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Calm before the storm
Page 60
Page 61
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Buyers in the UK trailer market are sitting tight as manufacturers struggle to turn deals into sales, and while the used market just ticks over, the spectre of 30,000 unsold trailers from mainland
Europe looms large. Words: Kevin Swallow Last year, eastern European hauliers went mad, cashing in on the extra business generated by heading west, snapping up more than 100,000 trailers.
According to Gary Beecroft, director of automotive and transport consultancy group CLEAR, the trailer manufacturers benefiting were Schmitz, Krone and Kitigel, plus Austria's Schwarzmtiller Europe's four largest trailer manufacturers.
"The figures show only registrations of new trailers there is also a market for imported used trailers from Western Europe, which in some Eastern European countries is almost as large as the new vehicle market," Beecroft says.
Hitting the buffers Poland, Russia and Turkey accounted for 61% of the market, which was worth €3bn (approximately £2.4bn). Fast forward 12 months and that growth has slowed, coinciding with Western Europe "hitting the buffers-.
He adds: "At the 2008 IAA trade fair in Germany, component manufacturers were reporting a massive decline in demand from heavy trailer manufacturers, with orders down by as much as 50%. There were rumours of 20,000 to 30,000 unsold trailers littering the fields of Europe.
"Until this stock of trailers is cleared from the market, there is little hope of an upturn for component orders. That means no improvement until next year. I have heard the current market described as brutal."
Growth in the east is down from an average of 27% over the past five years to 6% growth forecasted for 2008, and that's thanks to the strong Russian market.
UK trailer manufacturers and importers have publicly dismissed a flood of unsold trailers hitting these shores, thanks mainly to the Euro and shipping costs, but none denied in private that deals could be struck between mainland divisions of specific UK importers to move some of the stock here.
Paul Bratton, general manager at SDC Trailers in Mansfield, says it's unlikely. "The Germans could take a hit and flood the market, but what's the Euro at the moment, €1.20 to the pound? That will keep them that side of the Channel Plus, people don't want them. All that galvanised chassis, people like their colours here," he explains.
Although the UK market lacks confidence, it only needs something to kick start it. "You have got to be optimistic; a lot of it is hope. The new market is very slow, there are orders out there, but people are delaying," he continues. "There are not the volumes there were."
Key is capital investment, Bratton insists, and the The current market Americans sorting themselves out. The used market, has been described as though, he believes, is ticking over. "It is very buoyant and brutal, says CLEAR's there is a lot of repair and refurbishment business out Gary Beechcroft there. Operators using used trucks are the smaller owners up to 20 fleet vehicles, who might need an extra trailer, who don't want a blue one, they want it in their colours," he reveals.
At auction, there is still a market for trailers, but poor quality could threaten a potential sale. George Alexander, chief commercial vehicle editor of Glass's Guide, says used buyers have become far choosier resulting in prices for all average stock sliding.
"After condition and year, it is a trailer's manufacturer that decides their fate when offered for sale at auction. Trailers of optimum design, having good tyres and suspension and showing few signs of being overly worked remain popular," he says.
"Unfortunately, auction sites have too many rows of poor stock and this tends to depress the proceedings."
Buoyant market
Ian Short, auctioneer at ProTruck Auctions, says the sub-£5,000 market is buoyant and is price-related. "Buyers are looking at value not quality, there could be up to 20 bidders per trailer in this sector. Skellies and curtainsiders up to £2,500 are in short supply, there might be 15 and more bidders. Trailers valued up to £10,000 will have less bidders, probably about 10," he says.
Those fighting for the sub-£5,000 stock are exporters as well as an increasing number of domestic operators looking for value. PTA will have more than 70 trailers in its fortnightly sales, with at least half of these in the sub£5,000 bracket, and that number, says Short, is growing.
It seems that switched-on buyers, mainly trade and third-party buyers with cash, says Short, are bidding on the top-end stuff worth in excess of £10,000.
"That is where the bargains are to be had, we will have up to 15 trailers on offer, priced at more than £10,000. Vendors have to bite the bullet and take it, forget what it owes you and realise what you can get," he says.
In the past three months, trailers worth £20,000 have now dropped down to between £15,000 and £6,000, he says a 25% hit that is across the board.
"Anyone brave enough to buy stuff now will make a killing in the New Year," he says, when he expects the market to pick up. IN
THE MINIMAL PROCESS
Rather than slash prices to secure sales, the Schmitz Cargobull [UK] factory at Harelaw, County Durham, has developed minimal, Nissan-style automotive manufacturing techniques to improve and speed up the trailer building process.
While operations general manager Paul Avery is increasing capacity to 12 curtainsiders and 10 reefers a day, any savings from quicker production is swallowedup by rising material costs and is not passed to the end user.
The enhanced production is in place for managing director Tom Macallan's aim for Schmitz Cargobull "to be number one in the UK" to be realised.
Nigel Somers, regional sales director (North), announced that for the 2007/08 financial year, the group reported a €2.1bn (E1.65bn) turnover selling more than 66,500 trailers, with the UK returning £74 9m turnover.
Behind the scenes, Schmitz customers and employees warned that the market will be hard hit before its gets better. Already claiming to be the UK leader in reefer sales with 41% of the approximate 3,500-unit market, Somers sees the curtainsider sector as a growth area, and where he believes Schmitz has a 17% market share.