Arrow Says Used Truck Sales Up In 2010, but Shortage Possible

This story appears in the July 5 print edition of Transport Topics.

KANSAS CITY, Mo. — Arrow Truck Sales, one of the nation’s largest dealers of used Class 8 trucks, said sales increased about 60% during the first five months of 2010, compared with a year earlier.

Steve Clough, Arrow Truck’s new chief executive officer, also cautioned that a severe shortage of used trucks could develop in the next several years — especially in Class 8 — because of the collapse in new truck sales during 2008 and 2009.

“This has been the toughest used truck market I’ve ever seen,” Clough said at an event Arrow Truck organized here to celebrate the 60th anniversary of its founding.

Arrow Truck operates 18 truck centers in the United States and Canada, and maintains an inventory of about 2,000 trucks.

“During the boom, financing used trucks became very much like financing in housing, with many new players entering the field that weren’t as strong in audit checks or realistic interest rates,” Clough said. “A lot of people were able to offer cheaper credit than us, but they are all out of the business now.”

He said that Arrow’s main customers — private fleets, small and medium-size for-hire carriers and owner-operators — all are experiencing better times this year than the previous two years.

“All indications are that our customers now have the ability to get good loads that could make them money and allow them to buy newer trucks,” Clough said.

“Now, our sales are up 60% this year on a year-over-year basis through May, and credit applications are up 27% on the same year-over-year basis,” he said.

“Sales of used trucks in 2010 are far exceeding what they were in the first six months of 2009. Prices are up and inventories are increasingly hard to find,” Tim Ormsby, president of T&R Truck Sales, Fort Wayne, Ind., told Transport Topics. “The overall market is definitely so much stronger.”

Don Mueller, Arrow’s marketing director, said Arrow does not expect the full-year increases to match the first five months of 2010.

“We expect sales to continue to be good,” Mueller told TT. “But the caveat to the year-over-year numbers is that they will not be quite as good over the remainder of the year. This is not a reflection on how we see the rest of the year.”

Mueller explained that in 2009, first-quarter used truck sales were at the lowest point of the recession, but they started to come back in the third quarter, “so we’ll have higher numbers to compare against.”

Clough also said prices of used vehicles fell significantly during the recession.

“The average price of a used Class 8 was $35,000 in 2002, which had risen to nearly $50,000 in 2006 but then dropped to $41,000 in 2008 and $30,000 last year, a historically low price,” Clough said.

He said Arrow saw pricing move higher starting in March, “which is typical of a recovery.”

Arrow is owned by Swedish truck manufacturer Volvo AB, but it began operations in a single used truck lot in Kansas City in 1950.

Clough, formerly Arrow’s chief financial officer, succeeded Carl Heikel in May.

Heikel was appointed Mack Trucks’ senior vice president of international operations. Mack and Volvo Trucks North America are Volvo AB’s subsidiaries.

Clough said although exports provided an important outlet for used trucks in the first years of the recession, some markets, such as Russia, have turned away from U.S. trucks in part because of new import restrictions.

“Losing exports won’t be a serious problem, because we’re going to be facing a shortage of used trucks in this country, because new truck sales have been below the replacement rates,” he said.