Freightliner LLC, MBCC Expand Used Truck Initiatives
Efforts Focus on Increasing Available Capital, Broadening Used Truck Customer Base and Expanding Distribution
Freightliner LLC and Mercedes-Benz Credit Corporation today announced several bold initiatives designed to help rebuild the North American heavy-duty used truck industry. The multi-pronged endeavor is intended to effect structural changes within the used truck industry with the goal of returning value to used trucks and returning equity to heavy-duty truck owners. The announcements were made today at the Mid-America Trucking Show here.
Freightliner LLC, a DaimlerChrysler company, is the largest heavy-duty truck manufacturer in North America. Mercedes-Benz Credit Corporation (MBCC) is the diversified financial services provider, dedicated exclusively to Freightliner Trucks, Sterling Truck Corporation and Western Star Trucks in the United States and Canada.
“The initiatives we are announcing today build on innovative used truck programs Freightliner LLC has already developed with MBCC, or, in some cases, add revolutionary new programs never before seen in the used truck business,” said James L. Hebe, President and CEO, Freightliner LLC. “We are tackling head-on the problems that are plaguing the used truck business and destroying used truck values.”
According to Hebe, Freightliner’s initiatives are designed to increase available capital for used truck customers, expand the used truck customer base, increase the model diversity within the used truck inventory and create additional retail distribution outlets for the industry’s inventory of used trucks. “Freightliner’s initiatives address the complex dynamics and multifaceted problems that have depressed the used truck industry in North America,” he said. “Our objectives are to protect residual values for our new truck customers, protect the investment of our used truck customers and increase demand for customers’ high value, late model used trucks.”
Freightliner’s six initiatives are as follows:
1. FASTruck Division of Mercedes-Benz Credit Corporation
First, Freightliner announced the creation -- in partnership with Mercedes-Benz Credit Corporation -- of a new finance operation. Called FASTruck, the new operation is dedicated to serving qualified, first-time owner-operators and other customers who do not fit the typical borrowing profile of finance companies.
“One of the leading causes of the current used truck crisis is a lack of available credit for qualified first-time buyers or other established truckers who have credit availability issues,” Hebe said. “There are people out there wanting to enter the trucking business, or, who would like to trade up to later model used trucks, but they can’t find the financing. Very few finance companies are left who are really committed to helping these potential buyers. FASTruck will make financing available in this market segment and work closely with each buyer to ensure the highest chance of success.”
In partnership with Freightliner, FASTruck will be a separate division of MBCC and managed by a completely dedicated group of finance professionals. The FASTruck division will be headquartered in Lisle, Illinois, and will grow to a staff of over 100 people.
“FASTruck is a revolutionary new concept in the North American trucking industry,” Hebe said. “This new finance business will be totally focused on first-time owner-operators and other customers with similar financial profiles. FASTruck will be staffed with experienced transportation industry professionals who understand the unique business and financial needs of these customers and who will deliver financial solutions to put these people in business and help ensure their success. FASTruck also will match credit and credit terms with the reality of the trucking business and used truck buyers.”
FASTruck will provide financing for qualified customers of Freightliner, Sterling and Western Star dealers as well as for special program trucks financed through SelecTrucks, Freightliner LLC’s used truck division.
“In creating FASTruck, Freightliner and Mercedes-Benz Credit Corporation are providing capital for and injecting life into the used truck business,” Hebe said. “This investment is a crucial step in getting the used truck industry moving again.”
2. Opening of Used Truck Retail Remarketing Centers
Second, in conjunction with FASTruck, Freightliner and MBCC will establish and open a network of remarketing centers throughout North America. This new retail system will be targeted at rapidly remarketing vehicles returned to MBCC as off-lease vehicles and repossessions.
“We recognize that one of the most important aspects of financing is dealing rapidly with trucks returning to the market through finance sources,” Hebe said. “These trucks must be rebounded directly to retail buyers in an expedited manner. That will be the primary focus of these remarketing centers in addition to their function as another channel of distribution to the marketplace.
