Truck market improves but money still tight


Things are looking positive for the truck market but dealerships are struggling to close deals due to tight credit conditions

Truck market improves but money still tight
Truck market improves but money still tight

By Gary Worrall | November 5, 2010

The Australian truck market continued its slow recovery during October, with a buoyant general economy providing enough impetus for operators to return to dealerships in greater numbers.

This general air of optimism is tempered by ongoing difficulties in accessing new truck finance, with numerous dealers reporting high enquiry levels that are not reflected in the number of approved credit applications.

While dealers say they do not wish to see a return to a glut of finance, there is a concern that an over-reaction by financial institutions is hindering a ‘responsible’ level of sales.

As has been the case for more than a year, Isuzu and Kenworth dominated the sales scene, with Isuzu returning yet another month of overall market leadership by delivering 610 units for the month.

Hino cemented its second place with 350 units for the month, comfortably ahead of fellow Japanese manufacturer Fuso (235 units).

Kenworth remains king of the heavy duty market with 148 deliveries during October. Kenworth’s national marketing manager Andrew Hadjikakou says are all current models.

"All of these trucks are all ADR 80/02 models, there will be no ADR 80/03 product being delivered until January 2011," Hadjikakou says.

"We do have some prototypes of the new range out in the field doing testing, and they are generating plenty of positive feedback."

Behind Kenworth, Volvo retains second place in the heavy duty market, with 62 units for the month, although Western Star (65) and Isuzu (80) are both making inroads into Volvo’s lead.

The good news for Kenworth, which is possibly not so good for its competitors, is the level of customer response to the new K200 model, due for introduction in April 2011.

"There is a great level of interest in the K200, we are touring the country with it as part of our cavalcade, and operators are saying good things about it," Hadjikakou says.

He says the Kenworth order book for the rest of 2010 and even into early 2011 is positive.

"But we are not really sure where 2011 is heading, the operators are still a little uncertain about what the new year holds for the industry."

Swedish manufacturer Scania is another holding high hopes for a strong finish to the year, with sources saying the truck market is showing signs of life.

"We are the expecting a strong finish to the year, but it is hard to say what is happening next year," the source says.

While Scania is another manufacturer with its own finance company, reports are that operators do not seem to be shopping around for finance, outside of traditional sources of money.

Scania’s new rental fleet of prime movers is also influencing the market, the source says, with a good level of inquiry on the service as operators look at long term truck rentals.

Sales manager for Brisbane Isuzu Greg Smith says the retail sector is definitely down, describing business as "fits and spurts".

According to Smith, customer traffic is "very sporadic". It's a situation he does not see changing before June 2011.

"We are coming into what is traditionally a quiet period over Christmas. I would expect that it will be the end of the second quarter next year before we see consistency returning to the market," Smith says.

He feels the building industry has also become stifled, impacting on sales and leading to a 20 percent decline in completed transactions.

"We were getting plenty of guys looking to move up from a one tonne ute pulling a trailer into an alloy trayback that drives like their ute but can carry a lot more, but this has dried up," Smith says.

Like many of his peers, he says finance is still holding back many new truck deals as customers struggle to gain approval.

"We are getting quality leads, but finance is still an issue, the people coming in are from solid businesses, with good plans in place but you have got to work harder to complete a deal."

With Brisbane Isuzu using a range of finance options for clients, Smith says it is not that one or two financiers that are being difficult, "it is tough all round".


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