TORONTO, Ont. - Truck and trailer dealerships across the country are blaming everything from sales cycles to a high Canadian dollar for limited supplies of late-model used equipment. Regionally, 53-fo...
TORONTO, Ont. – Truck and trailer dealerships across the country are blaming everything from sales cycles to a high Canadian dollar for limited supplies of late-model used equipment. Regionally, 53-foot refrigerated van trailers are counted among the hottest sellers in the Toronto-to-Montreal corridor, while the construction frenzy surrounding Vancouver-Whistler’s 2010 Olympic preparations have made dump trucks so valuable that a growing number of owners appear to be selling their equipment privately.
For that matter, late-model highway tractors seem to be in demand everywhere – although many dealerships are finding it difficult to source them.
The tight supply of over-the-road equipment isn’t surprising when you consider the lull in new truck sales from 2001 to 2003, says Dennis Sheehan, co-owner and used truck manager at Sheehan’s Truck Centre in Burlington, Ont. The majority of trucks among today’s trade-ins tend to be five-to-seven years old because of it, and since most on-highway trucks average 200,000 km a year, the available equipment tends to be sitting beyond the million-kilometre mark that frightens many buyers, he says.
“I wish they’d go back to miles. It’s a lot easier to say 600,000 miles than a million kilometres,” jokes Steve Kenny, used truck manager at SelecTrucks of Toronto, suggesting the threshold is largely psychological.
Properly spec’d equipment can undeniably last well beyond that point, although it can be difficult to find finance companies willing to back older purchases, and some fleets insist on late-model equipment when signing contracts.
That’s not to suggest that the older equipment is always available, either. Some truck owners have ditched recent plans to sell their equipment after learning about the limited equity left in their trucks, says Ray Cotton, truck sales manager at Inland Kenworth in Langley, B.C. “If you remember, back in 1999 was probably one of the best years Canada ever saw for trucks being sold.” And many of those buyers delayed purchasing new equipment until they gained confidence in the engines built to meet 2003 emission requirements. (That year marked the widespread introduction of Exhaust Gas Recirculation systems.)
Compounding the equipment age is a strong Canadian dollar that has driven down the price of new and used equipment by 15 to 20 per cent in the last year and a half, says Dave Punt, owner of the Alberta Heavy Truck Centre.
When it comes to vocational trucks, demands tend to be driven by regional needs. For example, trucks with 46,000-lb. rears will always be popular in resource-rich areas such as northern Ontario, northern Quebec and Alberta’s oil patch, says Harvey Butcher, used truck manager at Premier Peterbilt in Brampton, Ontario.
And it’s not the only regional impact on equipment sales. Joe Burns, sales manager at the Carrier Truck Centre in Woodstock, Ont., says slower sales in the past few months can be blamed on a strong Canadian dollar and its impact on local businesses that are shipping fewer goods south of the border.
Meanwhile, Mike Hignett of Glasvan Great Dane in Mississauga, Ont. has been surprised by the recent surge in sales of 53-foot refrigerated vans. “Usually in the winter time, you don’t sell many reefers,” he admits.
“If you don’t have 53-foot lightweight reefers (these days), you don’t have anything,” agrees Yvon Fortin, used trailer manager for Action Utility Trailers in Montreal, referring to a strong demand for equipment weighing around 15,000 lbs. Three-year-old models are among the most popular offerings since they’re less than two-thirds the cost of new equipment, he adds.
Still, while Glasvan has been able to find equipment that’s a mere five to six years old – with plenty of life left in it – the trailers now need to be sourced one at a time. “We’re used to dealing in groups of 50 to 100 (trade-ins) at a time,” Hignett says.
Used 53-foot dry vans are also growing in popularity in some regions as buyers balk at higher costs for new equipment, driven up by higher commodity prices ranging from aluminum to steel, Fortin says.
Again, the supply can be a key issue. While buyers around Belleville, Ont. seem to want some of the vans built between 2000 and 2002, Markham Equipment Sales manager Don McInroy says “the big fleets aren’t changing much of their equipment so far.”
Value and availability
Owner/operators who want to maximize the value of their trade-ins these days should consider flipping tractors after three years, suggests Peter Cook, sales manager at Valley Equipment in Hartland, N.B. And when it comes to the resale of a truck, bigger always seems to be better. He is happiest when customers want to trade in equipment with vocational spec’s that include 46,000-lbs. rear ends and differential locks.
And since owner/operators tend to dominate those who want to be second owners, Butcher is always looking for high-horsepower engines and 18-speed transmissions. Anything with 380 to 410 hp may be ideal for city applications, but they don’t hold their value in the same way. “A fleet spec’ with a 10-speed, they’re a little harder to sell,” he says. In general, there always appears to be a demand for long-nose conventionals with high-rise sleepers. Those with the highest mileage are the exception, says Don Leslie of Don’s Truck Sales in Langley, B.C. “They got all these (integrated) sleepers and you can’t take them off worth a darn,” he notes, referring to how many over-the-road tractors can find a second life as a day cab.
Kenny goes so far as to suggest that local haulers want minimal bunk space, depending on the routes they travel. The price of fuel, however, is beginning to have an impact on some used sales.
“In that last couple of months, with these higher fuel costs, we’re starting to see people look at used fuel economy again,” Punt says. “Even the owner/operators are starting to think twice about the big, big engines.”
A truck’s value will also be affected by the condition of the equipment. A dealership typically needs to spend about $5,000 to safety a truck and replace its tires – and that’s when the truck is in good shape. Want to maximize the trade-in value? Cosmetic work goes a long way, Kenny says, referring to the value of fixing body damage and replacing tires. Even soap can make a difference. “If I get in the truck and find a newspaper from 1998, I know he hasn’t kept it clean.”
It’s more than a matter of being a neat freak – a messy truck can be a sign of equipment that hasn’t been properly maintained.
Maximizing trailer value
Want to get the most for your trailer? Consider trading new equipment within five years, Hignett suggests, noting that 10-year-old equipment is often destined for life as warehouse space on a back lot. And he adds that buyers of new equipment should also be careful to spec’ equipment appropriate for U.S.-bound freight.
“You want to spec’ a trailer…that’s going to fit the masses when you’re going to sell it.”
“Petroleum tankers (built in the) 1980s are boat anchors,” Krohnert adds. “And if it’s a tri-axle, most people are just keeping them because nobody wants them.” In fact, the latter configurations can earn less than $10,000 on a trade-in.
In comparison, it can often be a matter of reading the local market. He’s been moving plenty of 44-foot quad-axle tankers on his lot.
“Anything we order in for stock, it’s typically sold before it hits the ground,” he says, noting how higher steel and aluminum prices have seen many buyers gravitate toward used lots.
Regardless of the products, however, today’s dealerships know they need to be reasonable with prices because buyers are better informed, Kenny adds, referring to the ease with which values can be researched. “Everyone is on the Internet in their boxer shorts and bunny slippers (doing their homework) at three in the morning.”