Used truck sales are up 60% year over year at Arrow Truck Sales according to an announcement made, appropriately, on the company’s 60th anniversary. Credit applications are also up some 27%, while delinquencies are down. Inventory is also decreasing, Arrow’s new president and CEO, Steve Clough said during the 60th anniversary celebration at the company’s Kansas City, MO headquarters. “We are getting close to ‘normalized’ levels,” he said.
Used trucks are at historically low values, according to Clough. In fact, they are lower now than they were in 2002. Back then, a model year 1999 Class 8 truck with a medium-sized sleeper sold for about $35,000. In 2009, a model year 2006 Class 8 truck with a medium-sized sleeper was retailing at about $30,000.
However, sales will continue to improve, “barring any catastrophe,” he said, and inventory will continue to decline. Three to four years from now, Clough noted that the inventory of used trucks will be “very low” because of the dramatically reduced build rate for new trucks during the recession. New truck buyers usually like to trade-in trucks on a three- to four-year cycle, he said, but since so few trucks were built and purchased in the last three years, there won’t be many to trade.
Exports also took a lot of used equipment out of the domestic market, according to Clough, especially in 2007, but exports are now down substantially, and 2007 model year trucks with particulate filters won’t last long in many of the export markets without modification. “We try to discipline ourselves not to sell trucks where there is no infrastructure to support and service a particular vehicle,” said Russ Tedder, senior vice president, truck remarketing for Arrow.
Arrow also tries to stay away from second generation used trucks in favor of trucks that have had only one owner and prefers to buy vehicles in larger lots rather than one-at-a-time as a trade-in. “With us, most buyers actually do not have a truck to trade,” said Clough. “Most of the time customers have been operating a very high mileage truck that has already been sold to a wholesaler before they come to Arrow, and we encourage that.”
The company also believes in refurbishing the trucks they sell to make them “work-ready” when they leave the lot, Clough said. Although Arrow does not operate its own shops, the company works with outside service suppliers to help make sure that safety issues are addressed, said Clough. “The starting point [for refurbishing] is all safety issues,” he said. “Then it depends upon the age of the truck. We do sell some vehicles as-is to people who want to fix the truck up themselves. It is really on a truck-by-truck basis.” Arrow also generally offers a 30-day warranty.
In fact, working to meet each customer’s needs is a company priority, according to Clough, even when times are tough. “We work with our customers to help them through a rough path,” he said.
“As soon as the downturn happened, all that easy financing dried up,” Clough said. “We did not change our financing practices, however.” Arrow finances about 45% of the equipment it retails, but encourages customers to try their regular lending institutions first because they are apt to get better terms. “We are not first and foremost a financial institution,” Clough said. “It is an extra service we make available to help customers who need it.”