“Freightliner’s retail remarketing centers will serve customers who don’t necessarily require all the value added by our SelecTrucks network and who desire to purchase ‘as-is used’ vehicles,” Hebe added.
In opening its used truck remarketing centers, Freightliner plans to take a different approach to the industry practice of taking large numbers of used trucks to auction. “Lacking another distribution channel, finance companies have been taking large numbers of used trucks to auction -- this practice has decimated used truck values,” Hebe said. “By creating an additional retail outlet for distributing used trucks, we believe used truck residual values will stabilize across the industry and thereby protect the investment of all current and future truck owners.”
3. Lower Down Payments, Higher Advances for Experienced Truckers
Third, Freightliner announced it has worked with Mercedes-Benz Credit Corporation to secure higher loan amounts for established owner-operators and small fleet owners purchasing used vehicles. MBCC has modified its advance guidelines for used vehicles, so customers can purchase trucks with lower down payments.
“There are a lot of experienced owner-operators out there right now who would like to move into a later model used truck, but the market value of their current equipment is so low, they cannot get the financing to bridge the gap,” Hebe said. “MBCC’s new higher advances will enable these established businesspeople to purchase newer, more comfortable, more economical equipment, so they can operate their successful small businesses with more efficiency.”
The higher advances will be available to qualified customers purchasing used trucks at Freightliner Trucks, Sterling and Western Star dealers, as well as at Freightliner’s SelecTrucks used truck outlets.
“As with FASTruck, these new borrowing terms from MBCC are intended to alleviate the profound scarcity of available capital in the industry and to help more customers into later model used trucks,” Hebe said.
4. New Purchase Programs for Used Truck Buyers
Fourth, Freightliner today introduced two, innovative purchase programs for used truck customers. The first, Power To Succeed, is designed to ensure a successful beginning for new owner-operators or current truck owners moving up to a newer truck. The second, SelectOne, is designed to give experienced owner-operators and established small fleets a choice of benefits that address their diverse business needs. The new programs are immediately available for a wide range of Freightliner-brand used trucks at U.S. SelecTrucks centers and participating Freightliner dealers.
“Power To Succeed seeks to broaden the base of new owner-operators while SelectOne is designed to ensure the continued success of experienced owner-operators and small fleets,” Hebe said. “These innovative used truck programs provide everything from favorable financing to extended warranties to comprehensive business support and will have the end result of growing the North American used truck customer base.”
The programs are subject to vehicle limitations and additional costs and other terms and conditions.
Details of the programs are as follows:
Power To Succeed
Power To Succeed is the successor to Freightliner’s very popular Route To Success program, which was responsible for sales of 5,000 trucks in the year 2000. Incorporating all the popular elements of Route To Success while adding significant new content like a preventive maintenance package and a complete suite of business services, Power To Succeed is designed to help the used truck buyer become a successful entrepreneur.
Each Power To Succeed purchase features a long list of benefits, including:
*A low, $999 down payment -- This minimal up-front payment frees up cash for fuel and other initial expenses. This true, low down payment of $999, combined with an attractive interest rate and extended terms, also results in a very affordable monthly payment.
*24-month, 200,000-mile coverage on major components -- Each "Power To Succeed" purchase comes with Select 24/200 PTS Coverage, which covers the engine, transmission, rear axle, cab and frame. Available exclusively for "Power To Succeed" customers, Select 24/200 PTS Coverage protects the owner-operator against costly repairs related to major component failure. Select PTS Coverage is administered with no deductible throughout the Freightliner dealer network.
*12-month, 100,000-mile coverage on additional components -- Select PTS Coverage goes beyond major components to provide one-year/100,000-mile protection on the turbocharger, fuel injectors, fuel pump, water pump, rocker cover, vibration dampener, oil pan, fan hub, air conditioning compressor, charge air cooler, starter, alternator and batteries.
*10 new tires -- "Power To Succeed" customers start fresh with ten new tires. With a set of new tires underneath them, "Power To Succeed" customers are hundreds of thousands of revenue miles away from tire replacement.
*Alliance batteries -- A truck purchased under "Power To Succeed" comes with a set of new Alliance batteries. Alliance is Freightliner's private-label parts brand.
