Queensland based national transport and truck industry body the HVIA has announced it has partnered with Morris Finance to offer a new finance product for the commercial vehicle industry.
The HVIA says that with this year looking like being a record sales year for both trucks and trailers, it claims that many heavy vehicle OEMs are struggling with supply chain disruptions and the rising costs of raw materials, despite having full, order books,
For this reason, Morris and the HVIA claim they have been searching for a new, innovative, way to help OEMs ‘during these turbulent times’ and they are now ready to offer a new finance product through the HVIA,.
Morris is an equipment finance specialist and says it knows that lead times for many truck orders are out past 12 months, leading to pricing uncertainty and high risks thanks to the material supply challenges, rising electrical, fuel and shipping costs as well as general economic uncertainty.
According to the HVIA and Morris this situation is causing a concern and stress for OEMs and suppliers and claim this new finance product challenges the otherwise conventional process, and they believe OEMs can no longer operate on a handshake and carry the risk.
The HVIA and Morris say the solution is a finance approval that treats building a truck or a trailer the same as building a house.
“We lock in the deals, and the OEM is provided with progress payments during construction at regular intervals and these progress payments defray the normal risk that the manufacturer carries in the industry and is designed to alleviate cash flow difficulties,” the statement from the two organisations said.
“It helps with component purchases and supply costs and the purchaser also benefits,” they added.
“They get certainty and can carry on business with confidence because the longer lead times have meant more customers have had to seek additional finance approvals, as the original one lapses between order and delivery,” they say.
With this product they say the finance is approved and locked in and progressively drawn down.
Morris says there is a small additional cost for the purchaser of servicing the loan as it is drawn down, but it believes this is insignificant compared to the equipment purchase price and it says it is justifiable, given the addition certainty, peace of mind and reduce red tape.
The general manager of Morris Finance, Rod Cunningham points out that the finance package is optional and voluntary, and is not an OEM forcing new payment terms and is an independent finance product that is there for the client and has been designed as a win-win.
“I have been working in the transport industry my entire working career. I believe one of the strengths has been the enduring friendships I have made across the journey,” said Cunningham.
“I love the fact that we operate largely on a handshake, but as good as this is, I also want the industry to be sustainable,” he said.
“Recently I have heard stories of trailer OEMs being stuck with highly customized equipment which has been forfeited due to an inability to complete the transaction,” he continued.
“At the recent round of HVIA State Committees, there were several stories from HVIA members who are unhappy and concerned about taking risk during these uncertain times.
“I have often said that the heavy vehicle and building industries closely follow each other. I am in dismay at the number of builders defaulting and going into liquidation. Granted there are varied reasons for this, but they too are in a strong market,” he continued.
“I would hate to see this happen in our industry and I genuinely believe this is a solution that alleviates risk for OEMs, whilst providing certainty for the client,” Cunningham concluded.