Elevated inventories still pressuring equipment dealers

Elevated inventories created by post-pandemic supply chain normalization are exerting more pressure on equipment dealers as high interest rates drive up floorplan costs. 

Supply chain issues caused commercial vehicle inventories to drop during the pandemic, with Class 8 inventories landing around 40,000 units and Class 5 to Class 7 inventories landing around 50,000 units in October 2021, according to ACT Research data. 

Commercial vehicle inventories across Class 5 to Class 8 have more than doubled and hit record highs, with Class 8 inventory at 88,800 units and Class 5 to Class 7 inventories at 101,900 units in July 2024, according to ACT Research. 

With inventory more than doubled, and exceeding registrations, it puts more pressure on dealerships, Kathryn Schifferle, founder and chief vision officer at Work Truck Solutions, said during her company’s virtual Commercial Vehicle Business Summit on Oct. 23. 

“When you have an environment where people are not buying as quickly because of outside forces, that exacerbates the fact that maybe there was too much inventory rushing back in,” she said. 

The pandemic created concerns for consumers and dealers, Justin Jones, corporate sales manager at Nashville, Tenn.-based Diamond Equipment, said during the Oct. 22 Equipment Finance News webinar, “Used equipment financing in 2025 as markets normalize.” 

“The problem is as a customer, on the consumer side, you get the problem that they’ve got so much [invested] in these machines from purchasing it through COVID,” he said. “Even on the dealership side, we’ve still got inventory left over from then, and it’s either take a massive hit on our side or try to hold out for a while with inflated interest rates.” 

Elevated inventories create floorplan concerns

High interest rates combined with inflated inventories created a floorplan problem as well as a sales problem, Tony Stinsa, head of inbound and outbound logistics at International, said during the summit. 

“The impact of that on a dealership’s financials or a business that’s reselling trucks is big already,” he said. “If you combine that with the fact that interest rates have gone up in that space and the floorplanning space, 4% to 5% in that same time frame, that’s caused the cost of carrying that inventory to double as well.” 

Titan Machinery’s floorplan payable balance for its second quarter of fiscal 2025, which ended July 31, totaled $1.2 billion, up 101.3% year over year, according to the earnings release. The equipment dealership group reported that its floorplan payable balance increased more than 100% YoY in each of the last four quarters. 

In addition, the glut of inexpensive used inventory allows customers to buy lower-priced equipment and keep values down, Joe Lundvick, senior vice president and head of asset management at Mitsubishi HC Capital America, said during the Equipment Finance News webinar. 

That is “going to keep the prices down, both in used and in new,” he said. “It’s just a matter of trudging through the inventory that has piled up.”