February Used Class 8 Sales Steady as Market Sheds Excess Inventory
Sales in February of used Class 8 trucks were flat year-over-year with the average price showing a modest uptick, ACT Research Co. reported as the formerly oversupplied market is in better shape.
At the same time, fleet sales of premium used trucks are up, and prices for model years 2015-16 equipment are rising, one carrier executive said.
“What is keeping the used market so strong is the availability of late model, low-mileage trucks, arguably reasonably priced especially relative what they would have to pay for new,” ACT Vice President Steve Tam told Transport Topics.
There were 21,800 Class 8 trucks sold in February, which was unchanged from a year earlier, according to ACT’s industrywide estimate.
Tam
“It is, in many instances, a substitute for a new truck,” he added. “And you don’t have to put an order in and wait for it to get built.”
The overarching theme in the market is stability, Tam said, despite a drop-off from January’s stronger-than-expected sales of 23,100 — largely predicated on tax reform getting passed and “folks getting giddy about what was going on,” he said.
ACT expects a moderate gain in volumes for 2018 compared with 2017 — low- to mid-single digits on a percentage-point basis, Tam said.
The average price rose to $41,978 compared with $40,816 in the 2017 period.
“This time last year, we were fretting over falling prices,” he added.
Mileage also was flat at 451,000 miles.
The age of the average Class 8 fell to 6 years, 10 months. A year earlier, it was 7 years, 2 months.
At the same time, dealer sales of late-model trucks sold in the first two months of 2018 brought 3.9% more money than in the same period of 2017, according to Chris Visser, senior analyst for commercial vehicles at J.D. Power.
“Dealers are accepting lower pricing in order to move inventory. This activity is one of the fundamental factors driving our depreciation expectations,” Visser told TT.
The average sleeper tractor retailed in February was 6 years, 2 months old, had 458,975 miles and brought $48,579. Compared with February 2017, this average sleeper was two months older, had 8,989 (2%) more miles, and brought $1,230 (2.5%) more money, according to J.D. Power.
One carrier executive said other fleets are buying its well-maintained, low-mileage premium-spec’d sleeper tractors in greater volumes and for higher prices compared with last year as the others expand the size of their fleets.
“The fleets are anywhere from your 10-truck fleets to 250-truck fleets. They are just all over the place,” said Tom Goff, associate vice president of Werner Fleet Sales, a unit of Werner Enterprises Inc.
Werner Enterprises ranks No. 16 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
“Both pricing and volume have increased. A lot of that I attribute to the lead times on new truck builds,” Goff said.
Meanwhile, “Used-truck inventories are down considerably, which allows us to be more competitive in taking trades, including competitors’ vehicles,” Navistar International Corp. Chairman and CEO Troy Clarke said in a quarterly earnings call with analysts in March.
Also, Navistar has a new incentive program that provides up to a $4,000 discount on its used International trucks — depending on age, mileage and condition — to eligible owner-operators working with Uber Freight.
“I think, in reality, if you are talking a three or four-year-old vehicle, you are probably talking somewhere around half that as your incentive. It really depends age, mileage and condition,” said Mark Johnson vice president of strategic marketing at Navistar Inc.
The arrangement with Uber Freight is one of a number of the truck maker’s programs offering incentives to buyers, he said.
“The agreement is for one year, at which time we will reassess,” Johnson said.
