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Penske Truck Leasing likes its new incentive program so much that the company did something it doesn't appear to have done for at least 10 years. It put out a press release on it.
Signaling an aggressive stance in the market for leasing trucks, Penske announced on April 27 a "Get Back to Business" offer with what it called "flexible lease terms" and "low rates." The offer will be for customers leasing what privately held Penske said were "late-model, low-mileage vehicles" from its inventory of box trucks and tractors. A scroll through 10 years of Penske press releases on its website turns up no similar announcements.
Specifically, the length of lease terms is being reduced. In an email sent to FreightWaves, a spokeswoman for the company said the incentive program includes a length of term of three to four years on a lease. In an earlier email to FreightWaves, Jim Lager, senior vice president of sales for Penske Truck Leasing said that five to seven years is the company's current "normal offer."
"Today, we understand that the economic environment is unique and goals are changing, so we are adapting to meet that need," Lager said in the email.
"Customers often tell me how they appreciate the flexibility and competitiveness of our late-model equipment solutions in these unique times," said Phil Feger, vice president of sales at Penske Truck Leasing, said in the Penske statement.
"It's a strategic move ahead of an upturn we are anticipating later in the year when the economy is returning and businesses are opening," Lager added in his email..
The more flexible terms, Lager said, will be on 2018, 2019 and 2020 model years. Many of the vehicles have odometer readings less than 100,000 miles, he said, adding that many are also equipped with collision mitigation systems.
Chris Visser, Commercial Truck Senior Analyst at J.D. Power, said the Penske move, while being announced publicly, is not odd. He also said that incentives in the industry have been a feature of used truck leasing since the market for all trucks started to slide in late 2018.
"I think a lot of dealers and OEMs [original equipment manufacturers] with in-house financing arms, and also the third-party finance companies, have been running specials ever since pricing started to come back down in 2018," Visser said.
Visser added that he expected companies in the used truck leasing or sales market to provide "historically attractive rates" and be more willing to "dip down to widen the risk tolerance," another way of saying they might be offering deals to customers who might not have passed credit muster in the past.
Warranties are another area that can be used as an incentive, Visser said. "It's been a traditional value-add," he said. "They will throw in a warranty to move a truck. You'll probably see that." (Visser's comments were to the broader industry, not to Penske specifically).
In his email, Lager reviewed steps the company is taking with its trucks to sanitize the vehicles against COVID-19. And while he did not speak specifically to warranties, he did say that "maintenance is just one aspect of what we provide. While it is an important one, so are other services like engineering the right specs and procuring the best price."
Penske truck leasing rival Ryder System, Inc. (NYSE: R) will be announcing its earnings today (April 29). Contacted by FreightWaves, Ryder's media department said it could not comment on certain specific questions.But spokesman Jonathan Mayor added, "we have had flexibility in our Lease product for some time." He cited three separate types of leases launched in 2016: Full Service, Preventive and On-Demand.
"The flexibility of our program from 2016 has greater impact even more during these uncertain times as the apprehension companies have right now on spending capital is strongly present," Mayor said in an email to FreightWaves. "Because of this, we have flexible terms and options that allow businesses to hold on to capital, while benefiting from reliable vehicles that come with built-in maintenance."
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