Penske making bet on used truck sales
This year, Penske Used Trucks will roll out upwards of three used commercial truck dealerships nationwide as part of a growth strategy that matches the company’s existing call center and web-based sales model with brick and mortar facilities.
With used trucks in great demand and supply thin, Jack Mitchell, Penske’s Vice President of Remarketing, says the time was right for the company to develop a new channel in which to move its used lease and rental equipment.
Mitchell says Penske’s used inventory is down year-over-year roughly 40 percent, but sales have been strong. Citing the company’s six year buying cycles, Mitchell says about 4,200 used trucks are currently listed on PenskeUsedTrucks.com.
The company has enjoyed success in the past with used sales mostly through a call center and, more recently, a website. However, Mitchell says it was important to have trucks readily available for customers to touch and feel – an element missing from Penske’s previous strategies. Also, Mitchell says having trucks ready to roll of the lot helps Penske tap into a growing consumer segment – fleets and drivers.
“From a growth strategy standpoint for the last five years or so, we still sell a lot of units to dealers,” he says. “But one of our biggest growth strategies is to sell more units to end users.”
This shift in sales strategy puts Penske in competition with traditionally its largest group of customers.
“Over 50 percent of all our sales are to dealers,” he says. “We sell trucks to over 1,500 dealers a year. We have contacts at over 4,500 locations around the country. So, it’s still a big part of our business and not something that we’re steering away from. It’s just part of the evolution of our business.”
Once a Penske truck comes off its lease (Mitchell says upwards of 65 percent of the company’s inventory comes from lease customers), it is moved to an out-service center, is de-identified (Penske and company badging is removed), and the truck is prepped for sale.
“We’ve got a ready-to-go unit that we can advertise on our website and then we have for the first time, a dedicated sales rep at these (dealership) locations,” he says. “Having some ready-to-go units in certain markets, where a customer does call our call center or goes on our website…it gives the customer the opportunity to go onsite and see our ready-to-go equipment.”
Cities selected for Penske used dealerships were identified through use of data that showed volumes of used truck sales in the market and in areas where the company has surplus facilities.
Penske Used Trucks opened a commercial truck dealership in Torrance, Calif. last month, which joined another site in Charlotte, N.C., as the company’s entry into the market. Others are planned for Arizona and Georgia later this year, but Mitchell has his sights set on explosive growth in years to come.
“In my perfect world, we’d have 10 in a couple years,” he says. “It will be slow growth over the next couple years.”
That growth will be driven by both truck supply and customer demand.
“We’re going to face the next couple of years like this year, where we have less and less trucks to sell,” he says, adding he expects to sell approximately 22,000 units this year.