Raphael Stevens

Fleet, a once “dirty” word, and business, in the automotive industry has turned into a multibillion-dollar battleground for U.S. automakers, led by Ford Motor.
Its “Ford Pro” operations have raked in about $18.7 billion in adjusted earnings and $184.5 billion in revenue since 2021.
Such results have led Wall Street to praise the fleet and commercial operations, including with analysts calling it a “hidden gem” and Ford’s “Ferrari,” referring to the highly profitable Italian sports car manufacturer.

2023 Ford Super Duty F-350 Limited

DETROIT — A once “dirty” word, and business, in the automotive industry has become a multibillion-dollar battleground for U.S. automakers, led by Ford Motor.
The Dearborn, Michigan-based automaker has turned its fleet business, which includes sales to commercial, government and rental customers, into an earnings powerhouse. And Ford’s crosstown rivals General Motors and Chrysler parent Stellantis have taken notice, restructuring their operations as well.

“There’s much more of an emphasis now on profitability and how fleet can help that,” said Mark Hazel, S&P Global Mobility associate director of commercial vehicle reporting. “[Automakers] are looking at how they strategically go about this. It’s been a very targeted approach with how they deal with fleets.”
Many fleet sales, especially daily rentals, have historically been viewed as a negative for auto companies. They are traditionally less profitable than sales to retail customers and are used by automakers at times as a dumping ground to unload excess vehicle inventories and boost sales.
But Ford has proven that’s not always the case by breaking out financial results for its “Ford Pro” fleet business. The operations have raked in about $18.7 billion in adjusted earnings and $184.5 billion in revenue since 2021.
Such results have led Wall Street to praise the business, as analysts have called it a “hidden gem” and Ford’s “Ferrari,” referring to the highly profitable Italian sports car manufacturer.

“No other company has Ford Pro. We intend to fully press that advantage,” Ford CEO Jim Farley said July 24 during the company’s second-quarter earnings call, in which Ford Pro was the dominant performer.

Fleet sales typically account for 18% to 20% of annual industrywide U.S. light-duty vehicle sales, which exclude some larger trucks and vans, according to J.D. Power.
Part of the opportunity in fleet sales comes from the aging vehicles on U.S. roadways. The average age of the 25 million fleet and commercial vehicles on American roads was 17.5 years last year, according to S&P. That compares with light-duty passenger vehicles at 12.4 years in 2023.
While commercial sales, which are viewed as the best fleet sales, are estimated to be slightly lower this year compared with 2023, both GM and Stellantis have recently redesigned and doubled down on such operations. However, neither reports such results out separately.
“Breaking apart the fleet channel, we see that Commercial sales have been the weakest. And zooming in further, there are just two [original equipment manufacturers] that appear especially challenged: STLA and, to a lesser extent, GM,” Wolfe Research said in an investor note Wednesday.
Meanwhile, Ford’s commercial volumes have increased a “strong” 7% this year compared with 2023, Wolfe said.

While fleet sales data isn’t as available as retail, Wolfe Research estimates Ford is by far the leader in such earnings at a forecast of $9.5 billion this year. That compares with North American operations at GM at $5.5 billion and Stellantis around $3.5 billion, Wolfe estimates.
S&P Global Mobility reports Ford has been the fleet leader for some time. Since 2021, Ford’s market share of new fleet vehicle registrations (categorized by businesses with 10 or more vehicles weighing under 26,000 pounds) has been about 30%. GM, meanwhile, had around 21%-22% during that time, and Stellantis about 9%.
GM, citing third-party data, claims it outsold Ford last year in a segment of fleet sales: commercial vehicles sold exclusively to businesses (with five or more vehicles) and not individual buyers.
Ford, meanwhile, said it counts “all customers who register their full-size, Class 1-7 truck or van under their business,” not just those with five or more vehicles.
Ford claims to lead sales of commercial vehicles, categorized as Class 1-7 trucks and vans, with a roughly 43% share of U.S. registrations through May of this year. That’s up 2.3 percentage points compared with a year earlier, the company said.

Ford Pro

The Ford Pro business is led by sales of the automaker’s Super Duty trucks, which are part of its F-Series truck lineup with the Ford F-150, and range from large pickups to commercial trucks and chassis cabs.
It also covers sales of Transit vans in North America and Europe, all sales of the Ranger midsize pickup in Europe, and service parts, accessories and services for commercial, government and rental customers.

