Bank exits squeeze truck financing for mid-size fleets
Truck financing has thinned out for carriers rebuilding after the freight recession. Mitsubishi HC Capital’s Kirk Mann on what now separates an approval from a decline. The post Bank exits squeeze truck financing for mid-size fleets appeared first on FreightWaves .
The truck financing market experienced a significant squeeze over a three-and-a-half-year period due to two factors: a freight recession and the departure of many lenders from the sector. This squeeze has impacted the replacement cycle of commercial trucks, causing delays that fleets have been waiting for. Kirk Mann, executive vice president and general manager of Mitsubishi HC Capital America, observed the market's decline and financing in the midst of the downturn.
He highlighted that the asset bubble behind the truck's value soared during this time, with a typical 4-year-old sleeper tractor's value increasing by 136% over the previous decade. Mitsubishi HC Capital persisted in financing during this period, despite the bubble, wanting to show their continued presence in the market. The liquidity issue led to a high number of repossessions as borrowers could not sustain their payments.
As a result, lenders have improved recoveries on transportation assets by 15%. Credit profiles of borrowers have weakened during the downturn, causing lenders to become selective about whom they lend to. Commercial truck financing now ranges from 5.25% for investment-grade private fleets to 12% or higher for lower-credit small operators.
The industry's future growth is expected to come from fleets replacing older trucks, rather than expansion driven by EPA 2027 standards.
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Also reported by 1 other outlet
- Bank exits squeeze truck financing for mid-size fleets finance.yahoo.com
