Declining sales could leave the Detroit Three with too many plants in North America.
U.S. carmakers said on Tuesday they continued to slash low-margin sales to daily rental fleets in July as the overall pace of U.S. car and light truck sales fell for the fifth straight month.
The annualized pace of U.S. car and light truck sales in July fell to 16.73 million vehicles, down from 17.8 million vehicles a year earlier, according to Autodata, which tracks industry sales.
Several major automakers, including GM, Ford, Fiat Chrysler, Nissan and Hyundai hymtf said they sharply reduced rental car sales in July, and they portrayed the decisions as putting profit ahead of sales volume.
Automakers have used low-margin sales to rental fleets to avoid factory shutdowns. With more flexible labor agreements, the Detroit automakers have shifted course. They are quicker to idle factories to reduce supply, and they are demanding higher prices, industry officials said. Fiat Chrysler has killed several models it once sold to fleets.
Big U.S. rental car companies such as Hertz htz and Avis car at the same time are restructuring their fleets as values decline for rental cars they resell, and as ride services such as Uber uber bite into their business.
In a more troubling sign for Detroit, combined sales of large pickups fell 4%, and sales of large sport utility vehicles declined by 20%. Only the Ford F-series, up 6%, improved on year-ago results among major truck models.
Declining sales could leave the Detroit Three with too many plants in North America, Jeff Schuster, a forecaster with LMC Automotive, said on Tuesday at an industry conference in Traverse City, Mich. The decline in July’s annual sales pace from a year ago equates to the output of four assembly plants.
GM gained little ground in its effort to reduce inventories of unsold vehicles. The automaker had 104 days of supply at the end of July, down from 105 days at the end of June. GM has promised investors to reduce inventories to 70 days by year-end.
Ford said July sales fell 7.5%, but inventory fell to 77 days from 79 the previous month. Fiat Chrysler said sales dropped 10%.