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Prices rocket as dealers struggle to find stock
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Chronic stock shortages are pushing prices even higher as operators snap up desirable vehicles, reports Steve Banner.
The used truck bonanza is continuing throughout much of the country with many dealers reporting sky-high prices accompanied by stock shortages as desirable vehicles are snapped up immediately.
"We're struggling to find trucks," says Mike Curtis, used truck sales manager at Daf dealership Watts. "There's not a lot of choice out there."
"1 think it will be at least next March before things start to change," says Paul Prewett, general manager, used sales, at Scania dealership TruckEast. "At present we're able to pre-sell trucks we know are going to come back to us while they're still in service with their current operator.Two that were due to be returned to us at the end of October were earmarked for their next owner back in August."
The stock shortage is being exacerbated by long waiting times for new trucks. Operators awaiting delivery of new vehicles are hanging on to what they have until their replacements arrive, says Prewett. "Some manufacturers are talking about delivery dates in 2009 for eight-wheelers."
"The waiting list for new Daf XF105s is so long that you can probably sell a used one for more than a new one would fetch, and the second-hand price is likely to rise even further in the coming months,says one well known Daf dealer. "I'm wondering what will happen if a lot of the orders for new trucks turn out to be the result of people panicking, and are followed by large numbers of cancellations in a few months' time."
Holding on to trucks "I suspect a lot of operators will be retaining their existing trucks until at least the second quarter of 2008," says Anthony Wright of independent dealership EVS. "When they come onto the market, they'll sell very quickly.
Nor is there any evidence that the demand for used trucks is being stifled by buyers having difficulty obtaining funds because of turmoil in the financial markets, "Most of our customers seem to be able to get finance, and at competitive rates," says Prewett. "I can count on the fingers of one hand the number of finance proposals we've had rejected, and with fingers to spare."
Wright agrees:"Finance doesn't seem to be a problem at present and a lot of the operators we see have already got their funding arrangements in place.That way they can pounce on the vehicle they want the minute they see it."
"What can be a problem isn't so much the financial status of the buyer as the guide price of the vehicle concerned," says Steve Smith of independent dealership Smith Brothers Services. Finance houses have traditionally relied on the price guides to value trucks when advancing funds, and in today's market a truck may be worth considerably more than the guide suggests.
As a consequence there can be a gap between the amount that is being offered and what the buyer needs. Happily, finance companies now recognise that what a guide says is not the last word on the subject and are usually willing to come up with the su required if the client is putting down a decent deposit,says Smith.
While prices are high, there is a limit to how much the customer is prepared to shell out, and because they are having to pay more for their stock their margins are being squeezed. "Margins are certainly narrower than they were," says Curtis."I've walked away from a number of deals because I didn't feel confident! could make a profit out of them."
The stock shortage is prompting some dealers to widen their horizons and move into sectors of the market they have not previously specialised in. "We used to concentrate primarily on tractor units, but these days we carry a variety of other things too," says Jamie McDonald of independent dealership Roy Humphrey.'lley. include low-loaders and tipper trailers with aggregate bodies as well as tractor units."
Many dealers are cautious about diversifying into older stock,however, especially if it is high-mileage. "I'd be reluctant to offer anything that dated back before 2001," says Curtis.
"The older the truck, the greater the risk that it will break down," says Prewett.
Quiet spells
While most dealers are reporting busy trading conditions, one or two are admitting to quiet spells. "We saw things calm down for two or three weeks recently, but that's not to say that trade is dead," says Andy Mackay, used sales specialist at Manchester Daf dealership Chatfields."Nor do I believe it means prices are about to slump.
Some dealers suggest that where inquiry levels have slackened it might be because operators have got tired of asking if certain trucks are available only to be told repeatedly that they are not. •