Executives Say Used Trucks Remain Scarce, Despite 2011 Rise in New Class 8 Deliveries

The increase in new Class 8 deliveries in 2011 hasn’t yet done anything to ease the scarcity of used vehicles and, if anything, has added even more upward price pressure, industry executives and analysts said.

Most sources reported lower sales of used Class 8 trucks in December, although U.S. truckers bought 59.9% more new trucks last year than they did in 2010, according to WardsAuto.com (1-23, p. 1).

ACT Research Co., which claims to track used truck dealers and auction sites that account for about 10% of the U.S. market, said Jan. 25 that it recorded 1,874 used Class 8 sales in December, down 30.2% from December 2010.

“This December, the average price of a used Class 8 for all channels was $40,765. That may be close to an all-time high. Last December, the average price was $34,355,” Steve Tam, ACT’s vice president, commercial vehicle sector, told Transport Topics.

“In December, our sales were way down,” Terry Hebron, owner of the website Heavy Truck and Equipment Wholesalers, Flatonia, Texas, which is open only to used truck dealers, told TT. “Traffic on my website was way down, and fewer members were logging in every day.”

Hebron said that the total value of trucks sold via his site in December came to $500,000.

“So far, the market this year [2012] is much better,” Hebron said. “About $1.3 million of trucks were sold on the site this month, up to Jan. 24.”

Hebron said that about 2,300 dealers were members of his site, but they use the site only when they have something to sell or buy.

Before the recession and used-truck downturn, between 1,100 and 1,300 used trucks were typically listed on his site each day, but it’s down to about 600, he said.

“Everyone is sitting around and waiting for those big trade packages we’re told would be coming from the big jump in new truck sales, but we’re not seeing it,” Heavy Truck and Equipment Wholesalers’ Hebron said.

“The shortage is good for the dealers, though,” he added. “I have had a good number of the independent used truck dealers — and I’m talking about the biggest names in the industry — tell me that 2011 was their best year ever.”

ACT’s Tam said used truck dealers always faced increased competition in similar situations.

“When used truck prices rise, more and more industry people become interested in becoming used truck dealers,” Tam said. “Fleets suddenly see remarketing as actually a profit center. That is one reason why traditional used truck dealers have been complaining about a lack of product for the past two years.”

Rick Clark, president of the Used Truck Association, the industry’s trade group, said he has seen a worrying trend of higher prices caused not by scarcity, but by the higher prices of new trucks built to meet 2007 and 2010 federal emission standards.

Truck manufacturers added a surcharge of $7,000 to $12,000 at the beginning of each new cycle for the new emissions equipment.

“The biggest problem that many truckers have is getting financing on 2008 and ’09 trucks, and even some 2010 used trucks, because of the price of the original truck was so high,” Clark told TT. “These newer models that are starting to come into the market used to sell for $25,000 to $40,000, but now they’re being priced at $60,000.”

“A lot of the pricing depends on the specs and models, but on the lots I’ve been on, I’ve seen a lot of trucks priced for $60,000,” Clark added. “The typical customer is used to getting financing for a $35,000 truck. How do you get a C or D credit guy into a $60,000 truck?”

A new truck dealer confirmed that his company has emphasized used truck sales when their prices rose.

Sam Jenkins, executive vice president of Diamond International, Memphis, Tenn., which has 16 locations in four states that sell Navistar Inc.’s International trucks, said that the company primarily sells used trucks it gets as trade-ins from buyers of new trucks.

“2011 was a very strong year for us in the used truck segment, although supply continues to be tight and difficult,” Jenkins told TT. “We see that trend continuing in 2012.”

“We’re moving those used units pretty quickly,” Jenkins added. “When we know we’re going to have trade-ins as function of new sales, in some cases we’ve already placed those units before we take delivery.”