Eduardo Vega
Managing Director
Toyota Material Handling Capital (TMHC)
/
View from the Top

Forklift Suppliers Aggressively Pursuing New Opportunities

Tue, 09/01/2015 - 12:26

Q: What ratio of business does TMHC receive from leasing, renting, and buying, and which of these is your strongest profit center?

A: We established the company in June 2013 and started our operations in October of the same year. We service many of the large OEMs in Mexico and many other Tier 1s that lease, rent, or buy Toyota or Raymond forklift trucks directly from us. Before TMHC started business in Mexico, Toyota and Raymond only offered direct sales or shortterm equipment rentals. If the companies wanted financing for a fixed term, they had to get it from an external financial institution. Nowadays, with Raymond, we see around 45% of all sales being conducted through leasing, whereas, on for Toyota this is around 32-33%. The rest is made up from direct sales or short-term renting, which is usually no more than 12 months.

Q: How quickly has Mexico grown in importance for TMHC, and what does the country represent for the company on a global scale?

A: Mexico is a very strong market and represents the number one market for TMHC in Latin America. Mexico’s new forklift truck import volume is around 8,500 per year, but there are also around 17-23,000 used trucks being imported on top of that. The secondhand market is very strong locally, with companies that are going directly through dealers in the US to import those used trucks into Mexico. The new truck market is worth around US$300 million per year, but with the addition of the used trucks, the whole segment is worth around US$850-900 million. TMHC is the current market leader in Mexico, with our whole leasing portfolio of combined assets for forklift trucks in Canada, the US, and Mexico sitting at over US$2.8 billion. Canada buys 35-40,000 forklift trucks per year, the US buys 160,000 new forklift trucks per year, however Mexico only buys 8,500, so it does not make sense to open a manufacturing plant for forklifts here yet. However, we can offer an unparalleled level of flexibility to our customers in terms of lease terms, equipment exchanges, and Cascade accessories for the trucks. Finally, there is the option to provide an increasing or decreasing lease scheme that is tailored to the production and sales cycles of our customers, meaning that during slow sales months our customers pay less, and increase the payment once the high season rolls around.

Q: Which of your financial services are most in demand in this region, and which service presents the most profitable options for TMHC?

A: I would say operative leasing, but that depends on the financial and fiscal strategy of the customer. If the customer’s strategy is to go through a finance lease, they can register the asset into the books and also register the liability with us. They then have the use of the equipment through the contract period, whether it is 36, 48, or 60 months. Then, at the end of the lease, they have a purchase option of 1% of the invoice value of the asset. So, if the forklift truck was US$40,000, they only pay US$400 to keep the truck. These leasing options help companies with their cash flows and their leverage ratios, and they also help the company free up cash that is better used on materials that are going directly into the production line.

Q: How do your financial services differ across the different brands that you provide?

A: We are very aggressive toward offering competitive lease plans. By being able to earn a larger market share within the material handling industry, we are then able to sell more spare parts, as well as repair and maintenance services, and we are also able to provide our customers with a replacement of the truck every few years. If we are focusing on operative leasing, then by the end of the contract we can replace old trucks with new ones. This will drastically avoid downtime, which is essential in material movement and handling procedures.

Raymond Corporation of Mexico has an inventory of around US$5 million of spare parts for Raymond trucks in Queretaro, as well as a network of five dealers with a small warehouse of their own. Toyota Tsusho, the importer of Toyota trucks into Mexico, has an inventory of around US$7 million in spare parts in Mexico City. Alongside our own warehouse of spare parts, this allows us to guarantee a 24 hour delivery schedule within the country.