A bit of a
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rollercoaster
The used market has plenty going for it as operators strive to meet low emission zone rules and avoid price hikes on new chassis, but things aren't all, that straightforward, as Paul Evans, Iveco's used truck director, reveals.
Words / Images: Steve Banner Demand for second-hand trucks remains surprisingly buoyant despite the continued economic doom and gloom. So says Iveco's Paul Evans, director. used vehicle operations.
"The market last year was a lot better than we expected." he reveals."And so far this year. things have carried on at the same sort of pace as they did in 2009."
One development that will have a significant impact. Evans believes, is the rising clamour for second-hand Euro-4-compliant trucks among operators who regularly travel into and work in London.
All trucks entering the capital's Low Emission Zone (LEZ) from 3 January 2012 onwards will have to meet the Euro-4 particulate standards or attract penalty charges. As a result, the purchase price of vehicles that comply with the standard is bound to rise.
"Anything first registered on or after 1 October 2006 is deemed to meet the requirements," Evans says, which means some Euro-3 trucks could qualify for inclusion.
Value of trucks
Evans continues: "We've already had a situation where we had three 7.5-tonners to sell; two first registered in September 2006 and the third in October 2006.
"Nobody was interested in the September vehicles, but the October vehicle was snapped up and achieved around £4,000 more than the book value."
So how high could the prices of compliant trucks rise? Pointing out that there are not enough available to satisfy the likely demand. Evans believes they could soar to remarkably high levels.
"It's going to be a vertical climb," he predicts. "We're going to see a very high peak."
Rising prices for new trucks., thanks to the decline of sterling against the euro. could also help drive up Euro-4 prices as operators opt for late-registered Euro-4 trucks rather than more expensive ones fresh out of the factory.
If Euro-4 values are about to skyrocket, what implications does that have for the worth of the vast majority of Euro-3 trucks?
"Values are holding firm at present," Evans replies.
He adds that they may decline as the January 2012 deadline approaches, but by then the vast majority of Euro-3s will be well over five years old, anvway.
The shortage of Euro-4 trucks that Evans alluded to is in part a result of operators extending leases and hanging on to their existing vehicles in what is a stilluncertain economic climate.
-We did see a rise in extensions towards the end of 2009," he reveals. "You normally see that in the run-up to Christmas. Operators are busy and don't want to hand back their trucks, but they usually come flooding back in the new year. That hasn't happened this time around."
If Euro-4 prices do begin to rise steeply, operators who do not wish to carry on with their existing vehicles coukl decide to cancel any buy-back agreements they may I and sell them privately, Evans suggests.
"They may be worth more than the buy-back Figur( and the customer will understandably want to take advantage of that situation," he points out."I think th buy-back cancellations are going to be a major factor the market throughout this year."
Stock shortage
With a site at Hawarden in Flintshire, six miles or so f Chester, and close to the Airbus factory at Broughtor Iveco's used truck operation is already suffering from a stock shortage, admits Evans.
"At the end of 2009, our stock was 20% lower than had anticipated." he says. And things have not improve( noticeably since."As things stand, we haven't got any Ei trucks in the yard, although some are due in imminentl■ "Originally, we forecasted a total of around 1.500 u sales for 2010, but I believe the final figure will turn u be far less," he continues. "Indeed, I think our sales co fall by as much as 50% this year compared with last y not because of a lack of demand, but because we won have the vehicles available."
Iveco sold 2.100 second-hand vehicles in 2009, up f] 1,050 in the previous year, so a 50% drop would push volumes hack down to 2008 levels: yet another indica A Evans believes that that the used truck business is at present behaving rat sales could fall because like a rollercoaster. However, none of this is to sugges of a shortage of Euro-4Iveco outlets are neglecting profit opportunities that compliant vehicles second-hand trucks present, he stresses "As well as buying from us. many of them retail son the part-exchanges they take in. and go out and buy s on the open market," he says."In some cases, they rur rental fleets and as a result have their own vehicles to dispose of. They all sell used trucks: but they don't necessarily get all of them from us." •