Ford Super Duty trucks are seen at the Kentucky Truck assembly plant in Louisville, Kentucky, on April 27, 2023.
Joe White | Reuters

But automakers, including Ford, also see fleet operations as a key driver in other ways, including for electric vehicle sales, as well as reoccurring revenue options such as software and logistical services.
“This revenue has gross margins of 50-plus-percent which drives significant operating leverage and improved capital efficiency,” Farley said during the quarterly call. “The major part of this new software business is actually Ford Pro.”
Ford is aiming to achieve $1 billion in sales of software and services in 2025, led by its fleet and commercial business.
“Ford Pro is core to Ford, and there is potential upside on volumes as well as in software and service,” BofA’s John Murphy said Thursday in an investor note. “On software, Ford Pro accounts for ~80% of Ford’s software subscriptions with an attach rate of only 12%, which is projected to grow to 35%+ over the next few years.”

Ram, GM retool

As Ford touts its fleet business, its closest rivals have amped up their operations.
Chrysler parent Stellantis is relaunching its “Ram Professional” unit this year with goals of achieving record profitability in 2025 and, eventually, becoming the No. 1 seller of light-duty commercial vehicles, which exclude some larger vehicles.
Christine Feuell, CEO of Stellantis’ Ram brand, declined to disclose a time frame for achieving that target but said the automaker believes it can do so after completely revamping its operations to focus on better mainstreaming operations for customers and earnings growth through sales and new services.
“It’s a highly profitable business. Not only on the product side, but on the services side,” she told CNBC during a media event last week. “Software and connected services are really a significant growth opportunity for us as well.
“We’re a little bit behind Ford in launching those services, but we definitely expect to see similar kinds of growth and revenues generated from those connected services.”

2023 Ram Chassis Cab

Ram makes up about 80% of Stellantis’ U.S. fleet and commercial business. It has a new or revamped lineup of trucks and vans coming to market, plus a host of connected and telematics products to assist fleet customers. It also increased the availability of financing and lending for commercial customers.
“This year truly begins our commercial offensive,” Ken Kayser, vice president of Stellantis North American commercial vehicle operations, said during the media event. “2024 is a foundational year for our brand, as we look to build momentum into 2025.”
GM isn’t sitting idle either. It has revamped its fleet and commercial business. It launched “GM Envolve” last year, its overhauled fleet and commercial business focused on fleet sales, digital telematics and logistics for commercial customers.
Sandor Piszar, vice president of GM Envolve in North America, said the Detroit automaker views the business as a competitive advantage not just to sell vehicles but to create reoccurring revenue and relationships with businesses.

2021 GMC Sierra HD pickup

GM Envolve, formerly known as GM Fleet, reorganized the automaker’s business to be a one-stop shop for fleet customers — from sales and financing to fleet management, logistics and maintenance.
“GM Envolve is a critically important piece of General Motors business. It’s a profitable business,” he told CNBC earlier this year. “We think it is a competitive advantage in the approach we’re taking in this consultative approach of a single point of contact and coordinating the full portfolio that General Motors has to offer.”
GM and Stellantis declined to disclose the earnings and profitability of their fleet businesses.

EV goals

GM Envolve includes the company’s EV commercial business BrightDrop, which was folded back into the automaker last year instead of it acting as a subsidiary. It didn’t accomplish the growth GM had expected, but EVs have an opening for automakers’ fleet and commercial sales.
“BrightDrop is a great opportunity for General Motors and for GM Envolve,” Piszar said, citing all-electric vans specifically for last-mile deliveries as well as small local businesses. “There’s a lot of use cases and as we ramp up production and get customers to try the vehicle that’s a key piece of our model.”
Unlike retail customers, many fleet and commercial customers have predefined routes or schedules that could accommodate EVs well because they drive locally in a region and could charge overnight when electricity costs are lower.

