If you are seeing a large increase in your maintenance and repair costs for your company vehicles, having a hard time attracting new drivers and are turning down business, it’s time to update your existing equipment or add vehicles to your fleet. When you replace or add vehicles, you face the lease versus buy decision. Choosing to lease, frees up working capital that you can use in other areas of your business.
Leasing also allows for the newest technology and provides a great recruiting tool for your younger drivers to have the “cool” technology currently available.
There are thousands of work trucks sitting today due to the semiconductor chip shortage. Because of COVID, the production of these computer chips came to a stop. Production is catching up and most of the manufacturers have produced work trucks and are storing them, waiting until needed parts arrive. There are so many trucks parked by the manufacturers today, you can see them with Google Maps from space. Just like the pyramids and the Great Wall of China.
Heavy trucks and semi-trailers are also affected by the parts shortage. Used truck and trailer prices are up significantly due to the short supply of new products. At the same time, world events are decreasing economic recovery and further growth. The average sleeper tractor retailed in February was 69 months old, had 452,369 miles and brought $110,686. This price is a record! Three-to-five year old trucks increased 6% in February from January and 77% more from February 2021. The shortage of new and used heavy trucks is so bad today, pricing will not change notably until the freight market cools.
Medium duty trucks also are bringing historically high pricing and are priced at 100% higher than a year ago. When we see a pullback in spending and manufacturing, we can consider them to be indicators that prices will begin to come down.
Interest rates are increasing and inflation is not transitory. The Ukraine invasion also will place downward pressure on freight. Financing on work trucks and heavy trucks and trailers will be requiring more down payments for new entrants and will be placing more emphasis on driving experience and lease structures.
Contact us at Fisher Leasing and let us help you with a fleet strategy during these extraordinary times.
Fisher Leasing Corporation