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Page 71
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Demand for late-model, low-mileage used trucks was boosted as operators rushed to buy before digitachs and Euro-4 arrived. Now it is being maintained by a shortage of new trucks. Steve Banner reports.
The sellers' market for lateplate, low-mileage used trucks could last for another two or three years — and many operators that normally buy new vehicles are being forced onto the used market by the long lead times on new models.
That the opinion of Lee Smith, a director of independent dealership Hanbury Riverside. Those long lead times are unlikely to shorten soon, he warns, as manufacturers struggle to satisfy rising demand for trucks in Eastern Europe while meeting the needs of customers in Western Europe.
-As a consequence. UK hauliers are now being asked to wait up to 56 weeks in some cases for new vehicles," he points out.
While some truck manufacturers are increasing production, they are doing so cautiously. Scania, for example, plans to increase capacity by 5% later this year. That will take it to 84,000 units this year with a further rise, to 100,000, scheduled for the end of 2009.
Steady supply Meanwhile, the used boom carries on. "We have a steady stream of trucks coming into stock from well-known operators, and customers are ordering them from us two months in advance and putting a deposit down," says Smith. -They're often also asking us to arrange to have them modified to their requirementsFTOs [power take-off] fitted, for instance — prior to delivery "One operator has just bought five vehicles from us, and says he'll take a further three for delivery in October. As a consequence all the vehicles that will be arriving this month and in September are presold, and prices are staying firm."
Steve Smith of Widnes-based independent dealership Smith Brothers has never seen anything quite like the prices used trucks are fetching today. "If you'd have told me 18 months ago that they would reach this level, wouldn't have believed you," he says.
Nor is demand being stifled by customer nervousness over digital tachographs, says Smith: "They've been accepted, and we're selling vehicles fitted with them without any trouble. Remember that trucks up to a year old and more will have digital tachos in them so they're no longer an issue.
Allan Hilton, responsible for used sales at Daf dealer Ford & Slater's Kings Lynn branch, says: "We're not finding the presence of a digital tachograph is an obstacle to doing a deal. Some operators were initially scared to jump the digital hurdle, but they're increasingly gliding over it."
Matt Heath, used truck specialist at Maritime Transport, says big operators who normally buy new trucks are happy to take digital: "But those owner-drivers who usually don't, tend to favour analogue."
So far as the SCR vs EGR debate is concerned, Heath believes the competence of the local dealership and its location can have as much influence on the operator's choice of truck as the relative merits of the two emissioncontrol technologies.
I.ee Smith agrees that SCR/
EGR is less of an issue no and adds that the rising interest rate does not seem to be a significant issue either— not yet at least: "If you need trucks because you've just taken on a new contract then a 0.25% rise in interest rates is unlikely to make much difference to your buying plans."
More and more of Hanbury Riverside's sales are being driven by its vvebsite. says Smith. and a growing number of customers are buying trucks without seeing them first: "You can be talking about up to £500,000-worth of vehicles a time." He expects to sell 350 vehicles this year. up from 2006's total of 300.
How long the. good times will last is open to debate. Phil Holmes, used sales manager, eastern region, at Scania dealership Keltruck, agrees demand for trucks is buoyant for the foreseeable future but will it last for the next three years? "I don't think I'd want to put my foot in the water to quite that depth," he says. "Although business remains fundamentally healthy, the number of calls we're getting for used trucks has diminished a little recently: possibly because some hauliers are sick of chasing after late-plate vehicles that aren't readily available anywhere."
That downturn could simply part of the seasonal downturn in demand. The holiday season is having an impact, says Hilton. which should give dealers more time to hunt for stock —but he does not expect the intense competition for what little is available to abate any time soon.
Holmes adds: "One thing! would say is that used prices are unlikely to drop back to where they were before the boom. Where they are now is probably where they should be, bearing in mind that they hadn't increased significantly for 10 years prior to the recent rise."
Over-pricing But he advises dealers against taking advantage of the situation by charging desperate hauliers excessively high prices: "I know a couple who are, and in my view they can't see past the ends of their noses. They'll pay for what they're doing in the future.., operators have long memories.
Hilton seconds that view: "You shouldn't jack up prices hugely just because you think you can get away with it.
Keith Whitaker, used truck specialist at Southampton Daf dealership Adams Morey, says: "You can find that you're paying up to L.3.000 more for a truck than you paid for an identical vehicle two months previously."
"It's quite extraordinary," says Steve Smith. "Used trucks are supposed to depreciate in value. not appreciate. The people who are going to do really well out of all of this are those contract-hire companies that wrote agreements three years or so ago and put in conservative residual values. They're going to make an absolute fortune when those vehicles come back."
This is because the trucks being returned to them will fetch far more money than they expected. Sonic operators are asking for agreements to be extended, and that too is helping to starve the market of desirable stock.
Smith points to another factor that's keeping late-plate values buoyant: the increased willingness of exporters to bid for newer trucks rather than the older vehicles they have traditionally favoured.
The late-plate drought is forcing sonic operators to accept older, less well-specified, vehicles. But there's one thing they will not compromise on. says Whitaker: "That's mileage. They expect a vehicle to have covered no more than 100,000-120,000km for each year of its life. Anything higher can hold them back from purchasing."
"In our experience customers who want something that's lateregistered are unlikely to accept anything older,says a spokesperson for independent dealership Southfield Commercials, based near Manchester airport. -But we're noticing a number of operators who would normally buy new that are now going after late-plate used.
Another factor likely to buoy up used sales towards the end of the year is the expected rush for vehicles that will meet the requirements of the London Low Emission Zone (LEZ). "If the operators affected leave purchasing too late then they may find that the trucks they need to meet the LEZ's requirements won't be available," Holmes warns.
A market remains for those older, non-LEZ-compliant, trucks that are received in part-exchange, says Whitaker. "Not everybody wants to go into London. Precious few trucks converted into horseboxes, for instance, are to be found there." •