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Some operators are saying no
Page 72
Page 73
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The trade is suffering a backlash as operators grow unwilling to pay the high prices being demanded for late-year, low mileage tractors. Steve Banner reports.
Cash-strapped operators are proving increasingly reluctant to pay the high prices being asked for late-year, low-mileage tractor units.
"Some dealers are asking £5,000-0,000 more for a truck than they would have done for the same vehicle a few months ago," says Paul Prewett, general manager, used sales, at East of England Scania dealership TruckEast."As far as the auctions are concerned we're seeing vehicles fetch more than we would have retailed them at six months ago.
"Although there is always somebody out there prepared to pay the money, the response of a growing number of hauliers is 'no thanks—I'll make do with what I've got and keep it going for another 12 months'. Operators only have a certain amount of cash to play with and they're saying 'enough is enough'," Mike Curtis, used truck sales manager at Worcester Daf dealership Watts, is encountering the same attitude. "As a consequence we're seeing parts sales rise as operators hang on to their existing trucks and refurbish them," he reports.
"High prices mean some operators are reluctant to commit themselves," says Nigel Sharp, who heads the Barnsley used truck operation run by Daf dealership F&G Commercials. "They don't see why they should pay £4,000 more for a truck than they would have paid loran identical vehicle a year ago."
Risky business
While the stance being taken by operators is understandable, they are running a risk: if they delay buying a replacement vehicle for 12 months and the market remains the same, they could end up paying even more for their vehicles than they would now.
Tim Robinson, used sales manager at Hull MAN dealership North East Truck SE Van,says: "According to the price guides, the retail price of an MAN TGA 26.413 )(XL 6x2 unit, 2004 on a 53 plate, has gone up by £1,000 in just two months."
Dealers say that the rising prices simply reflect the fact that they have to pay considerably more than they used to for the stock they buy in. 'At an auction recently I saw a Daf CF65 curtainsider on an 03 plate fetch £3,000 more than it was really worth," says Sharp.
Dealers say these increases are hurting them too, by putting a squeeze on profit margins. "Even if you've paid more, there's only so much more you can charge the buyer," says Curtis. "Despite the fact that there are long lead times on new vehicles, the customer still wants to see an £8,000412,000 price gap between a late-registered tractor unit and a new one, even though he cannot get hold of a new one."
"Dealer profit margins have stayed the same," says Sharp. "They may even have shrunk."
However, operators' growing reluctance to pay high prices has yet to offset the shortage of lateregistered vehicles. "Operators aren't getting rid of their existing trucks because long lead times mean they can't get hold of new ones," Prewett points out. "The number of people we've had to say no to because we haven't got the trucks they're looking for is heartbreaking," says Stuart Wolstenholme, used truck sales manager at the Middleton, Manchester branch of Scania dealership West Pennine." We've just acquired a batch of 03 and 04 420hp R124 6x2 units so I'll be able to start saying yes for the first time in ages."
He was so pleased to get them that he admits standing in the yard waiting for the first one to arrive: "I was a bit like an expectant father. Even though you can ask silly money for trucks like that, I'm trying to keep them at sensible prices. We've got a lot of loyal customers that come back to us year after year, and! don't want them to feel they're being exploited."
"Dealers can be too greedy," Sharp agrees.
Pre-selling used trucks "We've got more customers than we've got vehicles without a doubt; we're pre-selling trucks before they arrive on our forecourt," says Prewett."We've pre-sold trucks that won't come back to us off contract until October/November. I reckon the used market will stay buoyant until at least next February/March."
"Some people say the bubble has burst already, but I certainly don't think that's the case," says Wolstenholme.
And an executive at Roy Humphrey Group of Eye in Suffolk remarks: "It's like the housing market. People talk about a downturn but it never seems to happen, and in the meantime used truck prices are going through the roof" One dealer, who asked not to be named, believes some manufacturers are making the most of the current situation: "Go back a few years and several of them made thumping great losses because they wrote overoptimistic buy-back agreements.
"Subsequently they've been a lot more conservative about the buy-back deals they are prepared to offer, only to find that the trucks being returned to them are fetching way more than they expected them to.
-So they're making hay while the sun shines-and I don't really blame them." •