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Used tractor prices 'levelling out'
Page 20
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IN by Steve Banner
Prices of three-year-old used tractors are at last starting to stabilise after a 20-25% plunge in value last year, says Renault Trucks UK director, used vehicles, Bruce Allison.
The impact of the price collapse is still being felt on residuals, however, and operating lease rates on new trucks have hardened significantly as a result, he contends. It's leading to a progressive widening of the gap between the cost of owning new and owning lateregistered used trucks.
"At the same time there's a narrowing of the price gap between used 4x2 and 6x2 tractors at three and four years old," he reports. "It used to be the case that 6x2s would fetch 15% more than 4x2s; now it's nearer 12%. That's because 70% of new tractors sold in 1999 were 6x2s. This means manufacturers have got a lot of them coming back at a time when the regulations have changed again-4x2s are more in demand than they were, and there aren't a lot of three-yearold used 4x2s about."
But Allison does not believe that there are fields full of unsold second-hand trucks quietly rusting away: "I'm not aware that's the case, and we certainly don't have vast numbers parked up."
That's just as well, given that he expects 30,000 buy-backs to come home to roost across the UK Industry this year; most of them three to five-year-old rigids and tractors. Renault alone will have to dispose of around 2000, compared with 1,350 in 2001, says Allison, with the first two-year-old Midlumsboxes, curtainsiders, and dropsides—due to come back during the second half of the year.
Its dealerships are beefing up their used activities in order to cope. "Woodwards now has a site in St Helens that can display 50 used trucks; Renault Trucks Chiltern in Dunstable has acquired extra land so it can display 30; and Allport has redeveloped its site at Fradley in Staffordshire, just off the A38, with used vehicles in mind," he says. "We've seen expansion at Renault Trucks Glasgow too, and JDS has opened a used vehicles and service and parts site on the east side of Manchester. We're also setting up company-owned sites in Telford and Southampton, and they will both have used trucks on show," The number of dedicated used truck salesmen in the network is increasing too. "This time last year we had 18, and we should have double that number by the start of July" he predicts.
There's some evidence that finance houses are being slightly more selective about the used truck deals they are willing to fund, says Allison. Nor has the demise of City Truck Group, which had 600 Renaults on lease (mainly Premium 6x2 tractors) made his life any easier.
"But 200 were due back anyway this year, and we had already planned for their arrival," he says. "We don't own any of the 600—they're owned by a variety of finance companies—so we're engaged in talks with these companies, and with City customers who may wish to take over those vehicles. It's not in the interests of the used truck trade, and it's
certainly not in Renault's interests, for all those trucks suddenly to become available on the open market."
Renault is energetically promoting its Choice approved used trucks programme, but Allison admits to being disappointed with sales of Elite Premiums and Magnums. They come with a cab and chassis repaint, a 12-month warranty and—most importantly—a retuned engne.
Magnum "I would have thought we could sell more of them, but that may be because it's a programme best suited to the Magnum and there aren't a lot of used Magnums around," he says.
Renaud Trucks UK is slowly building up its used truck exports, he adds: "We should do 200 this year. We sold 20 to Malaysia in 2001, and we're aiming to sell 50 to 60 there this year.
Exporting is no longer an easy means of getting rid of timeserved six and seven-year-old tractors, however. "Malaysia For example won't accept anything manufactured before 1998," he points out. So what happens to these ageing workhorses? Allison believes they're worth more when broken up for parts, and suggests that manufacturers might consider introducing a used spares programme.
"My colleagues in France are looking at it, and it may be something we could consider for the UK, although we have no firm plans," he says.
It's surprising to hear somebody in Allison's positon state that he is happy with the way his company's trucks are treated by the used price guides, but he has no complaints.
"OK, a three-year-old Premium is shown as being worth perhaps 1,2,000 less than the equivalent Oaf and so on— but that's light years ahead of where we used to be," he smiles.