Bill Snyder, sales manager for Liquidity Services’ TruckCenter.com writes that with recovery being the ultimate and critical last step, financial institutions need a clear understanding of the key steps to maximizing value when it comes to selling off-lease or repossessed trucks and other equipment.
Bill Snyder, Sales Manager, Liquidity Services’ TruckCenter.com marketplace
With recovery being the ultimate and critical last step, financial institutions need a clear understanding of the key steps to maximizing value when it comes to selling off-lease or repossessed trucks and other equipment. Understanding the landscape of the secondary market as well as implementing useable techniques to maximize return can help financial institutions achieve their recovery goals.
The State of the Secondary Marketplace
The various platforms for remarketing surplus trucks combined with widespread acceptance and demand for trucks on the secondary market enable a high return for the assets. It’s important to understand the current dynamics within the secondary market to properly set expectations for what is a good recovery value.
First, the competitive environment of the secondary market is greatly impacted by how large fleet operators approach the lifecycle of their trucks. Most organizations turn over approximately 20% of their fleets every year; for a large company that could be up to 1,500 trucks. Typically these trucks are five years old and have between 500,000 and 600,000 miles. The reason for the turnover after five years is threefold: the expiration of warranty, completed depreciation, and the recovery value is generally higher for a truck in that mileage range. Trucks in the 500,000-600,000 range that have been properly maintained can still have a lot of mileage left in them and always garner more interest from buyers and therefore a higher recovery. As a result, financial institutions can expect increased competition among sellers for trucks in this condition and higher expectations from buyers with respect to truck quality.
Secondly, recent EPA standards are also impacting what buyers in the secondary marketplace are willing to buy. Due to difficult EPA restrictions and the cost to maintain trucks built after 2012, there is increased demand on the secondary market for models with older engines that are “grandfathered in” and not subject to the standards of newer trucks. These older models will often generate higher recoveries for the leasing institution because the total cost of ownership is lower for the buyer than the new models. Many fleets are holding on to their pre-2012 models for an extra year or two, versus turning them over after the usual five-year cycle, making them a hot commodity on the secondary market.
How to Get the Most Recovery Value for Your Surplus Trucks
The size of your organization or the number of trucks you have combined with the time and resources available to manage sales and marketing may determine how you go about selling in the secondary market. Smaller institutions with fewer trucks commonly handle remarketing in-house; while larger institutions commonly work with professional auction houses. If you choose to handle remarketing in-house it’s important to implement a few best practices in order to achieve your goal of maximum recovery.
Taking complete inventory on the type of trucks you need to sell will help you prioritize the highest value vehicles first
Determine estimated values for your vehicles: Look at value guides such as Black Book or investigate what similar vehicles are going for at auction.
Determine a sales channel for the vehicles: online posting, private sale, local advertisement.
Adjust your marketing to attract the right buyer type: There is a unique buyer base depending on truck condition, make, model and location.
Schedule a preview period so potential buyers can come inspect the truck(s).
Taking quality images and video to provide to potential buyers through online channels
Have a removal plan in place for the truck(s).
Working with a Partner to Manage All Aspects of the Remarketing Process
While handling remarketing in-house can make sense for institutions with smaller fleets because it requires fewer resources, larger institutions can benefit from partnering with an organization to handle most or all aspects of the process. Hiring an external partner to sell your assets can increase your bottom line and save valuable in-house time and resources, while ensuring a streamlined, hassle-free way of managing the process from start to finish. Still, there are some items to consider when looking for a partner to manage your remarketing.
For example, a local auction company may be sufficient to handle all aspects of sales and marketing in a specific market, to local buyers. But, if you have assets in a variety of locations and want to drive higher recovery, you will want to partner with an auction company that has a national reach and can market to a national buyer base, which is an extremely beneficial method of generating the most return for surplus trucks: More buyers means more competition which leads to higher pricing and recovery values.
Auctions are historically the best way to turn large numbers of inventory back in to cash quickly that can then be reinvested in new equipment or in the business in general. Knowing how to navigate the auction process on a national scale or working with a qualified auctioneering partner will help maximize return and give you the peace of mind that all aspects of the process will be taken care of properly. Other items to consider when choosing an auction partner include:
Make sure the auction company offers its own, safe location(s) to house trucks: Most likely a lending institution won’t have space available to store the truck.
Look for a company that offers to inspect and perform maintenance on the truck if needed.
Ensure the company has the capability to provide a valuation of the truck.
Look for a company that offers reserve pricing to cap any downside potential on the final pricing.
A credible auction company will complete all aspects of the process including transportation, marketing and sales.
Though credit is flowing a bit more freely these days with respect to the trucking industry, financial institutions must take on a more active role in the entire loan lifecycle — start to finish. By anticipating what might happen after the truck is no longer needed and establishing best practices and streamlined processes, institutions can save valuable time, minimize risk and maximize return.
Bill Snyder is regional sales manager for Liquidity Services’ TruckCenter.com marketplace, the multi-platform sales channel to buy and sell heavy duty, medium duty and light duty trucks and trailers. With more than 25 years’ experience in the truck and auction industries, Snyder has been recognized for his work with both financial institutions and large fleets. To learn more about how Liquidity Services’ TruckCenter.com marketplace can help manage your surplus transportation assets, visit http://www.truckcenter.com/.
Funder and vendor partnerships have long been a staple of the financing industry, and a good partnership can benefit both parties. But unexpected changes can catch vendors flat-footed, especially if adherence to their contracts won’t allow for adapting to new circumstances. Diane Croessmann examines some of the ways these partner programs work, along with what changes can cause them to malfunction.
The American Association of Commercial Finance Brokers hosted its annual conference this past May in (viva!) Las Vegas. Paul Burnham provides a rundown of the three-day event, which offered attendees the chance to learn, network, and, in the spirit of its host city, maybe go home with an extra prize or two.