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A question of finance
Page 52
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Hauliers can still finance trucks,
Steve Banner reports, but there
are signs that the moneylenders will tighten their belts to counter bad debts as the wider economy struggles to control inflation...
The continued turmoil in the banking sector is still not prompting lenders to impose tougher criteria on hauliers who want to acquire trucks on finance, say many dealers. However, others believe lenders are generally becoming more demanding.
Andy Mackay of Manchester Daf dealership Chatfields hasn't had any problems: -I can't recall the last time I had a finance proposal declined by a lender."
And Nigel Sharp of Daf dealership F&G Commercials, which has sites in Huddersfield and Barnsley, adds:"Lenders are willing to advance more than the retail book price."
Cautious lenders By contrast, Barry Browning of Andover, Hants-based MercedesBenz dealership Pentagon believes finance houses may be growing a little more cautiousand Anthony Wright of independent dealer European Vehicles Sales, based near Doncaster, suspects they may quietly be increasing their provision against bad debts: "They're also looking for bigger deposits from any haulier applying for finance which may be a borderline risk."
Finance companies that took a conservative approach to setting residuals three or four years back are doing very nicely now the prices realised by used trucks have turned out to be significantly higher than expected.
"Five years ago we were selling new 53-plate.420hp 6x2 Premium tractor units for £46,000-£48,000," says Andrew Waddington, a salesman at Wigan Renault dealer Woodwards."Now, having covered 500,000km, those same trucks are fetching £27,000well over 50% of their original value."
Dealers have had to pay more to buy vehicles for stock over the past year, but retail prices, though healthy, have not risen at quite the same pace." If you're paying £2,000 more for a truck than you would have done previously you'll probably only be able to retail it for £1,500 more," says Wright.
"Operators are only willing to pay what they feel is reasonable money, so dealer margins have been squeezed," says Mike Curtis of Daf dealer Watts; the firm has sites in Gloucester, Hereford and Worcester. "However I'm still selling trucks at a profit."
Browning is concerned about what may happen if there is a sudden downturn in the market and dealers are left with a lot of expensive trucks they can no longer sell profitably:"If that happens, a lot of people will get their fingers burnt."
But as things stand the retail sector is buoyant, allowing usedvehicle salesmen to earn what are at times generous commissions. "Some of them are making as much as£3,000out of the sale of a single truck," one dealerexecutive reports. "In the recent past that was unheard o1 but it's happening now."
Not much fun Life is not quite so much fun for new-vehicle salesnaen.The chassis shortage is likely to make it increasingly difficult for dealers to justify retaining their services, even though their franchise may oblige them to do so.
One answer is to ask them to sell used trucks as well, or possibly vans. Another might be to ask the manufacturer they represent to make a substantial contribution towards their wages assuming that the manufacturer concerned does not employ them directly, as one or two of them do. •