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Déjà vu

27th September 2012
Page 39
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Page 39, 27th September 2012 — Déjà vu
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Which of the following most accurately describes the problem?

Is history set to be repeated with demand once again exceeding supply as operators hell-bent on resisting Euro-6 technology turn to the used market for late-year Euro-5 used trucks?

Words: Steve Banner Used truck dealers can look forward to a stable market over the next 12 months, but autumn 2013 could see some major upheavals. That will be when signiicant numbers of hauliers start to realise that Euro-6 is going to become a reality in January 2014 and start looking for late-plate Euro-5 models to tide them over, says Paul Young, senior regional asset manager at Paccar Financial. But he warns that their search could be a frustrating one.

This is because a lot of operators already running Euro-5s could opt to hang on to them because they too will be wary of Euro-6. “I think we’ll see a lot of lease extensions in a year’s time, with customers deciding to keep their existing Euro-5 vehicles for four or ive years rather than the two or three they originally planned,” he says.

US truck builder Paccar is Daf’s parent company, and Paccar Financial funds a high percentage of all new Dafs sold in the UK. As a consequence, it has a signiicant role to play when it comes to the disposal of second-hand ex-contract XF105s, CF85s and so on.

Hauliers are cautious about committing themselves to Euro-6 because they fear they will suffer fuel and weight penalties, and will have to pay a price premium over and above the price that they have been used to paying for Euro-5 product.

“They’re right about the last point,” says Young. “That extra £10,000 that has been bandied about so far as tractor units are concerned is probably correct, given the extensive hardware and software changes that have had to be made.

“Euro-6 involves a lot more than simply tweaking a software programme,” he adds. And, of course, there is no cash incentive from the government for operators to adopt Euro-6 early.

If late-plate Euro-5 shortages start to bite a year from now, then prices will begin to rise accordingly. Until then, however, they should stay reasonably stable, as should the prices of other used trucks offered for sale, with the market experiencing nothing more than the usual seasonal variations in demand.

Rise in enquiries

“We’re already seeing an earlier-than-expected rise in enquiries for ex-contract vehicles, as we head into the autumn after a quiet summer,” says Young. “Perhaps we’re seeing the early impact of the festive season: people still go silly at Christmas, even in a recession.” Everything people need to be suitably silly, from festive booze to Father Christmas beards, travels in a truck at some stage of its life.

“I think the upturn will continue until the end of November,” Young says. “I’m relatively optimistic about the inal quarter of the year.” At the time of writing, Paccar Financial had managed to dispose of 20% more trucks this year than it did over the same period in 2011, partly because it has been able to obtain more stock.

“Last year we saw 70% of our customers opting for lease extensions,” he says. “This year the igure is closer to 33%, which means that we’re getting more vehicles back, and that’s a igure we’re quite comfortable with.

“Prices are pretty stable and it is interesting to note that residuals expressed as a percentage of the front-end price have gone back to where they used to be,” he adds. “In other words, trucks are, for example, typically fetching 40% to 45% of the front-end price at three years old and 20% to 25% at ive years old.” None of this is to underestimate how tough the market is for some dealers, with the UK still mired in recession and little immediate hope of relief.

“We’re inding things slow, to be honest, and the extent to which the price of diesel has risen in recent weeks isn’t helping,” says Jamie McDonald. Based at a site not far from Besthorpe in rural Norfolk, he runs independent dealership RJM Commercials and is now busy looking at opportunities in the export market.

“Anything priced at below £15,000 is selling, but anything more expensive is a struggle, and in some cases is a struggle to export it too,” says Nigel Sharp, who is in charge of used vehicle activities at Daf dealership F&G Commercials. F&G runs sites at Huddersield, Barnsley and Oldham. Sharp is becoming increasingly concerned that the number of owner-drivers who used to be the natural customers for ex-leet vehicles may be falling, with those still in businesses often leasing new trucks, he suggests, rather than going the second-hand route because of the attractive deals that are on offer.

“I think we’ll see a short, sharp burst of activity in the used market during the coming weeks, then that will be it until after Christmas,” he says.

Plenty of interest

There is certainly plenty of action at the more pricecompetitive end of the sector, according to independent dealer Dave Higgs of Kidderminster, Worcestershirebased D H Commercials.

“We’re getting a lot of interest in some 2008 MercedesBenz Axor 1840 6x2s we’ve got for sale,” he says. “They’ve typically done between 590,000km and 600,000km, and we’re offering them at £18,750.

“Examples that have done 400,000km or thereabouts are available for £19,750.” At the lighter end of the scale, he is embarking on selling no less than 258 inexpensive Mercedes-Benz Sprinter 3.5-tonners previously employed by Tesco on home-delivery work. “A lot of them will end up being rebodied as car transporters and dropsides, but some may be bought just as they are by small shops,” he says.

Stuart Wolstenholme, used sales manager at Middleton, Manchester Scania dealership West Pennine Trucks, is conident that demand for pricier late-registered Euro-5s will start to grow. He believes it may make its presence felt earlier than next autumn.

“I’ll have some two-year-old Euro-5 rigids and tractor units arriving in January, and I doubt they’ll hang around for too long,” he says. “In fact, I wish I’d got them now.” He has already been talking to prospective purchasers about them. “I’m being quite bold so far as the prices I’m asking are concerned, but I haven’t frightened anybody off yet,” he comments.

“I’ll have more two-year-old Euro-5s coming in a bit later and possibly some that will be no more than 12 months old, although I suspect that in the latter case the operator concerned will decide to extend the lease instead. Hopefully he won’t, because I’m expecting a lot of enquiries about Euro-5s in 2013.” n


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