So last week I dialed into a conference call arranged by Navistar to discuss its new “Diamond Renewed” reconditioned used truck program (you can read more about that here, with insight into the company’s broader strategy for rebuilding market share in U.S. here.)
In the course of the round table discussion, David Gerrard – Navistar’s senior VP of distribution – noted that used trucks are a pretty good source of business for the OEM, as the company sells some 7,000 to 10,000 used units through its network of 15 International Used Truck Centers scattered across the U.S.
How “good” a source of business you might ask? Try about $20 million in revenue annually … per used truck center, or nearly $300 million for the entire network.
That right there tells you just how valuable the used truck market is to everyone involved in it these days – from OEMs and leasing companies to dealers and fleets alike. (This story illustrates how used truck prices are benefitting from the strengthening demand for used iron.)
This isn’t exactly a new trend, though; indeed, Steve Clough – president of Arrow Truck Sales –highlighted the used truck market’s strength over the last few years in presentations you can find here and here.
Now, however, all sorts of used truck-focused activity is in the works. Mitsubishi Fuso, for example, rolled out a new warranty program for its used iron back in May.
Then this week, leasing and third party logistics (3PL) giant Ryder System launched what its dubbed the “Keep It Cool” promotion in the U.S. and Canada – a deal available through September 1 this year offering a free 12-month warranty, underwritten by Premium 2000+, on qualified used refrigerated trucks that covers both the truck’s engine and the refrigeration unit.
“We designed this special warranty to give buyers added piece of mind when making a decision to purchase a used refrigerated vehicle,” said Eugene Tangney, Ryder’s VP of asset management and vehicle sales, noting in a statement that the company’s used vehicle inventory also includes tractors, trailers, straight trucks, panel and cube vans, plus stake trucks that come with a 30-day warranty and complete vehicle maintenance history.
[Several years back Mike Stephens with Ryder Vehicle Sales in Dallas TX walked me through the inspection process conducted by the company to insure used equipment being readied for sale meets its standards.]
Ryder, by the way, said its sells over 17,000 used vehicles a year via its network of 59 used vehicle sales centers across North America, which includes seven in Canada. (The company also just launched a new national brand awareness campaign that you can check out here.)
Penske Corp. is another big player in the used truck space and puts a lot of effort into prepping the 23,000 or so used units the company expects to sell this year.
Earlier this year I talked to Penske’s Jack Mitchell about that process here and all the cleaning and record-keeping involved illustrates just how valuable a property used commercial trucks are in the U.S. today.
It’s no wonder, either, since the average cost of a new tractor-trailer is now estimated to range between $140,000 and $175,000 according to data analyzed by global consulting firm Frost & Sullivan – anywhere from $110,000 to $125,000 for a new tractor and $30,000 to $50,000 for a new trailer.
(Sandeep Kar, the firm’s global director of research, automotive and transportation, talked about how such sticker prices are affecting total cost or operation or TCO calculations for fleets here. You can also get his take on overall global truck sales trends here.)
In short, then, these remain busy times for both buyers and sellers of used equipment – and the pace shows no signs of slowing anytime soon.