PACCAR Financial (PFC) is celebrating its 50th
anniversary this year. “We’re celebrating a milestone,” said Todd Hubbard,
president of PACCAR Financial. “The growth of PACCAR’s captive finance company
has been dramatic. In 1970, PFC had total assets of $87 million in its
portfolio compared to $3.6 billion in 2010. The finance group saw a 30 percent
jump in business between 2009 and 2010, and it’s looking to grow significantly
again in 2011.”
Recent customer surveys reinforce PFC’s commitment to
customer service which Hubbard said helped propel PFC’s growth. “On
a scale of 1 to 10, our customers gave us, on average, a 9-plus in all the key
metrics of customer service and loan programs,” he said. “You can’t
get much better than that.”
According to Hubbard, PFC has grown to be a primary
lender to customers through Peterbilt’s and Kenworth’s network of
dealerships. “Our mission is to support our dealers with innovative
and attractive lease and finance packages for their customers,” said
Hubbard. “And, since we have a vested interest in the transportation
industry, we can be more creative and responsive to our dealerships’ customers
than other finance sources.”
Hubbard said that mission was very evident during the
recent downturn in the economy from which the trucking industry is
emerging. “We had a perfect storm of events, which impacted
many customers ability to obtain financing due to the tightening of credit,” he
said. “Because of PACCAR Inc’s superior A+ corporate credit rating,
we had good access to funding at reasonable costs and were well positioned to
work with our customers and address the issues.”
PFC also stepped in to help customers through the
introduction of a used truck trade package program. “In some cases,
our customers wanted to purchase new trucks, but trading in their existing used
trucks was a problem due to depressed resale values in the used truck market,”
said Hubbard. “PFC bridged that gap by taking a portion of the
trades and limiting a dealer’s risk of absorbing an entire trade
package. The end result was that it helped facilitate new truck
purchases, which was good for our customers, good for our dealers, and good for
PACCAR.”
PFC’s vested interest in the transportation industry has
been a fundamental building block for many PACCAR dealers. So has
the finance company’s longevity and track record with customers.
“The amount of time PFC has been in business plays a big
factor in my ability to effectively sell to my customers – that they’ll be
there to service the loan, and be there the next time our customer wants to
replace a truck,” said Clay Madden, director of finance for Performance
Kenworth in Houston. “So many times, finance companies come and
go. As a finance manager you can’t always promise that the loan
you’re placing will be serviced until the end of the loan. We’ve
just seen so many finance companies go out of business. As our
captive finance company, our customer can feel confident with PFC that they’re
going to be there even when the industry goes into a downturn.”
According to Gary Carlson, president and founder of
Select 1 Transport, how a financial group responds in times of uncertainty is a
barometer for future success.
“During the middle of last year, we had some growth we
were concerned about and how we were going to fund that growth,” recalled
Carlson, whose company specializes in automotive transport, event marketing,
and managed global logistics. “We picked up the phone, gave PFC a
call and said, ‘here’s what we are thinking of doing. We’d like to change our
truck financing a little bit.’ Without hesitation, they worked with us.
Obviously we showed them a good, well-thought-out proposal and it allowed them to
work with us on a refinancing package. That will go a long way for us over the
years to come.”
Hubbard said a finance source shows its true colors when
the industry goes through its cyclical up and downs. “Banks and
independent finance companies come and go,” he added. “They tend to
emerge during the booms in the industry, but disappear or tighten their belts
during the down times. The one thing constant about PFC, is we’re
constant. We’re always there and a part of the proposition of
buying a Kenworth or Peterbilt truck.”
A valued partner is how Jon Vinje, president of Halvor
Lines in Superior, Wis.,. views his relationship with PFC.
“We have some relationships with local banks, which are
necessary for our business,” said Vinje. “But for our tractors, we pride
ourselves on our equipment, and we need a good financial partner for equipment
acquisition. PACCAR Financial provides the financial resources to make us
successful. And, I feel very comfortable with PFC -- they continue
to support our business. More importantly, I value their
partnership with us even more after going through the economic
downturn. They understood the different business cycles that we go
through with the economy and trucking industry – something local banks just
don’t understand.”