Brightdrop EV600 van
Source: Brightdrop

S&P Global reports EV startup Rivian Automotive led the U.S. in all-electric cargo van registrations last year, roughly doubling Ford, its closest competitor, at No. 2.
While the upfront investment is high, automakers have argued the eventual payback could be worthwhile for some businesses.
All three of the legacy Detroit automakers are touting such advantages to their fleet customers, while still offering traditional vehicles with internal combustion engines.
Stellantis and Ford also have started highlighting their portfolios of different powertrains such as hybrids and plug-in hybrid electric vehicles as adoption of EVs has not occurred as quickly as many had expected.
Ford last month announced plans valued at about $3 billion to expand Super Duty production, including to “electrify” Super Duty trucks.
“We’ve gone to, on all of our commercial vehicles, a multi-energy platform so we will offer customers the choice that we think no other competitor will have,” Farley said during the earnings call. “We believe we will be a first mover, if not the first mover, in multi-energy Super Duty.”
— CNBC’s Michael Bloom contributed to this report. More

The “godfather” of GM’s modern day Corvettes, Tadge Juechter, retired Wednesday after roughly 47 years with the automaker, including 31 years devoted to Corvette.
CNBC interviewed Juechter, 67, ahead of his retirement, touching on his career as well as the business of Corvette, including plans for an all-electric version and the potential of spinning off the brand and for an SUV.

2025 Chevrolet Corvette ZR1 Coupe with ZTK Performance Package.

DETROIT — Tadge Juechter’s first “taste” of Corvette working at General Motors was to research whether there were enough Americans who could afford a new high-performance model of the famed sports car, known as the ZR1, back in 1985.
Nearly 40 years later, not only are there enough people to afford such a vehicle, but GM’s new 2025 Chevrolet Corvette ZR1 stands as something of a coup de grace for Juechter, who retired Wednesday after roughly 47 years with the Detroit automaker.

The so-called “godfather” of the modern Corvette retired roughly a week after helping to introduce the new 2025 Corvette ZR1 — the most powerful and fastest version of the car ever produced.
“One thing all the great Corvettes of recent years and decades have had in common is you. Your knowledge, your skills, your hard work, your passion,” GM President Mark Reuss told Juechter when revealing the vehicle. “Thank you for making Corvette the glorious American sports car it remains. Thank you for making our company better.”

GM President Mark Reuss (left) on stage with Tadge Juechter, retiring Corvette executive chief engineer, during the reveal of the 2025 Chevy Corvette ZR1 on July 25, 2024.
Screenshot

Reuss announced last month that all 2025 Corvettes and beyond will feature a silhouette profile of Juechter’s head etched in window locations and the front tunnel reinforcement panel beneath every Corvette 
CNBC interviewed Juechter, 67, ahead of his retirement, touching on his career as well as the business of Corvette, including plans for an all-electric version and the potential of spinning off the brand and for an SUV.

Electric Corvette

GM has said an all-electric Corvette is coming, but it hasn’t given a time frame. Last year, the automaker introduced a hybrid version of the car called the E-Ray.

Juechter wasn’t inclined to disclose any details of an upcoming Corvette EV, but he believes the E-Ray proves GM can successfully electrify Corvette.
“Electrification can be a wonderful contributor to cars. I embrace efficiency. … We’re passionate about efficiency in everything that we do,” he said. “Efficiency makes a good sports car, too. So, I think electrification is just another technology, and we have to figure out how to play that technology in a way that resonates with our customers.

2024 Chevrolet Corvette E-Ray hybrid sports car

“E-Ray is the first step. We think long term, you know, decades long term. Yes, General Motors committed to 100% electrification, and it’s our job as engineers to figure out what’s the way to get there. We’re businesspeople, too. We have to bring our customers with us.”
Juechter said there’s been some “natural push back” to electrified Corvettes from the sports car’s fan base.
“We’re hoping maybe the E-Ray warms them to maybe this electrification thing’s not so bad,” he said.

Corvette spinoff and SUV

Wall Street analysts have said GM could better leverage the Corvette brand by expanding models and, to an extent, sales. In late 2019, Morgan Stanley analyst Adam Jonas said a Corvette sub-brand could be worth between $7 billion and $12 billion.
That has raised questions around whether Corvette would be better spun off from parent GM.
But Juechter doesn’t necessarily believe that’s the way to go.
“I don’t know if we need to spin off. I mean, Corvette’s at the heart of Chevrolet. It’s a pure business play. If you’ve got this brand equity, you can just keep it at home or you can choose to try to monetize it and put it outside.
“General Motors historically hasn’t done that. We embrace our important franchises, and this is a really important franchise,” he said.

