The State of the Dealer Market
Editor’s note: This is the first of a two part series on the state of the truck dealer market. The second part will publish Dec. 26.
Holiday colors may be green and red, but this time of year, the two most important colors to business owners are red and black.
Most dealers in the North American commercial vehicle marketplace will close the year using their black pens. But the journey to a positive bottom line wasn’t a simple one.
This was a challenging year for the dealer market.
This year will go down as a mixed bag for the truck sales.
New truck sales were steady but average most of the year. A late spike in October provided only a temporary reprieve, as November sales stumbled back in line with year-long levels.
Used truck sales, however, were strong throughout most of 2013.
According to sales data released by Polk earlier this month the first nine months of 2013 represented the second-strongest used vehicle sales period since Polk started tracking used transactions in 2004.
And while NADA/ATD projections for November show the used market sagged slightly coming to the end of the year, overall sales remained strong.
There are several reasons for the uneven year, notes Keith Ely, managing partner at KEA Advisors.
One obvious factor was the rising cost of new trucks. The 2014 emission regulations created a price bump for new vehicles, and some fleets chose to keep older trucks and/or purchase used vehicles to avoid those added costs.
This meant dealers with the access to quality used trucks were able to thrive, says Peach State Freightliner CFO Greg Althardt.
“If you can find good ones that aren’t totally beat up you are going to make good money,” he says. “But the Catch-22 is good used trucks are hard to find. Fleets that have them aren’t in any hurry to give them up.”
Ely adds “finding equipment that is in demand is a challenge. Those good pre-emission trucks are really hard to come by.”
An uncertain United States economy also provided to be a weakening factor to the sales market early in the year. A variety of economic problems formed in 2012 remained unsolved entering 2013. Fleet utilization was affected, and with less trucks needed, few were purchased.