Truck repos help drive pre-owned market
WESTBURY, N.Y. -- Repossessions and liquidations of tractor-trailer trucks have been high for the past five quarters, reports N.Y.-based Nassau Asset Management. Yet, those same trucks are reselling at a brisk pace, illustrating the diverse forces affecting the trucking sector. Nassau's NasTrac Quarterly Index (NQI) reveals trends in equipment repossessions and orderly liquidations. The company also has been tracking truck repossessions and liquidations from quarter-to-quarter due to the importance of this sector. "We feel truck repossession trends are important because freight transportation is an essential component in many equipment sectors we watch to predict what our economy is doing, including construction, manufacturing and retail sales," says Nassau President Edward Castagna. Nassau indicates that U.S. truck repossessions and liquidations began to climb in first quarter of 2005 after two years of relatively low volume. The volume of repossessions was 145 percent higher than in Q4 2004. Repos in the first quarter of 2006 increased 40 percent over the previous quarter. Castagna says many factors -- negative and positive -- can affect truck repossessions and liquidations. The bad news: High fuel costs are contributing to repossessions. While the ability to apply fuel surcharges to customers is helping mitigate the effects for some of the larger truckers, most truckers do not exact fuel surcharges. Driver shortages may also be affecting the numbers of repossessions and liquidations if small carriers can't find qualified people to get behind the wheel, Castagna notes. However, there are more financed vehicles on the road than there were a few years ago as equipment leasing and finance volumes have rebounded from the economic downturn in 2001. The more vehicles on the road, the more natural repossessions and liquidations, Castagna adds. Another sign of a strengthening trucking industry, he says, is increasing demand for new and used vehicles to avoid 2007 models that will have more complicated anti-pollution engine systems. Furthermore, trucks the company has repossessed or liquidated are reselling quickly. "We feel the rush to change out fleets before year end may leave a surplus of used trucks on the secondary market," Castagna says.