Tech training, parts inventory and diagnostic equipment to ensure cutting edge service for customers are all part of the recent investment by Penske Truck Leasing.
Penske, the Australian importer and wholesaler of MAN, Western Star and Dennis Eagle trucks, has had a presence in the local truck rental market since it founded Penske Truck Leasing Australia in 2014.
In 2017, Penske started acquiring MAN/Western Star dealerships from independent family-owned companies who either no longer wanted to run them or were not prepared to invest the substantial amounts required to bring their workshops up to speed with tech training, parts inventory and diagnostic equipment to ensure cutting edge service for customers.
The upshot of this modernisation program is that Penske now owns the dealerships in the capital cities of Perth, Sydney and Brisbane, as well as the regional northern Queensland cities of Mackay, Townsville and Cairns.
The MAN/ Western Star dealerships in Melbourne and Adelaide remain independently owned and run by Westar Trucks and Wakefield Trucks respectively.
“They are both fine dealerships run by really good people, and both are very important partners of ours,” says Adrian Beach, General Manager of Penske Truck Leasing Australia. “They sell us the new trucks that will be domiciled in those markets and do almost all of our service and repair work as well.”
In these two locations, Penske’s rental/ leasing offices are co-located in the Penske Australia dealerships which also house Penske Power Systems (MTU Detroit Diesel) and Allison Transmissions, located in Altona North in Melbourne and Edinburgh in Adelaide.
As for the company-owned dealerships, Penske Truck Leasing Australia commenced as a ‘store within a store’ at the Brisbane facility in 2014 and progressed to each of the other branches as they were acquired.
“Initially we were brought in to be a customer of the Penske truck brands, so every time we bought a truck for the rental fleet it helped increase the brand market share,” says Adrian. “In doing this, it gives our rental customers exposure to brands they may not have experienced before, which gives them the opportunity to see the benefits of them first-hand.
“The intent is that, hopefully, next time they need to replace some units or expand their fleet, perhaps we will be in the conversation where we weren’t before”
From Small Beginnings
The Penske rental fleet started in Brisbane with a relatively modest 20 trucks in 2014. Over the ensuing years Melbourne, Sydney, Adelaide and Perth facilities were added to the mix, followed by the north Queensland cities of Mackay, Townsville and Cairns.
“Today we have over 200 units in our rental fleet, including prime movers and rigids,” says Adrian – adding that after three years of renting the company started offering other services. “Once we had the brand and the business well established in Australia we started doing fully maintained operating leases which in our USA operation makes up around 65 per cent of our business compared with 35 per cent rental.”
Traditionally there has been consistent seasonality in the Australian truck rental business, typically slow over the winter months and flat out around Christmas, but that the onset of Covid 19 changed all that.
“We found that Covid disrupted this familiar pattern in that the demand for our rental trucks stayed high throughout 2020, especially in the second and third quarters, with unusually high utilisation for supermarket and online delivery operators due to panic buying and people staying home in lockdown and shopping online,” says Adrian.
“As a result, our customers in these fields all needed extra equipment for this period, and also after Christmas there was not the usual fall off in demand that we’re used to. This meant that all our equipment was out being rented into the new year and it has only fallen about 10 per cent over the last few months where usually it would drop down to around 60 per cent at this time of year.
“Customers who may have had a fleet of 10 core vehicles in the past are now downsizing to seven or eight and renting a couple to make up the shortfall due to uncertainty in the market.
“That way if something happens and they lose work they can quickly de-fleet without any penalty, or conversely gain additional units at short notice if work picks up.”
When Penske first started its truck rental business in Australia there was a degree of uncertainty as to whether commercial rental and leasing would work at a high level for businesses wanting to incorporate this into their fleet strategy.
“We’ve proven that this can be a reliable strategy and we feel our competition has really raised their game since we’ve been here, and we also have a few more competitors who are pretty good at what they do,” says Adrian. “Therefore, truck rental and leasing in this country is now a more established and reliable alternative to buying.”