Penske gets creative to move inventory in down market
Bob Glenn, director of remarketing for Penske Truck Leasing, says he's seen the used truck business “change a lot in just the last three years. My department is charged with taking our retired leased and rental equipment and either selling it off through retailing or wholesaling or by exporting. Sales volumes overall are down 25% year to year, and that's a steady trend since 2006.”
He reports that last year Penske Truck Leasing sold 23,000 vehicles, and those well represent this major trucking equipment lessor's diverse motor pool, including everything from light-, medium- and heavy-duty trucks to trailers. “Across all vehicle types, we have seen the volumes drop,” says Glenn. “And that's led us to try to find new ways to sell our used vehicles.”
According to Glenn, Penske is being more creative about how it sells used trucks and to whom, pushing “direct sales to end users, from the largest fleets down to small businesses as opposed to relying on traditional wholesale and dealer channels.”
Last December, Penske went so far as to open a used truck call center for the first time. “It's staffed with a trained sales force to handle calls generated by the Internet and other ads. It's centralized so we can give the customer direct treatment,” Glenn points out.
The call center staffers work with a wide range of customers. But leaving nothing to chance, Penske had a few months before that rollout tripled the number of fleet sales representatives it fields to work specifically with small- to medium-sized businesses operating private fleets. “For us,” Glenn notes, “small means less than 20 vehicles; medium, more than 20; and large means more than 100.” In addition, he says Penske has begun “working with some very specific dealers who sell our trucks for us on commission. It's all part of our goal to have 12 retail used truck centers open this year.”
Glenn points out that with all its used-truck sales and marketing efforts, Penske never shies away from “capitalizing on the good reputation we have in the trucking industry” as a vehicle lessor. “That's especially so when we're talking about maintenance. We can provide maintenance history reports that go back three years on every vehicle we are selling — and they can be accessed online via our web site. Our sales focus,” he adds, “is 100% on vehicles we have owned and operated either as lease or rental units.
“We're also confident that we ‘turn’ vehicles much faster than others in trucking do,” he continues. “For us, light and medium trucks are in service for three to six years, with the average being five years. In that time, light vehicles cover 100,000 mi. and mediums cover 200,000. Heavy trucks are in for five to six years and hit 500,000 mi.”
While he feels the relative youth and low miles of used Penske trucks is a prime selling point, Glenn points out the lessor offers extended warranties on the power equipment it sells. The program is provided via a partnership with National Truck Protection and includes engine and powertrain offerings. He says about 20% of buyers opt for some kind of extended coverage. “We also offer a [contract] maintenance program to buyers of our used equipment,” he adds. About 8% of buyers opt for maintenance services after the sale.
Interestingly, Glenn says buyers of used Penske equipment include “locals,” who visit a nearby branch location, but also “many who look far and wide for a very specific vehicle and are willing to travel to get it.”
Penske Truck Leasing's prediction of the market is that “we have begun to see the light getting a little brighter. We'll see a very gradual increase in sales volume over the next eight to ten months — and by this time in 2010, a nominal increase will kick in. It's a slow recovery, but the economy is stronger than it was three months ago,” Glenn adds, “which is even leading to a bit more flexibility [being offered] in financing for customers.”