Summary
Rush Enterprises, Inc. is the largest heavy & medium duty truck sales and service organization in the US. Their numbers allow us a look at the marketplace from ground level including new and used trucks, along with parts and service.
Analysis
Rush Trucks Centers are top-notch places to do business. From my personal experience in dealing with them, it’s mostly about their people. Offering Paccar, Inc.’s Peterbilt products in the territories they have is another big plus. Throw in financing and their repair shops - and therein lies the keys to success.
Their dealer locations are in stronger parts of the country including Southern tier and Rocky Mountain States, plus the Central Valley and Southern California. Major trucking customers include Werner Enterprises and Averitt Express, plus refrigerated carriers Marten Transport Ltd, Stevens Transport and Knight Transportation Refrigerated Div. Smaller refrigerated fleets and owner-operators. Additionally, they sell to the oil field customers BJ Services and Schlumberger and cement customer Cemex.
Some of what this tells us is that Peterbilt brands are favored by truckers in the food sector, which has always been more stable than the auto and home building sectors. The territories noted have been less affected than some other States in this economic downturn. Many of their customers either are in or travel to California where more onerous emissions regulations are in place (with other States following). Peterbilt’s aerodynamic trucks are a real positive, too.
We all have seen for third quarter ‘09 that the Less-Than-Truckload (LTL) tonnage in off 15% from last year with Truckload (TL) being off about half that. At the same time, major TL fleets have shed up to 10% of their fleet, while both TL& LTL carriers have parked up to a similar amount.
New sales numbers in this environment shows relatively how well Rush has done. Their truck sales numbers were off 26% (dollar-wise). In looking at truck unit sales numbers, Class 8 was off 24% as compared to 33% nationally. YTD Class 8 sales are off 30%, as compared to 40% nationally. Mid-size truck unit sales were off 30%.
Used truck sales were off 18%. For dealers, used truck sales usually follow a different track than new. One usually sees used equipment follow tonnage more closely where new sales gets into other drivers such as financing packages, truck driver demand and regulations. When large orders make the numbers spike, most dealers cannot handle the associated trade-ins - resulting in the manufacturer flowing them out through additional dealers / channels.
Parts and service sales were off 17%. This also follows tonnage and resultant miles. We all are seeing truckers looking to keep trucks longer, which could result in a more stable longer-term and profitable segment of business to take advantage of. The only problem with all of this is that OEM dealers of all makes types don’t have a good track record of keeping customers after the warranty runs out. Therein lies opportunity!
The missing issue is financing, but we do know that OEM financing arms are taking advantage of the lack of financing otherwise. Overall and as compared to many other dealers, I’d say things look relatively good for Rush.
