December Used Truck Sales Decline, ACT Reports

By Seth Clevenger, Staff Reporter This story appears in the Feb. 4 print edition of Transport Topics.

Used Class 8 truck sales declined in December from a year earlier as vehicle prices increased and average mileage trickled lower, according to ACT Research.

ACT’s survey, which includes an estimated 10% of the market, said that dealers moved 1,808 used trucks in December, down from 1,993 in the same month a year ago.

Despite that 9% drop, ACT Vice President Steve Tam said demand “held up pretty well,” considering buyers’ hesitation and “analysis paralysis,” caused by concerns about the fiscal-cliff debate at the end of 2012.

The average price for used trucks sold in December rose to $41,200, from $39,353 a year earlier, Tam said. He said the pricing gain correlated with a decrease in average mileage, to 538,800 from 552,100 in December 2011.

The industry still faces a shortage of the late-model, low-mileage used trucks that are in high demand, Tam said.

While used truck prices rose about 2% in 2012, following a 30% gain the year before, Tam predicted the average price would fall by 5% to 10% in 2013, primarily because of higher used inventories as the economy improves and more carriers purchase new equipment and trade in their old trucks.

Pricing fluctuated during 2012, beginning at an all-time high of $44,276 in January and dropping as low as $35,032 by September before rebounding a bit to $41,200 in December, ACT said.

American Truck Dealers, a division of the National Automobile Dealers Association, said the average retail price of a used Class 8 sleeper rose to $49,819 in December from $47,829 a year earlier. During that timeframe, average mileage declined to 538,517 from 546,742, the group said.

Chris Visser, senior analyst for ATD/NADA, said rising consumer spending could boost used truck sales in the year ahead, especially if Congress addresses pending financial concerns.

“The consumers are ready to spend,” he said. “They’re more confident about their employment security, more confident in their housing values, and they’ve already been buying new cars. They have their checkbooks out; they’re just waiting for the government to stop playing chicken with the economy.”

Rick Clark, president of the Used Truck Association, said he expects used sales to be slower than normal in the first quarter of 2013 before hopefully picking up in the second quarter.

“I think the economy still isn’t right,” he said.

Clark, who is vice president for warranty provider National Truck Protection in Cranford, N.J., also predicted that used truck inventories will increase in the first quarter, in part because of trade packages coming in on deals that were made at the end of 2012.

Dealers in different regions of the country experienced varying sales results in December.

Hammer Truck Sales in Salisbury, N.C., had a “tremendous” December despite the apprehension surrounding the “fiscal cliff,” said Nat Hammer, company president. “We had customers coming in from all over the country buying equipment.”

Many of the dealer’s customers had a good 2012, and moved forward with purchases before the end of the year, he said.

Hammer also noted a resurgence in sales of used vocational equipment as the construction market bounces back.

Despite those positive signs, it remains difficult to find low-mileage used equipment, he said.

“When the economy slowed down, people obviously were hanging onto their equipment a lot longer,” he said. “Low-mileage equipment kind of dried up in that atmosphere. It’s a competitive market among the used dealers to try to find good used equipment.”

Edward Barcena, president of Champion Truck and Trailer Inc., a used truck dealer in Odessa, Texas, also cited inventory challenges.

“Low-mileage stuff is almost impossible to find,” he said.

It is also a growing challenge for the dealership to find used trucks that match the needs of customers whose operations are related to the oil industry, he said.

“It’s hard to find used equipment that meets the specification requirements of the oil field on the used side,” Barcena said. “What we’ve had to do is take a normal truck and try to modify it to meet that demand and that need. The exact stuff they ask for is not out there. That’s just a pipe dream.”

Barcena said used truck sales at his business slowed in November and December by 25% to 30%, compared with previous months.

He said that is because many of the energy sector companies exhausted their budgets and were waiting to finalize their 2013 budgets before making purchases. There was an uptick in sales in January, Barcena noted.