Ford Makes Money from Fleet Business, GM and Stellantis Notice
- Ford has successfully transformed its fleet operations into a significant profit center.
- This success has drawn the notice of competitors General Motors and Stellantis.
- The shift highlights the competitive landscape in the automotive industry as companies adapt to market pressures.
The average age of the 25 million fleet and commercial vehicles on American roads reached 17.5 years last year, according to S&P. Despite a slight decline in commercial sales anticipated for this year, major automakers like GM and Stellantis are investing in redesigns and enhancements to their fleet operations. Wolfe Research estimates that Ford leads the market in fleet earnings, projecting $9.5 billion for 2023, primarily driven by its Super Duty trucks within the F-Series lineup. Ford's Pro business is not only focused on traditional vehicle sales but also aims to capitalize on electric vehicle (EV) sales and recurring revenue streams through software and logistical services. The company has set a target of $1 billion in software and services sales by 2025, with its fleet and commercial sector playing a crucial role. BofA analyst John Murphy emphasized the potential for growth in both vehicle volumes and service offerings within Ford Pro. Stellantis, with Ram accounting for about 80% of its U.S. fleet business, has also revamped its approach to fleet sales. The launch of "GM Envolve" by General Motors signifies a strategic shift towards a more integrated fleet and commercial business model, focusing on digital telematics and logistics. GM Envolve includes the EV commercial initiative BrightDrop, which aims to provide all-electric vans for last-mile deliveries, enhancing GM's competitive edge in the market. Overall, the fleet vehicle market is adapting to changing consumer demands and technological advancements, with automakers positioning themselves for future growth in both traditional and electric vehicle segments.