Recent federal actions targeting non-domiciled commercial drivers and requirements for English proficiency are negatively impacting truck dealership sales and increasing caution among lenders.
According to a survey by IronAdvisor Insights, 60% of dealers reported a decline in used truck demand in November, up from roughly 10% in August. These challenges have been attributed to new policies affecting non-domiciled drivers.
On September 26, the Federal Motor Carrier Safety Administration (FMCSA) issued an emergency ruling limiting the eligibility for non-domiciled commercial driver’s licenses due to issues regarding illegal CDL issuance by states and accidents involving foreign-born drivers.
The ruling scrutinizes state licensing practices and is aimed at various immigration statuses beyond just undocumented individuals. Categories impacted include:
- Refugees;
- Asylum seekers with pending cases;
- Individuals under Deferred Action for Childhood Arrivals;
- Temporary Protected Status holders;
- Student visa holders; and
- Dependent spouses and children.
This ruling follows President Donald Trump’s executive order from April 28, which reinforced English proficiency requirements for truck drivers. J.B. Hunt has estimated that these regulations could remove 5% to 12% of CDL holders, equating to about 214,000 to 437,000 drivers over the next few years.
Since the ruling, a significant number of drivers have exited the market, with the FMCSA withdrawing 17,000 non-domiciled CDLs in California alone. They have also threatened to rescind one-third of Minnesota’s non-domiciled CDLs along with up to $30.4 million in federal highway funds.
Impact on Dealers
Despite a federal appeals court issuing a stay on the rule on November 10 to allow for further examination, truck dealers have already felt substantial repercussions. One dealer reported losing 38 drivers from a 60-truck fleet due to these changes, while another mentioned drivers skipping work due to fears related to immigration enforcement.
Repercussions for Lenders
The updated policies also pose risks for truck lenders, as non-domiciled CDL holders shut down operations or face imprisonment. Chris Grivas, president of CAG Truck Capital, indicated that more borrowers are falling into repossession due to these developments. Additionally, lenders financing trucks used by driving schools may also be affected, especially with nearly 3,000 CDL training providers losing accreditation recently.
Although foreign-born drivers make up a small portion of carriers—around 18% per the Bureau of Labor Statistics—lenders need to remain vigilant about regulatory shifts that might impact borrowers’ repayment capabilities.