Tadge Juechter, retiring Corvette executive chief engineer, during the reveal of the 2025 Chevy Corvette ZR1 on July 25, 2024.
Screenshot

Regarding leveraging the brand for future products such as an SUV, which has been under consideration for several years, that’s a little different, Juechter said, declining to confirm that any such plans or considerations exist.
“How you leverage it. That’s a question for the future. You see the models we’re rolling out. We’re making the maximum of this mid-engine architecture. And, you know, I’ve made no secret I work on EVs, too, and trying to bring some of the performance spirit into the EV space. How that gets applied in the future and how it gets branded, that’s a story for another day,” he said.
The concept of a performance car brand producing a SUV or crossover would have been blasphemous years ago, but several brands such as Porsche, Lamborghini and even Ferrari have done so as consumer preference has moved away from the traditional car model.

Favorite Corvette

Juechter has been a part of four separate generations of Corvette – from the fourth-generation ZR1 to the new mid-engine, eighth-generation of the sports car.
The first Corvette he purchased for himself was the sixth-generation 2006 Corvette Z06.
“It’s hard to pick a favorite. It’s like what’s your favorite child. Actually, it’s harder than who’s your favorite child. Anyway, I won’t get into parenting, but every one of these cars we pour our heart and soul into and they all have their specialness about them.
“I don’t know. I can’t pick one. If I’m forced to pick one, I say money talks. I bought that Z06. I put my own money down on that car. … That car was very special to me,” Juechter said.
Juechter said he wasn’t planning on purchasing the Corvette, but he saw a “fully decked out one” coming off the line at the Corvette plant in Bowling Green, Kentucky, and said that he had to have it.

2020 Chevrolet Corvette

He has since sold that car and last year purchased an eighth-generation Corvette Stingray convertible as a “retirement car,” given he won’t be getting any free Corvettes for testing.
“I’ve never been a convertible guy, but it’s my wife and my touring car — like cross-country touring car. I’m not going to track it. It’s going to be my daily driver,” he said. “If you just have a daily driver, a cruiser, a Stingray is pretty sweet.”

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Sustainable diapers brand Kudos is set to launch in 375 Target stores nationwide as it looks to disrupt the legacy consumer products industry.
Kudos, founded by “Shark Tank” alum Amrita Saigal, makes diapers that are 100% lined with cotton and made with other degradable materials like sugarcane and trees.
The diapers are more absorbent than competitors like Pampers Pure Protection, Huggies Special Delivery and Honest diapers, according to independent testing conducted by Diaper Testing International. 

Kudos diapers founder Amrita Saigal with her daughter
Courtesy: Kudos

Throughout modern history, parents have only had one real option when it comes to disposable diapers: plastic.
The single-use products are typically made with fossil fuels like petroleum and can take hundreds of years to break down, making them the third-largest consumer item in U.S. landfills, according to the Environmental Protection Agency. 

Plus, they’re not as breathable as other materials, which could make incidents like diaper rashes more common. 
Still, plastic diapers from mega brands like Procter & Gamble-owned Pampers and Kimberly-Clark-owned Huggies continue to dominate the market. Amrita Saigal, founder and CEO of Kudos, is looking to change that. 
The Massachusetts Institute of Technology graduate, mechanical engineer and “Shark Tank” alum developed a sustainable diaper that uses some plastic, but is 100% lined with cotton and incorporates other degradable materials like sugarcane and trees, she tells CNBC. 
Later this month, it’ll be the first diaper of its kind to land in retail stores when it launches in approximately 375 Target locations nationwide. 
“I am so excited to partner with Target to make history as the first 100% cotton-lined disposable diaper to hit retail shelves,” Saigal said in an interview with CNBC. “It’s just a really big deal for us, especially because Target does not carry many brands.”

Kudos Diapers
Courtesy: HatchMark Studio

In the three years since its launch, Kudos has raised more than $6 million in funding. It closed a $3 million round last month with investments from Precursor Ventures, Xfund and Oversubscribed Ventures. 
In the last 12 months, it’s sold more than 20 million diapers and grown sales by more than 100%.

