Automakers in Hot Pursuit of Police Cars

As carmakers trim rental fleet sales, police departments remain major customers for boxy sedans—and a source of profits

Even as American auto manufacturers attempt to trim annual sales to daily rental companies (see BusinessWeek.com, 10/12/06, "Why You're Paying More to Rent a Car"), they are in hot pursuit of competitive and lucrative police vehicle fleets. The Detroit Three are all vying for a larger piece of market share of upgraded and heavily modified versions of mainstream vehicles tailored for law enforcement.

Nearly all the 65,000 to 70,000 vehicles bound for local precincts and highway patrol outposts every year are purchased as part of multiyear contracts, depending on fleet mileage and operating conditions. Although many police departments will further customize their cruisers in the aftermarket, before they are delivered they are heavily modified by the manufacturers, which can sharply boost the price.

FASTER, STRONGER, PRICIER.

For example, Dodge's standard rear-wheel-drive police Charger, which has an MSRP of $26,825, comes with a 3.5-liter V6 that produces 250 horses, and the car is certified to operate at speeds up to 150 mph, whereas the entry-level $21,575 Charger SE available to civilians has a 2.7-liter V6 and 190 horses. On top of that, police cars are equipped with heavy-duty suspension, brakes, and engine cooling systems. Not to mention roof-mounted flashing lights—or the more than $5,000 price difference.

Vehicle upgrades are intended to fortify vehicles that have to perform in a range of environments and situations more challenging than what most civilian vehicles face. Lt. David Halliday runs the Precision Driving Unit of the Michigan State Police, which conducts extensive vehicle testing widely used as benchmarks by departments throughout the country. Halliday says that cars are as likely to reach high speeds as they are to idle for hours on end, both taxing to the car's engine.

Interiors undergo reconfiguration as well. Most feature inoperable rear-seat door locks and grills or partitions separating the front and back compartments of the cabin. Many manufacturers also relocate gear shifters from the center console to the steering column, freeing up space for a laptop or other electronic equipment.

CROWN VIC WEARS CROWN.

According to a report from Polk Data, from October, 2005, through January, 2006, fleet sales accounted for approximately 31% of all sales for Chrysler and General Motors (GM), an increase of 24% and 19% increase respectively year-over-year. At Ford (F), fleet sales were 29% of overall sales, a rise of almost 21%. The automakers do not break out what percentage of their sales are to police departments.

For law enforcement agencies across the U.S., Ford's Crown Victoria is the undisputed market leader. The aging model has been the No. 1 police vehicle for a decade. Of the 63,939 Crown Vics sold in 2005, 50,000, or 78.8%, were converted to police vehicles, according to John Arnone, a manager of Ford's Canadian manufacturing operations. (Ford manufactures the car at its plant in St. Thomas, Ont.)

But now, DaimlerChrysler's (DCX) Dodge brand is making an aggressive push to regain market share in police fleets. After dominating sales between the 1960s and 1980s—largely thanks to its now-defunct Plymouth brand—Chrysler dropped out of the market in the 1990s only to resurface with a modified Dodge Intrepid in 2002.

DODGE MUSCLING IN.

Last year, the company began selling police versions of its popular retro-inspired muscle cars, the Charger (see BusinessWeek.com, 10/12/06, "Dodge's Hard Charger") and Magnum.

Built on newer platforms than competiting vehicles, the Charger and Magnum have a performance advantage over offerings from GM and Ford.

Chrysler's Roxie Thomas, senior manager for government sales, says the decision to offer a Charger model to police departments was simultaneous with the company's re-entry into the rear-wheel-drive sedan market and not based on the model's star status among consumers. Between its introduction in October and the end of the year, about 3,500 Chargers were sold to police departments throughout the country, says Thomas.

Is Ford feeling threatened by the Charger? Tony Gratson, government sales manager, cites the Crown Vic's utility—it has more interior cabin room and a larger trunk than others—and reputation as hedging factors. "We've been doing this for a very long time," says Gratson. "And we've been the industry leader since 1996."

TRIED AND TRUE.

The legacy argument may prove potent. Wes Brown, a partner in the Los Angeles automotive marketing research firm Iceology, says: "Even though the Charger is the first new police vehicle to also have a lot of consumer interest, it may be beneficial to stick with what you know in a dangerous situation."

General Motors, meanwhile, maintains the second-place spot, having sold about 12,000 Chevrolet Impalas to police departments in 2005. The Impala is smaller than competitors and has a front-wheel-drive system. According to Michigan's Halliday, many departments have preferred rear-wheel-drive vehicles for their durability.

But the automakers still have to make their prices competitive. Rob Minton, GM's communications director for fleet and commerical operations, says municipalities and police departments focus heavily on cost. "It's a very dollars-and-cents business," he says. "They're spending taxpayer money and obviously they have to be judicious."

PATRIOTIC POLICE.

Of course, requirements around the globe differ drastically. From Europe to Asia, police vehicles follow strictly patriotic lines—sometimes to amusing ends. The Swedish police, for example, drive modified Volvo V70 station wagons. Granted, the often suburban cars are equipped with a raft of performance-oriented upgrades that take them into speedier territory.

Even supercar maker Lamborghini got into the act when it donated a Gallardo—which sells to consumers for anywhere from $175,000 to $200,000—to the Italian Polizia di Stato, or state police. The company heralded it as the fastest police car in the world, probably not an exageration considering the Gallardo's 500-horsepower, 10-cylinder engine capable of propeling passengers to 192 mph.

Unsurprisingly, police fleets are overwhelmingly supplied by domestic makers. Just as police departments in the U.S. buy American—although cops in Aspen, Colo., famously used to ride around in Saabs—departments around the world are just as loyal to home.

British police have a mixed stable including Land Rovers, Jaguars, Vauxhalls, and others British-made marques. The Japanese opt for Toyotas, Spaniards for SEATs. The Germans ride in BMWs and the Swedes in Volvos. The French patrol their boulevards in locally produced Peugeot and Renault models.

And whether the pursuit occurs in a six-figure supercar or a more modestly priced but equally muscular sedan, the perp walk lasts just as long.

To see a lineup of the coolest cop cars, click here for the slide show.