Strategy Sound?

Just how important is sales leadership in the U.S. market?

That answer may be changing a bit, as Ford Motor Co. aggressively dials back sales of Blue Oval products to daily rental fleets in an attempt to boost residual values of its new cars.

Although Ford led the U.S. sales chase for the 18th straight year in 2004, Ford Div. edged out General Motors Corp.'s Chevrolet brand by a mere 15,440 vehicles in overall sales.

Ford's light-vehicle lead in 2003 was 205,422 units, but the margin was eradicated in 2004. Ford executives have said Chevy is picking up momentum thanks to a reliance on rental fleet sales, and Ford Chief Operating Officer Jim Padilla fired another salvo at its cross-town rival during a Detroit auto show interview.

Padilla was dismissive when asked if Ford's move to concentrate on growing its retail share, rather than its penetration overall, inevitably would cede U.S. sales leadership to Chevy.

“I wouldn't go for their (GM's) strategy for anything. If they want to increase their rental-fleet business by 160,000 units, that's dandy. Go check their residuals and ask what's the best business plan for their customers and their bottom line,” he says. “That's not a tradeoff we're willing to make.”

But Ford is not abandoning rental fleets. It will pump most of the roughly 250,000 Taurus sedans it plans to sell in 2005 into rental and other fleets.