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New truck deals are being set up to ensure dealers get plenty of used trucks back in the next three years to meet expected demand, as operators look to avoid Euro-6 at all costs
Words: Steve Banner Canny franchised dealers are structuring new truck deals to ensure they get plenty of used Euro-5 models coming back in 2013, 2014 and 2015. Many hauliers who are fearful that Euro-6, mandatory on all new trucks from 31 December 2013, will result in cost, weight and fuel penalties may wish to opt for late-plate Euro-5s instead: and dealers want to be in a position to satisfy the demand.
“We’ve recently supplied a fleet of over 100 new Euro-5 tractor units, 30 of which will be returned to us in a year’s time,” says Stuart Wolstenholme, used sales manager at the Middleton, Manchester branch of Scania dealership West Pennine Trucks. “We’ll be getting some more back after 24 months and the remainder back after 36 months.” “People are starting to ask about Euro-6 and talking about getting Euro-5s instead,” says Matt Hammond, used vehicles sales manager at West Thurrock, Essex-based dealership Harris Daf.
“Late-plate Euro-5 will be the route many operators will wish to take so we’re building up our returns portfolio and we will of course be able to generate suitable vehicles from our rental fleet too,” says Rael Winetroube, sales director at MAN TopUsed. “Equally we will need to sell new Euro-6 models as well – we’ve got production facilities in Germany we need to keep busy – so we’ll need to strike a balance between the two.
“I have to say though that if all MAN did was sell used trucks – and as far as we’re concerned demand has been relatively buoyant so far this year – then we’d be stockpiling Euro-5s.” Not everybody is experiencing the same degree of buoyancy. While dealers are undoubtedly looking forward to a healthy level of demand for late-plate Euro-5 trucks in the near future, many of them report that at present the used market seems to be treading water.
It’s all so quiet...
“It’s certainly quieter than it has been,” says Hammond. “I think the demand for trucks capable of complying with the latest changes to the London Low Emission Zone [LEZ] artificially inflated demand to some extent in 2011.” Having satisfied their needs last year, it may be a while before the operators concerned start buying again.
“Demand isn’t especially brilliant, although we predicted last year that June would go quiet this year with bank holidays, the Queen’s Jubilee, and a lot of customers deciding to take the opportunity to go on holiday,” says Jonathan Bownes, sales executive at Volvo dealership Thomas Hardie’s Middlewich, Cheshire used truck centre. “If you’re off swimming with dolphins, then you’re not buying trucks.” A more fundamental reason for the used sector marking time, however, is the lack of economic growth, he believes. “We’re still in recession and we’re only crawling out of it very slowly,” he observes.
Euro crisis factored in
Bownes doubts that the Euro’s well-publicised problems are having much of an impact on used demand at present. It seems to have been collapsing for so long, he points out, that companies have already factored the traumas it is undergoing into their calculations.
A sudden and catastrophic disintegration could knock demand sideways because of the impact it would have on the overall UK economy, however: “The used market has dropped off quite quickly over the past couple of months and I think it’s due to economic uncertainty,” says Mike Finney, general manager of used vehicles at Renault Trucks.
“Some operators who might have bought a twoto three-year-old truck in the recent past are obtaining vehicles on flexible rental agreements instead.” Such arrangements allow them to hand them back to the rental company immediately if things get really tight. Getting out of, say, an operating lease is likely to be more problematic. “That said, late-year/low-mileage trucks will always sell sooner or later,” he remarks.
A lease or an HP deal may of course be out of the reach of some customers. “While I’ve not had people say they can’t buy a truck from me because they can’t get the funding, finance seems to be slightly harder to obtain than it was,” says Hammond. ■
UNPREDICTABLE MARKET
Used truck sales steady with the occasional spike While used sales may not be soaring, some dealers are reporting periodic and unexpected surges in business.
“We were very quiet then we suddenly sold 13 trucks in a single week; a mixture of 18and 26-tonners and tractor units,” says Wolstenholme of West Pennine Trucks. “It shows that the market is a bit unpredictable at present. As a consequence of that week our stock has gone down, and we’ve only got 38 trucks available.” So what’s the position with prices? “They took a bit of a step back at the end of March/start of April but since then they’ve been fairly steady,” he replies.
“They’re at a realistic level, and while I wouldn’t describe stock as being easy to obtain, it is usually possible to find the right thing for the customer,” says Hammond of Harris Daf.
“Supply and demand is probably just about where it needs to be,” says Bownes of Thomas Hardie’s used truck centre. “The pool of trucks available is quite well matched to the pool of people buying, although specialised vehicles such as hook-loaders and skip wagons remain hard to find.” “I think prices became over-inflated last year because of the demand generated by the LEZ,” says Finney at Renault Trucks. “They’ve come down since.” “They’re bobbing along quite nicely,” says Bownes. “They’re neither being ramped up nor forced down.” “At present we’re finding that most customers are willing to spend up to £30,000,” adds Wolstenholme. “That sort of money will put them in a 57-plate Volvo FM Globetrotter 6x2 440hp tractor unit which we’ve sold at £25,000 to £29,000.” West Pennine regularly sells second-hand examples of makes other than Scania although used Scanias naturally figure largely in its stock list. “Above £30,000 demand is a bit slower, but people are always willing to pay more for a Scania V8 unit,” he observes.
“One of those will always find a home – there’s always somebody looking for one – and we’ve recently been selling 07-plate 560hp Griffin V8s with manual boxes, which is unusual, leather-trimmed interiors, kitchen packs, Kelsa bars and lots of other shiny bits for £39,000. There’s nothing holds its value like a V8.”