Financing Remains Top Choice for Truck Purchases, Study Says

A new industry analysis of the North American Class 8 business finds financing is expected to remain the top choice among consumers despite losing some market share.

It accounts for 64 percent of all new class 8 truck purchases. Leasing and cash purchases will account for 28 percent and 8 percent, respectively, according to Frost & Sullivan. What’s more, the group anticipates that the increasing price of new trucks will likely not significantly impact the viability of the North American class 8 purchases.

Rather, the market will witness the rise of new solutions, business models, and revenue streams as original equipment manufacturer (OEM), which the researchers refer to as “captives,” offer fleet management services and telematics-related value propositions to compete with non-captive firms.

Services, parts sales and warranty contracts, in particular, will be revenue-generating services that offer immense scope for growth.

“While non-captives have historically been leaders in the leasing and financing market, the line between the two parties will blur as captive business strategies begin to mirror those of non-captives,” said Frost & Sullivan Automotive and Transportation Senior Industry Analyst Wallace Lau.

“This has resulted in unique service solutions being offered to consumers by both parties such as contract maintenance, extended warranties and fleet management services,” Lau added.

However, captives will have to remain cautious in their business strategies as the risk of truck defaults or another economic downturn could lead to the downfall of any OEM.

In fact, the slow pace of economic recovery has forced companies to delay capital expenditures for trucks until more robust growth takes root. As consumer confidence gradually returns, U.S. interest rates and, potentially annual percentage rates for trucks, could see a slight raise.

Hence, captives and non-captives alike must deliver innovative packages to quell consumer concerns over payment options, access to credit, and service solutions.

“With fleets and owner-operators looking to streamline daily operations and improve overall efficiency and profitability, new opportunities have risen for OEM captives and non-captives to deliver customized, flexible services,” revealed Lau.

Category: Featured, General Update