Through its history, PFC has been known for offering
comprehensive finance and lease packages to better serve its
customers. These include special promotions such as bundling
“no-cost” extended warranty offers in the finance package. “That’s
something banks can’t offer,” said Hubbard.
“PFC certainly does have innovative programs,” echoed
Bob Gentry, president of Peterbilt of New Hampshire. “In addition to
standard finance and more creative lease packages, they do extended terms, skip
payments for our construction customers, and on the medium-duty side, they’ve
been very aggressive with creative financing. The special Medium
Duty Combo program they offer blends a 4.99 percent interest rate with an
extended warranty and is extremely helpful. The majority of my
business over the past several months was due to that program.”
With the documented industry-leading high resale values
of both Kenworth and Peterbilt trucks, Hubbard said PFC can confidently offer
lease finance products that include a guaranteed residual
value. “With a high residual value, it makes the monthly lease
payment for a Kenworth or Peterbilt very competitive and often on par with
lower cost vehicles. It gives our customers more truck, more
comfort, and more quality for the dollar, plus a way to utilize off-balance
sheet financing. It’s why we’ve seen a dramatic increase in lease
business in our portfolio over the past couple years.”
While providing truck finance packages has been PFC’s
mainstay, it has also broadened its scope over the years to include trailer and
body upfitting financing.
“The ability to lease and have our trailers financed has
been an important financing piece for us,” said Doug Lokemoen, president of
Tri-Hi Transportation, which operates 75 Peterbilts and 93 trailers out of
Merrill, Wis. “We do both retail financing as well as FMV (fair
market value) leases,” he said. “And they’ve financed our trailers
the past seven or eight years, and that’s helped a lot.
“We use the FMV to help keep our payments down and grow
our company. But whether it’s a lease or finance package, the folks
at PFC have been very helpful in working with us to develop the best option for
our company.”
PFC also helps PACCAR dealers grow and flourish by
lending money for flooring plans, as well as dealership expansion.
“As a captive finance group, they provide wholesale
floor plans for us on new and used trucks,” said Cooper Sykes, president of
Cooper Kenworth, which has 10 locations in North Carolina. “Along
with providing retail financing for our customers, they’ve been absolutely
vital to our organization. They have a vested interest in their
dealer body in wholesale and retail financing. When I had only been
in business a year, I was working with another finance company. But,
in 1973 and ’74, when the economy went into a trough, that other lender said
they were going to cut my floor plan off. I went to Kenworth and
they in turn went to PFC and picked up my floor plan to allow me to continue. I
was very small at that time. Even though that was 37 years ago, I
never forgot that.
“Then in 1995, my Durham store burned to the ground, and
during the 12 months I was trying to build back, PACCAR Financial and Kenworth
worked with me to get my dealership back on track. They helped me
when I had trouble, so over the years I’ve been as loyal to them as they have
been to me.”
According to Hubbard, PACCAR Financial has come full
circle over the past 50 years. “We originally began as a finance
source to help customers purchase Kenworth and Peterbilt trucks,” he
said. “But as we’ve grown and matured, we’ve come to play an
integral role with dealers in their flooring and expansion, plus we’ve
continued to support their customers with innovative finance plans and creative
approaches to customer needs during the up as well as down cycles of our
industry.
“Who knows what the next 50 years hold, but our
customers can be assured that Kenworth and Peterbilt products will continue to
be industry-leading, be backed by a world-class dealer network, and supported
by a finance group dedicated to their mutual success.”
About PACCAR Financial Corp.
PACCAR Financial (PFC) has been assisting Peterbilt and
Kenworth truck owners for 50 years with innovative purchase and lease plans
that can be customized to meet their individual business
needs. PACCAR Financial is exclusively committed to the trucking
industry and to the success of those who buy Peterbilt and Kenworth
trucks. Through a North American network of Kenworth and Peterbilt
dealers, PACCAR Financial provides retail loans and leases.
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