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As the global financial crisis deepens, used dealers are having
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to fight hard for every scrap of business, but there are still buyers hunting for quality bargains.
Words: Steve Banner Dealers are being forced to scrap for every bit of business that is available in one of the toughest used markets that any of them can remember.
"Things have never been more difficult," reveals Stuart Wolstenholme. used truck sales manager at Scania dealership West Pennine's Middleton, Manchester branch.
"There's not a lot happening on the sales front at present," says Mike Curtis, Worcester-based used truck sales manager at Daf dealership Watts Trucks.
He adds: "People are hanging on to their money, and the fact fuel prices have fallen has made little difference to their attitude. They don't want to commit to purchasing."
"I've not known trading conditions quite like this for many years," reckons Jamie McDonald of Eye, Suffolk dealership Roy Humphrey.
But demand for stock is not completely dead, though, stresses Wolstenholme.
"I'm on the hunt for 18-tonners because there are still plenty of customers after them," he explains. "As for 26-tonners, I've had three in over the past three weeks, and sold all of them pretty easily.
"I've had a lot of interest in some sixand eight-wheeler hooklifts that I've got, too," he adds.
"Eighteen-tonne curtainsiders are also in demand, and I'd struggle to find a decent one," states Matt Hammond, the used vehicle sales manager at West Thurrock, Essex-based Harris Dat More effort "While it's true that things aren't all rosy. you still have a choice," says Jonathan Bownes, sales executive at Volvo dealership Thomas Hardie's Cheshire-based central used truck operation. "You can either sit there all day just looking at your stock or you can go out and sell it. The days of customers walking into your yard and saying, 'I'll have that one, that one and that one' have gone."
That said, Bownes has just sold six 56-plate tractor units for over £50,000 each, and had a better November than he did in 2007. He does admit, though, that the bulk of the vehicles he's selling at the moment are at the less pricey end of the scale. "For the most part, it's the sub-£30,000 stuff that's moving," he observes.
"People are looking for three-to-four-year-old stuff, priced from £25,000 to £30,000 and with a decent history," explains McDonald.
Hammond agrees with Bownes that sales staff are having to put in a lot more effort in today's climate than they did when business was booming.
"It used to be the case that dealers had hauliers queuing up to buy used trucks from them," he says. "It's not like that now, so we've all got to work a bit harder."
And that includes going through lists of customers even more thoroughly with an eye to spotting likely sales opportunities. Hammond has been doing exactly that, especially where 7.5-tonners are concerned, and he's had some success...
"Things aren't good. The market is down from where it was and tractor unit sales in particular are slow — but they're not quite as bad as some suggest," he says.
"Dealers have got to keep soldiering on and put the effort in," reckons Curtis. "It's as simple as that."
That said, one of the problems is that many dealers are overstocked with trucks that they bought when prices were at their peak, and now they cannot dispose of them without suffering a hefty loss. Those who do not have yards full of vehicles are at a definite advantage.
"We've brought our stock levels right down," reveals Curtis. "And we've halved our stock since last May," adds Wolstenholme.
"We've been slowly thinning our stock out, but we tend to do so at this time of year anyway," explains Bownes.
"We're probably carrying around £1.5m worth of trucks at present," he continues. "That's what I had 12 months ago, too, but because of the way prices have dropped, it represents more vehicles now than it did then."
Another difficulty is the lack of any clear pattern to the market. "It's up and down," says McDonald. -We have a good week then we have a bad week. The phones won't ring for two or three days, then they start ringing again:' "We're also discovering that some operators are finding it difficult to raise the necessary finance," he adds. "Funders are insisting on a 25% to 30% deposit in certain eases."
That is not the experience of all dealers. "Our customers still seem able to get finance," says Wolstenholme.
Something that is pushing stock levels back up again at many dealerships is an influx of part-exchanges as dealers who have managed to sell a new truck or two take in whatever the operator wants to get rid of.
Not all of those part-exs are terribly desirable, but some dealers feel that they have no choice but to accept them if they want to secure the new vehicle deal.
Unique selling points
In some cases they may of course be tempted to over-value the part-ex, which compounds the dealership's stocking headaches and stores up future problems "I have no objections to taking in part-exchanges," says Bownes. "I simply get them washed and cleaned up generally, then sell them on.
"But hauliers have to understand that the part-exs they are offering are now worth significantly less than they might have been, say, 12 to 18 months ago. That said, a new truck won't cost them so much either."
From a price point of view, there's never been a better time to buy a truck. "In some cases, prices have been dropping by around £2,000 a month," says Curtis.
"Remember that there was an over-inflation of prices in 2007," says Hammond.
"I reckon that they've dropped by 25% over the past 12 months, but I doubt they'll go any lower now. We're getting to the point at which dealers simply will not sell vehicles any cheaper." If operators do not want to buy used trucks, then there is no reason why they cannot take them on a short-term lease Hammond reckons. He is making use of a finance package that has been put together by Paccar that allows him to offer three-year-old Daf 95XFS on a 12-month lease either with or without maintenance.
He believes the scheme will appeal to operators who are in the market to replace trucks but do not want to commit themselves to buying one until they have a clearer idea of what the economy is going to do.
Used 2006-vintage 06-plate Actros 2546LS 6x2 units are available through Mercedes-Benz dealerships on a two-year operating lease courtesy of Mercedes-Benz CharterWay. Oneyear CharterWay operating lease deals are available on year-old long-wheelbase high-roof Sprinter 311CDI vans, too.
Another way of appealing to operators is to offer work with the trucks you're selling.
This is exactly the approach that is being followed by secondhandtruclaco.uk, the fleet sales arm of Maritime Transport, and it is an offer being taken up by more and more of its customers.
"We've got work, we need people to do it and we haven't cut our rates," explains general manager, Matt Heath. "Admittedly, the sales operation isn't as busy as it was 12 months ago but we're still taking plenty of inquiries."
So what's going to happen in 2009? Opinions seem to differ between dealerships. "January will be something of a non-event, but things will hopefully start to pick up in February," states Bownes.
"Let's hope we see some improvement during the first quarter," says Curtis.
"I'm hoping things will start to get better during the first four or five months of 2009," says McDonald.
Wolstenhohne strikes a more pessimistic note. "Business confidence has taken such a knock that I think it's going to be tough throughout the whole year," he says. •