OXON HILL, MD – The sale of used North American trucks to overseas markets may once again become a useful technique for maximizing revenue for sellers, industry executives said, but for now the recession has caused even that market to decline, according to Transport Topics.
A Volvo Trucks vice president offered examples as to how the business has been a good one for the Swedish-based corporation, both for its European and North American tractors. However, a financial executive and a Navistar Inc. senior vice president said used-truck prices are currently at extremely low levels, with equipment inventories at glut stage.
“There are hundreds of billions of dollars in projects worldwide, and they all need [trucking] equipment,” said Frank Oliveira, a Canadian-based vice president with Volvo’s Arrow Truck Sales unit, which handles used vehicles.
Oliveira noted at an American Truck Dealers (ATD) convention workshop that much of his current load of business comes from the Middle East. For most of last year, high crude oil prices were helping bury the United States and Canada in recession, but they provided lots of money for building in and around the Persian Gulf.
“What’s happening in our backyards economically is not necessarily the case all over the world,” Oliveira said.
Before Arrow, Oliveira worked for Daimler AG and sold trucks in Europe and Africa in addition to the Middle East and North America.
While European cab-over models once dominated the developing world, Oliveira said businesses and governments in those nations now are doing more comparison shopping for trucks because of the Internet, and many buyers have switched to North American-style tractors.
“I went to Kuwait, and the first thing I saw on leaving the airport was a Penske truck made by International,” he said.
Much of that business has dissipated, though, said Scott Cohen, principal of Cobalt Finance, a used-truck financing company in Deerfield, Ill.
“At the end of 2007, there was a U.S. economic problem, but there was still growth overseas, but not now. The once decent export market has dried up,” Cohen said during an ATD presentation the day after Oliveira spoke.
Cohen said since the start of 2009, used-truck values have dropped further and inventory levels have risen.
Navistar Senior Vice President James Hebe said in an address to the dealer group that among the many problems the industry is now facing is low trade-in value for tractors.
Even Oliveira admitted that used-truck prices in Europe plunged by about 35 percent during the second half of 2008, but he said some major vendors managed to keep volumes high by slashing prices.