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American Railcar Industries re enters leasing business

Steel News - Published on Mon, 03 Jan 2011

Argus Media reported that car manufacturer American Railcar Industries is adding equipment leasing, a business it left years ago to its roster of businesses.

ARI already designs and manufactures new railcars and parts, operates a network of railcar repair centers and supplies fleet management and engineering services to shippers. The company\'s industrial products group also creates specialty rail metals products.

Mr James Cowan president & CEO of ARI said that \"ARI is very excited to offer railcar leasing and provide another option for customers to utilize our quality railcars. We remain committed to meeting the needs of our customers. The economy and railcar market have been challenging over the last couple of years and ARI is responding to those challenges with an expanded market strategy.\"

Before ARI went public in 2006, it had a leasing business but spun it off before the manufacturer made its initial public offering. American Railcar Leasing is controlled by Carl Icahn, who is also it principal beneficial stockholder and board chairman.

ARI is returning to the leasing business due to customer demand, another senior company official told Argus. He declined to comment on the company\'s recent sales or its order backlog. In the third quarter, ARI delivered 420 railcars and had a backlog of 1,420 cars.

Mr James Cowan said that this is a good time to venture into leasing. He added that \"Our prices are pretty good right now, steel prices are good right now, so it\'s a good time to be investing in a fleet. We\'ve got a lot of customers that want to lease cars rather than buy and in today\'s market there looks like a lot of opportunities.\"

ARI does not plan to acquire an existing fleet, nor develop a fleet on speculation. Instead, the company will build cars and lease them to customers upon request.

The executive said that shippers use several fleet management practices, including leasing, buying and operating a mixed fleet. The ARI leasing option will allow the company to reach out to shippers it could not market to before because it did not offer leases, which will be offered only on a long term basis.

Railcars will be built to shippers\' specifications and then leased to them, but ARI will not only build cars that are slated for lease. Specialty railcars that shippers want for a one time use will not be leased because the company must be confident it will be able to re-lease the equipment, before manufacturing such railcars for its lease fleet.

He said that \"We\'ve got a lot of inquires already. Some customers have inquired about both leasing and buying. It\'s just another service we are offering to our customers, but we still are also selling to other lease customers as well.\"

The company\'s top three customers last year were all leasing companies. CIT Group Equipment Financing, American Railcar Leasing and GATX accounted for 36.5%, 28.2% and 19.7% of ARI\'s consolidated revenues, respectively.

(Sourced from www.argusmedia.com)

Posted By : admin on Mon, 03 Jan 2011
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