WESTBURY, N.Y. – Repossessions and liquidations of tractor-trailer trucks rose nearly 8 percent in 2006 compared with 2005, according to Nassau Asset Management's NasTrac Quarterly Index (NQI). The company tracks equipment trends as part of its business providing collections, repossessions, and remarketing services to the nation's leasing and finance industry.

An increase in repossessions is not always negative, says Nassau President Edward Castagna. It can simply reflect an overall increase in financed equipment saturating the marketplace or consolidation as well as mergers and acquisitions.

But the rise in tractor-trailer repossessions in 2006 seems to signal that another challenging year is ahead for small-to-mid-sized trucking businesses – one that could result in even greater numbers of repossessions.

"Truck repossessions and liquidations have been on an upward trend for seven of the past eight quarters, and current conditions indicate this trend will continue," Castagna explains. "Fuel prices are lower than during the spikes in 2005, but still highly unstable. The drop in new home construction is hurting portions of the transportation sector. And there are general economic factors to consider. Problems with the sub-prime mortgage industry, for example, are making it harder for struggling businesses everywhere to squeeze equity from their real estate."

However, the current demand for used tractor-trailer vehicles is rising.

"Right now there is a steady market for used trucks," Castagna says. "It is difficult to predict the future, but we feel the market should remain strong this year and possibly into 2008."

One reason is that the 2007 trucks meeting new EPA diesel engine regulations are just starting to roll off the line. Their engines are unproven, cost more to maintain, and are being avoided by buyers for as long as possible, according to Castagna. Even though today's buyers can opt for new 2006 models that are still being sold, Castagna believes concerns over the 2007 models may also fuel used truck sales.

Nassau's latest NQI compares the company's internal repossession and orderly liquidation activity in 2006 with 2005. In addition to reporting on tractor-trailer trucks, the latest NQI revealed the following trends:

Construction repos flat-lined — Repossessions and liquidations of construction equipment dropped insignificantly in 2006 (-2 percent). Castagna believes the market for used construction equipment will remain strong due to the weakened dollar, which attracts international buyers, and because of steady demand from global mining, roadwork, and infrastructure projects. He says Nassau is keeping a close watch on slowdowns in certain sectors of the construction industry, such as new housing, as well as the fallout from sub prime rate mortgages; both situations have the potential to affect repossessions not only in the construction industry, but also for forestry, sawmills, truss manufacturing, excavating, transportation, and other industries serving builders.

Machine tool repos rose moderately — Repossessions and liquidations of machine tools rose more than 8 percent in 2006. This reflects the increasing number of machine tools in the marketplace as the industry recovers from lows earlier this decade. The market grew an estimated 27 percent in 2006, experiencing its best year since 2000, according to the Association for Manufacturing Technology.

Medical repos dropped — Repossessions and liquidations nose dived in 2006 for medical devices (-33 percent). Nassau believes the numbers reflect the strength and stability of the medical equipment market in recent years, resulting in fewer repossessions for that sector. The market for new medical devices is growing 8-10 percent annually, according to a report by Accellent Inc., a manufacturing services provider to the medical device industry, and market demand for innovative products should continue as the population ages.

Printing repos plunged — Repossessions and liquidations of printing equipment also decreased (-35 percent). To date, Nassau has found little industry data to pinpoint reasons for the drop, but is continuing to study the situation. Castagna also notes that his colleagues are reporting a possible pick up in printing repossessions activity so far in 2007.