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Truck Repossessions Edged Higher in 2006, Resale Market Continues to Look Strong Nassau Asset Management's Index Shows Machine Tool Repos Up, Too; Other Sectors Varied WESTBURY, NY, April 20, 2007 -- Repossessions and liquidations of tractor-trailer trucks rose nearly 8% in 2006 compared with 2005, according to Nassau Asset Management's NasTrac Quarterly Index (NQI). The company tracks equipment trends as part of its business providing collections, repossessions and remarketing services to the nation's leasing and finance industry. An increase in repossessions is not always negative, says Nassau President Edward Castagna. It can simply reflect an overall increase in financed equipment saturating the marketplace or consolidation as well as mergers and acquisitions. But the rise in tractor-trailer repossessions in 2006 seems to signal that another challenging year is ahead for small-to-mid-sized trucking businesses - one that could result in even greater numbers of repossessions. "Truck repossessions and liquidations have been on an upward trend for seven of the past eight quarters, and current conditions indicate this trend will continue," Castagna explains. "Fuel prices are lower than during the spikes in 2005, but still highly unstable. The drop in new home construction is hurting portions of the transportation sector. And there are general economic factors to consider. Problems with the sub-prime mortgage industry, for example, are making it harder for struggling businesses everywhere to squeeze equity from their real estate." Fortunately for companies that finance trucks, there is a silver lining: the current demand for used tractor-trailer vehicles. "Right now there is a steady market for used trucks," Castagna says. "It is difficult to predict the future, but we feel the market should remain strong this year and possibly into 2008." One reason is that the 2007 trucks meeting new EPA (Environmental Protection Agency) diesel engine regulations are just starting to roll off the line. Their engines are unproven, cost more to maintain, and are being avoided by buyers for as long as possible. Even though today's buyers can opt for new 2006 models that are still being sold, Castagna believes concerns over the 2007 models may also fuel used truck sales.
Other Repo Trends Nassau's latest NQI compares the company's internal repossession and orderly liquidation activity in 2006 with 2005. In addition to reporting on tractor-trailer trucks, the latest NQI revealed the following trends: Construction Repos Flat-Lined - Repossessions and liquidations of construction equipment dropped insignificantly in 2006 (-2%). Castagna believes the market for used construction equipment will remain strong due to the weakened dollar, which attracts international buyers, and because of steady demand from global mining, roadwork and infrastructure projects. He says Nassau is keeping a close watch on slowdowns in certain sectors of the construction industry, such as new housing, as well as the fallout from sub prime rate mortgages; both situations have the potential to affect repossessions not only in the construction industry, but also for forestry, sawmills, truss manufacturing, excavating, transportation and other industries serving builders. Machine Tool Repos Rose Moderately - Repossessions and liquidations of machine tools rose more than 8% in 2006. This reflects the increasing number of machine tools in the marketplace as the industry recovers from lows earlier this decade. The market grew an estimated 27% in 2006, experiencing its best year since 2000, according to the Association for Manufacturing Technology. Medical Repos Dropped - Repossessions and liquidations nose dived in 2006 for medical devices (-33%). Nassau believes the numbers reflect the strength and stability of the medical equipment market in recent years, resulting in fewer repossessions for that sector. The market for new medical devices is growing 8%-10% annually, according to a report by Accellent Inc., a manufacturing services provider to the medical device industry, and market demand for innovative products should continue as the population ages. Printing Repos Plunged - Repossessions and liquidations of printing equipment also decreased (-35%). To date, Nassau has found little industry data to pinpoint reasons for the drop, but is continuing to study the situation. Castagna also notes that his colleagues are reporting a possible pick-up in printing repossessions activity so far in 2007. About NQI NQI reports on Nassau's internal repossession and orderly liquidation activity in a given quarter compared to the same quarter the previous year. Readers should keep in mind that results must be viewed over several quarters to establish trends. Finance companies and industry analysts can also contract with Nassau to dig deeper into the numbers, determining the root causes for trends and researching specific equipment types. Companies can use their private reports created by Nassau to help mitigate risk in portfolios and/or provide useful economic indicators to their own clients. ABOUT NASSAU Nassau
Asset Management of Westbury, NY, has been providing
full-service asset management, including asset recovery,
collections, remarketing, plant liquidations, and appraisals
for more than 25 years to the equipment finance industry. For more information, please visit www.nasset.com
or call 1-800-4.NASSAU. Media Contacts
Edward Castagna
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