Truck leasing gains traction

Price hikes for new trucks are unlikely to impact the viability of the North American Class 8 truck leasing and financing market, which is set to develop a range of new services, according to research from Frost & Sullivan.

The firm’s report, Strategic Analysis of the North American Class 8 Truck Leasing and Financing Market, finds financing is expected to remain the top choice among consumers despite losing some market share. It accounts for 64% of all new class 8 truck purchases, compared to leasing (28%) and cash purchases (8%).

The research predicts the market will witness the rise of new solutions, business models, and revenue streams as original equipment manufacturer (OEM) captives offer fleet management services and telematics-related value propositions to compete with non-captive firms. It identifies services, parts sales and warranty contracts as revenue-generating services with good 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.”

However, the firm warns 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.

“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. “Captives and non-captives must position themselves as complete, one-stop service solutions to attract and retain consumers in the North American market.”