerable market share. Auto industry analysts say the strategy is needed to overcome billions of dollars in losses and return to profitability.

“What they’re finding is that in order to achieve better resale values for leasing, this is a practice that they have to cut back on,” said Ron Pinelli, president of the Autodata Corporation, an industry statistics company in Woodcliff Lake, N.J. “It’s painful, but it’s the right move for them.”

G.M.’s vice president for North America sales and marketing, Mark R. LaNeve, said last week that the company intended eventually to compensate for fewer rental cars with more retail sales, which have larger profit margins. But, he said, “our total sales will be down in January.”

Edmunds.com, a Web site that gives consumers car-buying advice, projected that overall sales for the industry were down 3.1 percent in January, when adjusted for an additional selling day this year.

All three Detroit automakers have substantially reduced production to more closely match supply with demand.

Together, they are expected to account for 52.4 percent of the American market in January, down from 57.1 percent a year ago, Edmunds said. Toyota and Honda are expected to gain market share.

The biggest reason for Ford’s decline is its decision last fall to stop making the Ford Taurus, a midsize sedan that was once the best-selling car in the country but which ended its life as a staple in rental car fleets.

Ford also stopped building the Freestar minivan, which was also sold largely to rental car companies.

G.M. and Chrysler do not have any models sold primarily to rental companies.

The decline in fleet sales is too big to be offset by sales of new vehicles like the Ford Edge and Lincoln MKX, two crossover vehicles that Ford began selling late last year after a month-long production delay.

About 20 percent of Ford dealers, or more than 900, still have not received shipments of the Edge, said Cisco Codina, a group vice president for sales and marketing, although the company has based its turnaround efforts on the success of the model.

Mr. Codina said that bad weather in parts of the country had prevented shipments from reaching dealers, but that a full supply of Edge models should be available by next week.

Micheline Maynard contributed reporting from Dearborn, Mich.

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