*Meritor re-lined brake shoes -- "Power To Succeed" customers receive a coupon for a set of re-lined Meritor brake shoes. Program trucks come with quality brake shoes, but when they wear out, another set will be ready for installation at participating Freightliner dealers.
*Destination - Success Business Program -- "Power To Succeed" customers also receive Destination - Success, a comprehensive educational program designed to provide first-time or even experienced truck buyers with the basic information necessary to operate a successful trucking business.
*SelecTrucks Business Services -- New with the Power To Succeed program, SelecTrucks Business Services provides a comprehensive set of tools for starting and managing a trucking business and maximizing profitability. Administered by American Truck Tax, SelecTrucks Business Services includes budgeting, breakeven analysis, income statement preparation, industry comparisons, estimated taxes, and year-end federal & state taxes preparation. Also provided is unlimited business consultation. Power To Succeed members are enrolled for 12 months in SelecTrucks Business Services -- a great tool to help create successful trucking entrepreneurs.
* Preventive Maintenance -- Also new with Power To Succeed is a preventive maintenance service. The 12 month / 120,000 mile Power To Succeed Preventive Maintenance service provides six PM services. Included are preferred multigrade oil, fuel and oil filters; brake adjustment and lubrication of brake and axle zerks, clutch, driveshaft, fifth wheel, steering and suspension. The Power To Succeed Preventive Maintenance coverage is redeemable at all Travel Centers of America / Freightliner ServicePoint locations.
“Route To Success was easily the most comprehensive used truck purchase program ever developed,” Hebe said. “Power To Succeed delivers even more value and will give our used truck customers great momentum toward business success.”
Power To Succeed program trucks are financed exclusively through the new FASTruck division of Mercedes-Benz Credit Corporation.
Freightliner LLC and SelecTrucks’ second new purchase program for used trucks, SelectOne, is designed for experienced owner-operators or established small fleet owners who know what it takes to prosper in the trucking industry. The highly flexible SelectOne program offers these business owners a choice of benefits, so customers can choose the package that best suits their business needs.
With the SelectOne program, used truck customers may select one of four purchase incentives at no additional charge to the customer:
*A low 7.99% or 8.99% finance rate for qualified customers.
*A “Security Package,” combining an outstanding limited warranty with a preventive maintenance program.
*A “Go” Package on factory-refurbished used trucks.
*A “Show” Package, also on factory-refurbished used trucks.
Under SelectOne’s low finance rate option, customers are offered a choice of a 7.99% or 8.99% annual percentage rate to dramatically lower interest expenses. The 7.99% rate guarantees a lower monthly payment during the life of the loan. Customers choosing the 8.99% rate will receive $100/month payment assistance for the first 12 months to improve initial cash flow. These rates are offered exclusively through MBCC on the first $50,000 financed. Amounts above $50,000 are at prevailing rates and will result in a blended buyer rate. This program is subject to vehicle limitations, minimum down payment and other terms and conditions.
The SelectOne Security Package is designed to deliver added protection against breakdowns as well as provide preventive maintenance assistance. The Security Package includes the Select Limited Warranty and Preventive Maintenance service. The Select 24 month / 200,000 mile Limited Warranty provides protection on all major drive train components, cab structure and frame. The 12-month / 200,000 mile Preventive Maintenance service provides 10 PM services and includes preferred multigrade oil, fuel and oil filters; brake adjustment and lubrication of brake and axle zerks, clutch, driveshaft, fifth-wheel, steering and suspension. The Preventive Maintenance service is redeemable at all TravelCenters of America/Freightliner ServicePoint locations.
With the SelectOne Go Package, the customer gets a Freightliner FLD or Century Class which has been refurbished at the SelecTrucks refurbishing center in Tooele, Utah. “Go Package” factory-refurbished used trucks feature 10 new tires; new batteries, new remanufactured alternator and remanufactured starter; new rear brake shoe re-line kit; new universal joints; new belts, hoses and coolant; new drivetrain fluids and filters; a 2-stage cab polish and interior detail; chassis repainting; engine compartment cleaning and detailing; road & dyno test and Federal DOT certification. Also included in the Go Package: a 3 year / 250,000 mile Select Premium Limited Warranty – the most comprehensive in the industry.
