The Used Truck Association held a meeting with key used truck industry officials recently, looking for more ways to address the current oversupply of used trucks.

Participating in the meeting in Indianapolis were truck manufacturers’ national used truck managers, franchised truck dealer used truck managers, independent used truck dealer managers, finance company executives, used truck consultants and appraisers, and the UTA board of directors.
“Our purpose was to build upon ideas advanced at our October convention, the theme of which was 'Turning Problems Into Profits: Managing Your Way Through An Oversupplied Used Truck Market,'” explained UTA President Steve “Bear” Nadolson.
Participants "outlined the realities of the market," he said, "then looked at the components of those realities for clues as to what courses of action could be taken to ease the crunch being felt in the marketplace today."
Among the components identified:

• Creditworthiness of used truck buyers is too marginal in many cases.

• New truck pricing is very competitive, and heavy discounts are driving down late model used truck values.

• New truck levels of supply (1999, 2000, 2001) are still high, raising the question: Do OEMs need to build 2002 models?

• Used truck financing has tightened up as a result of the huge losses and repossessions held by every financial institution.

• Wholesale and retail truck prices are being driven by supply economics, as well as the impact of auctions and used truck worth as determined by used equipment valuation guides. (While a reflection of the market, values from these guides still have an influence on finance advances on any particular used truck.)

• Market is being driven by all the aforementioned influences, plus high fuel and insurance costs, a cooling economy and high used truck interest rates.

To address these issues, the UTA meeting participants agreed upon a number of action items.
Since used truck valuation guides reflect the market, dealers can help enhance the value of used trucks by accurately reporting their sales of used equipment. "Representatives of the value guides said dealer reporting is poor," said Nadolson, "and they encourage better and more complete input of what used trucks sell for."
Finance representatives said they would be more conscientious in training underwriters to be aware that reconditioning adds value to used trucks and thus increased loan values may be warranted. The UTA leadership volunteered to compile warranty data into a manual form for use by lenders.
Because poor business skills have contributed to a lot of used truck loan failures, lending criteria needs to be changed to include business training. The financial representatives said they would consider this action.
Finance representatives want dealers to provide more accurate information. To this end, the representatives, working in conjunction with the UTA, will compose a list of the desired information and distribute it to dealers.
Follow-up meetings will be expanded to include delegates from American Truck Dealers, National Trailer Dealers Association, National Automobile Dealers Association, American Trucking Associations, all truck manufacturers, all financial organizations and dealers from every franchise. (Many of these groups were invited to attend the late January meeting but either refused or had conflicting obligations.)
"It should be pointed out that an attorney was retained for the meeting to ensure that participants did not breech any federal anti-trust issues," Nadolson said. "We intend to meet on a semi-annual basis to continue to discuss issues germane to the used truck industry and come up with plans for dealing with those issues and challenges."
For additional information, visit the UTA web site at www.uta.org or phone (410) 602-2470.