Executive Perspective: Build A Complete Used Truck Strategy
executive perspective
Denise L. Rondini | Editor | drondini@rrpub.com
Build A Complete Used Truck Strategy
This issue the Executive Perspective focuses on the role of used truck sales in a successful dealership. Karen Braddy, general manager at Manheim Specialty and Heavy Trucking and Equipment, shares her thoughts on the state of the used truck market and the role of auctions.
SD: What is the state of the market for used trucks?
general, the state of the market for mediumand heavy-duty used trucks is tough. The medium-duty market is flooded with a lot of box-type, rental-type trucks, which drives down the value of used trucks. However, we are starting to see some positive trends. We are seeing small to modest increases in orders over the prior months and the prior year. But, the increases are well below the peak level. Overall used is still an attractive market. Used products are less expensive for those who are in the market to resell. If I am a dealer looking to resell to a retail customer, the margins are higher so that makes them attractive.
KB: We are a remarketing channel. Dealers have trucks
on their lots that might have been sitting there for awhile and they might not have the proper buyer for them. They need to move them. Also they may need different kinds of used trucks in their inventory. They should use the auction for both buying and selling used trucks. They do it on their lots--they take in trades and then resell them. That is kind of the same concept at auction. It keeps your inventory fresh.
KB: In
SD: What do dealers need to know about auctions? KB: They need to do their homework. I highly suggest they use the tools that are available online so they can get comfortable with the process and not see an auction as a necessary evil or the last-chance stop that a unit has before it is put in the junkyard. It is not; it is a viable secondary market that drives profit to the bottom line. They need to educate themselves about how to use auctions in the best way. They need to watch the auction market and understand how to value trucks. We recommend dealers consult used truck valuation guides or use our heavy truck market reports, which tell them what the actual auction sales have been. This helps them gauge a reasonable selling price (asking price) or purchase price (offer) for a truck. We do not succeed unless we bring the buyer and seller together, so the guides are a very important point because they help make sure customers have reasonable asking prices and we have reasonable bidprices from our buyers.
SD:
What do you see in the near term and then looking farther out?
KB: The heavy truck market is a very mature business so we see very slow or minimal growth overall. When you listen to economists and other experts, they are predicting a turnaround in late 2010 or the first half of 2011. [Our internal sources] are saying it probably will be more in the mid- to late-2011 time frame barring any unforeseen craziness between now and then. As consumer confidence grows, our sales will in turn grow and we will sell more used trucks. SD: What are the benefits of dealers using auctions to buy and sell used trucks?
12 | SUCCESSFUL DEALER | April 2010