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Warm welcome for late arrivals

10th December 1992
Page 18
Page 18, 10th December 1992 — Warm welcome for late arrivals
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Which of the following most accurately describes the problem?

In the first of a new monthly series, Key Truck and Trailer Sales' Malcolm Taylor (below) takes the lid off the used vehicle market.

Q: What do smiling secondhand truck dealers have in common with good-quality, late-model used tractors and well-heeled customers?

A: They're all about as common as hens' teeth.

Despite what some so-called experts in the Treasury might tell you, economic recovery is a long way off, and the used truck market is suffering as much as any other retail sector.

Ironically the scarcity of tractors up to three years old is helping to keep prices buoyant. As ever the final price depends on condition and what people are prepared to pay on the day, but high-roof premium tractors are commanding noticeably higher prices than standard sleeper cabs so the message about the residual values of sleeper models finally appears to have sunk in with most fleet buyers.

Day cabs

Nonetheless many brewers and own-account petroleum companies still insist on day cabs: either they're prepared to take it on the chin when it comes to selling or they've tied up a manufacturer into a guaranteed residual deal. Heaven help those manufacturers when they try to pass on those day-cabs tractors.

The supply of good used trucks up to three years old has traditionally been courtesy of the rental companies. But over the past two years many have gone under and the rest have been reducing the size of their fleets so there's now a shortage of metal.

It's a sign of the times that most good used models now come from finance house repossessions or company closures. For obvious reasons many of them are poorly maintained; some have been downright abused. As a result dealers are having to spend more money than they'd like to bring vehicles up to an acceptable retail standard, putting even more pressure on what small profit margins remain.

Most of these vehicles are being sold by auction and in many cases dealers travel hundreds of miles to buy only one or two vehicles, putting yet another load on to the unit cost.

For the unlucky ones it's a long trip home and a wasted day. Even those who buy are left wondering on the drive home whether there is any profit left in the vehicle.

As hauliers are now keeping their trucks longer many vehicles more than five years old are coming on to the market in large numbers. With the demise of the owner-driver and small fleet customer they're proving extremely difficult to sell for anything like a realistic price. Even C and D-reg trucks are going for scrap.

Since the arrival of 38-tonne weight limits the supply of 32-tonners has been drying up. As a result many tractor buyers are buying or leasing 38-tormers then downplating them.

Hauliers who do want to run at 38 tonnes are demanding 6x2s, and yet again they remain in very short supply as the big fleets seem to be holding on to their vehicles.

The tax advantage is a strong argument for 3+2 rigs, but whatever the product, the buying profile is changing away from the traditional small fleets of 1-5 trucks to medium sized operators, often in the own-account sector.

Lending risk

There's no great secret behind the switch. Banks and finance houses see small hauliers as an unacceptable lending risk, which comes as no surprise considering how many small businesses have gone to the wall since the recession started.

This has left the field open to the medium sized fleets to pick up what vehicles are around, although most are leasing, not buying. Typical leasing deals include one struck by Key, which has supplied thirty 32-tonne ERF El0 and Leyland Daf 1728 Roadtrain tractors.

With the construction industry stuck in the doldrums there's hardly any call for multiwheelers and some good models remain in stock.

About the only bright spot is activity in the light commercial sector, particularly in the "big van" market around 3.5 tonnes.

The used truck market has always been a classic example of you get out it what you put in to it: dealers who have invested in up-to-,date premises and spent time developing their fleet customer base are probably better off than most. Meanwhile the smaller used dealers are keeping their wallets, and mobile phones, firmly in their pockets.

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