Disruption through innovation 

Saigal says she’s long been fascinated by consumer packaged goods and has spent her career figuring out ways to redesign everyday products, like sanitary pads and diapers, in her bid to disrupt an industry long dominated by corporate superpowers.
Her goal? Reduce the globe’s reliance on fossil fuels by building out new supply chains and developing sustainable products that are just as effective – if not better – than competitors. 
“I’m not launching a product that is not at par or better than Pampers,” said Saigal. 
“Are there eco-friendly alternatives? Yes, but they don’t perform and when it comes to a diaper, we cannot have something that doesn’t perform. You have one blowout, one leak, your parents are already sleep-deprived. They need things that work. They’re not willing to compromise performance for eco-friendly.” 
After three years of research and development, Saigal developed a diaper that can absorb far more fluid than competitors like Pampers Pure Protection, Huggies Special Delivery and Honest diapers, according to independent testing conducted by Diaper Testing International. 

Pampers didn’t return a request for comment. Honest declined comment.
A spokesperson for Kimberly-Clark, which owns Huggies, told CNBC it could not comment because it had not seen the study conducted by Diaper Testing International.
Saigal also developed a proprietary “DoubleDry” technology that brings two layers to the diaper instead of one, which allows it to wick away moisture. 
“If you were just to take out the plastic and replace it with cotton, your diaper would fail miserably, because what would happen is your baby would pee and all the urine would just pool, and then your baby’s butt would be wet,” said Saigal. “How do you quickly wick away that urine and poop and then pull it through the layers of the diaper and then evenly disperse it so your baby’s bottom feels dry. So that’s really what our innovation is.” 
Kudos is far smaller than its mightier competitors, but Saigal said its size has made the business uniquely positioned to build out new cotton supply chains and help suppliers grow alongside the company.
“For a company like P&G to do this, you’re talking … hundreds of millions of dollars in order to reconfigure their equipment to be able to do it … it’s really hard with their existing supply chains to be able to allow natural materials to actually work in their current process,” said Saigal, who worked for P&G as a design and manufacturing engineer after graduating from MIT.
Even sourcing natural materials for use instead of plastics would be challenging for larger companies because of their scale, Saigal said. Suppliers like cotton farmers tend to have buyers and partners locked in before they grow the requested materials, and since there isn’t yet mass demand for cotton from diaper makers, those supply chains don’t really exist yet at scale, she said.
As more and more smaller brands work with natural material suppliers to develop new supply chains, Saigal hopes that big brands will adopt natural materials over plastic more widely, which could reduce the price of those materials and in turn, make plastics more expensive. 
“When do you really get mass adoption of natural materials? The reality is, when natural materials become cheaper than plastic,” she said. 

Diaper economics 

Kudos faces a daunting landscape of scale.
Buzzy brands that start out by selling directly to consumers and then make their way into retail can face difficulties because of the high cost of inventory and onerous payment terms that come with it. 
Hello Bello, a hypoallergenic, sustainable diaper brand founded by celebrity couple Kristen Bell and Dax Shepard, filed for bankruptcy in October as it struggled to develop its supply chain after it began selling in retailers like Walmart. 
Over the last few years, a number of other consumer product companies and direct-to-consumer brands have faced similar fates after coming up in a funding environment that prioritized growth over profitability.
“In the heyday of DTC, it was like, ‘Don’t worry about the unit economics now, right?’ Like, just top-line growth, top-line growth, top-line growth, and then once you’re at $100 million, $200 million in revenue, then let’s figure out how to make this profitable,” said Saigal, who founded her company in 2021 and secured funding from “Shark Tank” host Mark Cuban and guest Shark Gwyneth Paltrow in 2023. 
“I don’t think that model works anymore,” she continued. “It’s like grow slower, but have the unit economics work from day one. I think the brands that are going to be successful now have to have a very, very tight lock on their numbers and their unit economics from the beginning.” 
In the year ahead, Saigal’s No. 1 priority for her business is to reach profitability and to get there, she’s keeping her team lean and being strategic with the capital she’s using to pay for inventory ahead of her launch into Target. She’s also had to toe a fine line when it comes to pricing. Her products are more expensive to make than her competitors’, but if the price is too high, she risks alienating potential buyers. 
Currently, parents can buy Kudos for between 41 cents and 70 cents per diaper, depending on the size. That compares with a box of Pampers Pure Protection, which runs between 34 cents and 75 cents per diaper, according to a listing on Target.com. 
“We are a little bit more expensive just because our raw materials are more expensive, but I’ve tried to keep it as minimal as possible,” said Saigal. “I care so much about being premium, but accessible. That is like exactly what I want to do, so that we are accessible to as many people, and cleaner materials are not out of reach.”
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank,” which features Mark Cuban as a panelist. More