Launched 35 years ago today, Daimler Truck Financial (DTF), the captive financing arm serving Daimler Trucks North America (DTNA) customers and dealers, is not resting on its past accomplishments. Rather, it is “taking critical steps to ensure our long-term success,” said Richard Howard, vp and head of DTF. “Although the market is extremely challenging at the moment, we’ve seen and survived our fair share of tough times.”
To be sure, DTF is celebrating how it has “put over a million trucks on the road since the mid-1970s” while building up its portfolio serviced to $5.4 billion and managing more than 43,000 contracts, according to Howard. The firm opened for business on June 24, 1974 as Freightliner Financial “with few employees and several contracts,” and has grown to employ 230. Most of the staff is now based in a new operations center in Fort Worth, TX, with some located in Fort Mill, SC and Farmington Hills, MI.
“Having stayed in the trucking industry through tough and good times in the economy, Daimler Truck Financial takes a balanced approach to managing its portfolio,” pointed out Howard. “The company focuses on profitable growth by diversifying its portfolio. Today, the portfolio is spread across the major trucking industry segments: fleet (51%), dealers (29%), vocational (10%) and owner-operator (9%).”
According to Steve Goodale, DTF vp for credit, the immediate issue is of course the economy. “We’re in a challenging credit market,” he told FleetOwner. “There is not much appetite for new trucks among fleets and small businesses [that use trucks]. The larger fleets are maintaining [their creditworthiness], but more and more we almost have to be in front of our other customers on a daily vs. a monthly basis to take the pulse of their business so we can be as proactive as possible.
“We have not yet seen a lot of loan restructuring requests, but this is still summer,” he continued. “We will have to watch for [that level of activity] more toward the end of the year. As of now, delinquencies have firmed up on the fleet side. We are seeing much greater pressure on owner-operators, due both to their lack of scale and the rate pressure on them.”
As for the vocational market, Goodale said that it amounts to “an interesting dynamic—there is some deterioration but the segment is still performing [overall].” He added that the DTN dealer body “remains healthy,” noting they “went into this recession with a better strategy on inventory than was the case in the ’01-’02 slowdown.”
To best judge the longer-term state of the market, Goodale advised keeping an eye on the October to December timeframe. “That will be the big test. Will the economy firm up by then—enough to keep the weak [trucking] players afloat through the winter? Sustainability is the question going forward.”
Howard noted that DTF is “known for its innovation in supporting customers” and in recent months has demonstrated this by introducing on-line training for dealerships to learn finance and insurance initiatives; won a bid from the Ports of Los Angeles and Long Beach to finance environmentally compliant hybrid trucks; and introduced insurance packages bundled into its financial products for fleets and dealerships. “Our purpose remains as steadfast today as it did when we started 35 years ago-- to be the first choice provider of financial products and services for dealers and fleets across all segments,” he added.