The SelectOne Show Package is designed for owner-operators who put a premium on style and appearance. Show Package trucks also are factory-refurbished by Freightliner at the SelecTrucks refurbishing center in Tooele, Utah. Program trucks are loaded with appearance enhancements like new Imron 5000 paint, new dual cab-mounted exhaust, a new exclusive interior (panels, seat covers, carpet), new mattress, new leather-wrapped steering wheel with burlwood inserts, new grille and surround, new stainless clad bumper and extensive detailing. Plus, all show vehicles have been road-tested and Federal DOT-certified.
“We created SelectOne for those seasoned owner-operators or established fleets who know what package of benefits will be most beneficial in ensuring their continued business success,” Hebe said.
Both Power To Succeed and SelectOne underscore the value of a Freightliner used truck purchase, Hebe added. “As the largest heavy-duty truck manufacturer in North America as well as its largest used truck retailer, Freightliner LLC can bring tremendous resources to bear to support our used truck customers,” he said.
5. Extension of Used Truck Refurbishing, Reconfiguration Initiatives
Fifth, Freightliner announced that it will continue to expand its used truck refurbishing and reconfiguration operations. In August of 2000, the company opened a dedicated used truck refurbishing and reconfiguration facility in Tooele, Utah. The first of its kind in the heavy truck industry, the facility outfits used trucks with new components, interiors and appearance enhancements to create a line of factory-refurbished pre-owned trucks. The Tooele facility also reconfigures used trucks to cab types that are more popular in the current market. For example, Tooele is converting Freightliner FLD 120 tractors with 48-Inch SleeperCabs into FLD Day Cabs.
According to Hebe, Freightliner will continue to expand operations at Tooele based on demand, and is also exploring the possibility of establishing used truck refurbishing and reconfiguration centers in other parts of North America. In addition, Freightliner is exploring numerous additional reconfiguration projects -- including shortening wheelbases or converting Raised Roof SleeperCabs to Mid-Roof SleeperCabs.
“In coming years, we will place added focus on our reconfiguration efforts,” Hebe said. “One of the dynamics exacerbating the used truck situation is the glut of late-model, premium sleeper tractors on the market. By converting sleeper-tractors to day cabs or other more popular models, we address the oversupply issue while creating products that are more in demand from year to year.”
Hebe also said the company would continue its successful Legacy remanufacturing project. The Legacy heavy-duty day cab truck is a product of a remanufacturing process whereby Freightliner harvests major components from older cabover trucks, remanufactures them and combines them with a new cab and chassis.
“With our refurbishing, reconfiguration and remanufacturing initiatives, we are transforming products to give them great appeal in the marketplace,” Hebe said. “These projects are further examples of Freightliner's market leadership -- we are addressing the industry’s used truck issue while offering high quality, high value products to customers.”
6. Expansion of SelecTrucks Network
Sixth, Freightliner LLC will dramatically expand its SelecTrucks network, first opened in 1997. SelecTrucks is Freightliner LLC's network of used truck outlets offering a wide selection of used trucks, convenient locations, comprehensive warranty packages, flexible financing terms and business support. There are currently 36 SelecTrucks Center locations in North America. By March 2002, that number will approach 60.
“Our SelecTrucks concept has been very successful in building value into the used truck purchase,” Hebe said. “By offering high quality, certified trucks backed by comprehensive warranties and extensive business support, we have changed the concept of a used truck. With this expansion of the SelecTrucks network, Freightliner will give even more customers access to high quality pre-owned trucks and continue to uphold the value of used trucks.”
Changing the Industry
The six initiatives announced today are by no means the last steps Freightliner LLC will take to help rebuild the North American used truck industry, according to Hebe. “Freightliner is absolutely committed to changing the current status of the used truck industry and will continue to develop creative solutions to protect our customers’ investment in Freightliner, Sterling or Western Star trucks,” he said.