Expectations fail to make the grade
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• Dealers are once again proceeding with caution. After better than expected sales in the first quarter of the year, used truck dealers are again reporting a slowing down in business. Although enquiries remained at a good level, the conversion from enquiries to sales did not come up to expectations towards the end of May.
In the early part of the year dealers and operators were taking an optimistic view of the future, encouraged by falling interest rates and inflation, and government and press reports heralding an end to the recession.
But towards the end of May proceedings slowed down dramatically. Press and government comments became less confident about the economy and once again the end of the recession seemed to move further away.
Iveco Ford has come up with a way of moving the ever increasing burden of over-priced tractor units that are being returned under guaranteed buyback contracts to their main distributors.
Along with other manufacturers, it is faced with problems of falling sales, falling profits now running into losses and an ever increasing stock of used commercial vehicles from its finance company and guaranteed buy-back contracts.
Looking at the Iveco Ford programme it appears that participating dealers will have to stock tractive units at prices set by the manufacturers and carry out repairs and maintenance as advised by the manufacturers.
All this looks a very clever proposition from lveco Ford's point of view, but at the end of the day dealers may just find themselves stocking vehicles at totally unrealistic prices.
Several Iveco Ford distributors already have existing used truck sales departments. These departments in the past have been profitable and professionally run.
Renault has been forced to participate in a programme to encourage its distributors to stock used Renault trucks, in an attempt to raise residual values, but Iveco Ford distributors have always willingly entered the used truck market and kept residual values at respectable levels. The intervention of Iveco Ford on its distributors' used truck operations could in the long term have an adverse affect on residual values.
Pressured
Dealers could find themselves pressured into stocking vehicles at unrealistic prices on a finance house stocking plan on which they will have to pay interest until the vehicle is sold.
This will seriously jeopardise their purchasing power in the general market place, thus removing some of the present price support.
Used truck dealers point out that a truck well bought is a truck well sold. At present Iveco Ford used truck dealers can buy and sell competitively in the open market—but who knows what will happen when 'Nem Ford tries the hands-on control of its distributors' used truck operations.
1=1 by The Dealer