Adrian Beach: Penske Truck Rental
After taking over MTU Detroit Diesel, Penske Automotive Group is gaining more and more traction in Australia. US expat Adrian Beach is now meant to lead the brand’s foray into the rental market.
The local arm of the powerful Penske organisation is one of the fastest growing truck and truck service businesses in Australia. Representing Western Star, MAN and Dennis Eagle, the company took over MTU Detroit Diesel in late 2014 and launched a dedicated rental and leasing service last August.
Inspired by the company’s US-based rental operation – counting more than 20,000 staff and more than 200,000 vehicles – it is supposed to breathe new life into the Australian leasing and rental market and provide smart alternatives to the traditional concept of truck ownership. Prime Mover met American Penske Truck Leasing and Rental Executive, Adrian Beach, to find out just how well the project is developing.
Right away, Adrian acknowledges that both the market and the business environment in Australia are a little different to North America. At the end of the day, there is just no “typical” rental or lease client in either region, he says: “We have customers who own just one truck that goes out of commission during a major service, so they need something else for a few days to do their normal route. On the other hand, there are major companies who might need a dozen trucks for the lead up to Christmas. There are also clients who have new trucks on order and need something while they’re being built.”
In the US, Penske has found that its leasing customers tend to rent a lot, with many operators leasing the core fleet but also engaging in short-term rental because of its flexibility. “The lease side of our business can also be suitable for large and small organisations where – probably for an accounting reason – they want to get assets off their books. Those bigger companies can probably buy and maintain a truck for a similar price as what we can, but there are operational and financial benefits in having us own the vehicle.”
One such benefit is that Penske also looks after the maintenance of the vehicles. To do so, Penske operates a large number of company-owned workshops in the US, and Adrian says that by doing so, the organisation has an acquired knowledge about training and parts inventory, as well as the diagnostic and service equipment required at each location. “Maintaining vehicles is often not the core competency of a transport fleet and even some of the national fleets have said, ‘we’re transport, not maintenance’. So, we can often be a good solution for them.”
Many of the Australian fleets that Adrian has spoken to are struggling to find and train technicians for their own workshops too – which is why he thinks a targeted leasing offering like in the US can help fill the gap. “The technology that’s involved to maintain a modern vehicle with all of the emissions changeovers is a challenge. And, there are the ever-escalating costs of the equipment itself. Add that together and I think that a fully maintained operating lease or a rental contract rings a little more clearly now than it did a couple of years ago.”
Unsurprisingly, at the core of Penske’s Australian rental fleet are mostly Penske-sourced vehicles – including MAN TGS, Western Star 4864 FS2 and Western Star FXC models in varying specifications, but also a handful of Freightliner Coronados. “For rental, we have to have some all-purpose vehicles, and that 40-inch Western Star Stratosphere sleeper works wonderfully for us because it can do singles, B-doubles and road train work.”
But according to Adrian, it hasn’t just been a case of selecting the Penske brands that are available in-house. “We’ve talked to fleets that wanted a bonneted American truck, and the Western Star fitted that bill nicely. For someone that needs a day cab around the city, the Coronados work very well, but you can also use the MAN, which has the flexibility of being a good city truck. If you need to put someone in it overnight, that seems to work out really well too.
“Right now, those three OEMs meet the demand that we’re hearing. At some point we may become a little more agnostic and if an opportunity comes up for another OEM, we’ll try to make it happen for our customers.”
It’s not all just about prime movers either, he says. “We’re looking into rigids right now. But we want to avoid the consumer rental and stick with the heavier side of the rigids, with trucks such as 14 pallet rigids in a 6x2 configuration.”
Dealers handling the Penske brands have already proved to be a major source of leads for the rental and leasing arm, but Adrian had to do some explaining first about how the leasing/rental operation would fit in with their businesses. Offering the Penske-distributed trucks has the added benefit of getting an operator into a truck brand that they may not be familiar with and wouldn’t normally consider for their specific purposes, he says. “We’ve had customers come in to rent trucks because they’ve had new vehicles on order that have been delayed, who then cancelled their orders and instead bought the brand they rented.”
The leasing and rental division has also proved able to help Penske dealers gain more information about their own customers. “We’ve had certain situations where customers own Western Stars, rented one of ours and really liked the alternate combination of the engine and the transmission and got really good fuel economy. We pass that info on to the dealer and next time that customer wants to order trucks, they can consider the different specification.”
On top of that, Penske has partnered with Mix Telematics in Australia and the system is now installed in every rental and lease truck. Adrian says that this is a strong point of difference against competitors who may have more locations and more trucks in their fleets. “We built a dashboard with Mix that will show vehicle performance data such as a detailed trip report, fuel burn rates and driver performance factors such as harsh braking and cornering as well as over-speeding. We then download the report and send it along with the invoice. It gives us another reason to get back in front of the customer to talk about fuel economy and driver performance and discuss things other than their next rental.”
Adrian acknowledges that leasing isn’t a product for everyone and that rental may be easier to understand due to its flexibility and ability to keep a business operating when extra capacity is needed. “With leasing, it is important to get an understanding of what their challenges are and then find those aspects of our program that are going to help provide solutions for them.”
According to Adrian, the traditional Australian transport operator usually has an existing relationship with their own bank or financier and uses that to buy the trucks they want. When there is an excess of work available in the short or medium term, they engage sub contractors. But Adrian wants to change that thinking and provide alternatives. “I’ve learned that anyone can duplicate a truck spec. The key to our success has always been to understand our customers’ problems. I’m passionate about that. We don’t ask about what sort of contracts they have, we ask about what sort of challenges they face. We want to help with what keeps them awake at night.”