according to Paccar Financial regional operations director Mike Rankin.
"The economy is becoming a little sluggish, and that has reduced freight volumes and profits," he explained at Peterbilt's recent annual Red Oval Pre-Owned Truck Managers Meeting in Frisco, Texas. At the same time, "fuel and insurance costs have been going up, putting the squeeze on monthly operating budgets of truckers."
Rankin noted that interest rates have also gone up, and that "has driven up the costs of funds for lenders and the rates it charges customers."
These impacts have combined to slow fleet replacement and caused fleets difficulties in paying for existing equipment. It has also led to an increase in past due accounts, as well as more voluntary turn-ins and repossessions.
As a consequence, "the truck and trailer finance industry is facing large credit losses," and many companies are rethinking their lending strategies. Rankin highlighted the actions being taken by some lenders:
* Greentree Financial has ceased operations and is in a liquidation mode.
* Orix is no longer interested in financing owner operators.
* Newcourt been absorbed by CIT and has cut back on its participation.
* General Electric Credit is no longer accepting applications to finance one-truck owner operators.
Paccar Financial has adapted its credit practices but continues to support Peterbilt and Kenworth dealers in financing equipment purchases, Rankin said. He said the company is currently developing new finance programs with better rates and more flexibility.