Mitsubishi HC Capital America EVP stresses financing caution

Commercial vehicle lenders are prioritizing liquidity and targeting fleets with high capacity amid market uncertainty while OEMs work to keep prices stable.

President Donald Trump recently said he would enact a 25% tariff on medium- and heavy-duty trucks, effective Nov. 1, potentially dealing a blow to various commercial vehicle sectors.

As tariffs exacerbate transportation industry woes, lenders must stress caution when providing financing to freight carriers, Kirk Mann, executive vice president and head of transportation at Mitsubishi HC Capital America, said Oct. 8 during the Commercial Vehicle Business Summit, a virtual event hosted by dealer service provider Work Truck Solutions.

“It’s been the longest down cycle of freight that I’ve seen in my 30-year career, and there is an inventory overhang right now. You’ve got a lot of stock inventory out there with dealers.”

— Kirk Mann, EVP, Mitsubishi HC Capital America

However, fleets with high capacity can boost lender confidence in the wake of economic and pricing uncertainty, Mann said, noting the potential for “asset bubbles” like the pandemic.

“We’re making sure that if we believe there’s another asset bubble coming, then the way you mitigate it is by providing loans for organizations and individuals who have tremendous capacity,” he said. “What I mean is, they have the ability to repay the loan even if things get difficult.”

It’s also crucial for lenders to maintain liquidity to ensure that they have adequate funds when financing opportunities arise, Mann said, noting that a lot of liquidity has “evaporated from the market” in recent years.

“If you’re a fleet, if you’re a dealer, if you’re an OEM, you want to be sure that you’re partnered with people that have stable liquidity and can stay in the game with you for the long term.”

— Kirk Mann, EVP, Mitsubishi HC Capital America

“That doesn’t mean that we won’t be cautious, but we’re here,” he said.

OEMs hang tough with prices

While some OEMs have increased new vehicle prices to account for tariffs, others are trying to keep prices consistent to mitigate tariff-related challenges facing fleets, Gabe Slack, sales enablement manager of fleet companies at General Motors, said during the event.

“I think when you look at the manufacturing footprint that we have, we’ve got some flexibility there,” he said. “I don’t think it’s any secret when we release our financial stuff quarterly, that the profits are not as high as they were, and some of that is just due to the tariffs. But at this point, we’re trying not to pass that down to the consumer … and unfortunately eat into our profits.”

Incentives have also helped stabilize prices, Slack said.

“Incentives have gotten a little bit stronger, just trying to add some stability in the market for everybody out there,” he said. “As you look at how we go to market, we’ve got multiple plants in multiple areas, so we’re able to move some of that production around.”

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