March Used-Truck Sales Rise But Trail Year-Ago Level

This story appears in the May 6 print edition of Transport Topics.

Sales of used Class 8 trucks in March reached their highest level since October despite coming in 18.2% short of the sales volume reached in March last year, ACT Research reported.

Retailers, wholesalers and auctioneers surveyed by the research firm sold 1,924 used trucks in March, up 4.4% from the 1,843 sold in February but well under the 2,352 sold in March last year.

The survey represents about 8% to 10% of the entire market.

Used sales have risen two months in a row on a sequential basis, according to ACT.

“Hopefully, lost activity and momentum in the economy due to the threat of falling off the fiscal cliff and the presidential election have subsided enough that used-truck buyers will continue to increase purchases,” said ACT Vice President Steve Tam. “However, uncertainty associated with sequestration may be the next sticking point for potential buyers.”

The need to replace aging equipment with high maintenance costs remains the primary driver of sales, said Rick Clark, president of the Used Truck Association.

“For the majority [of buyers] we hear from, the only reason they’re buying a truck is they need it,” Clark said. “If they could run their old 2005 or 2006 trucks, they would, but they just have excessive miles.”

The used-truck business continues to grapple with low inventories of the most desirable trucks, said Clark, who is vice president for warranty provider National Truck Protection in Canford, N.J.

“Everybody’s still looking for the 2007 [model year] with low mileage, which is rare,” he said. “Guys are trying to avoid the [diesel particulate filters] as much as possible.”

However, one used-truck seller said the industry is reaching a point where more buyers will have to turn to 2008-2010 model year trucks, which are equipped with DPFs to meet federal emissions standards.

“I don’t know if we’re there yet, but there’s going to be a lot of those trucks that people are going to have to embrace,” said Kevin Hollaway, manager of used-truck sales at Central Illinois Trucks Inc., a dealer based in Normal.

Low-mileage, pre-emissions used trucks from the 2007 model year and earlier are still the most sought-after models, but they’re now “few and far between,” he said.

Some customers looking at the 2008-2010 trucks will ask to see something else, Hollaway said, but “there isn’t anything else” unless they can afford to pay more to get into a 2011 or newer truck.

Through the first quarter, used-truck sales in ACT’s survey totaled 5,469, down 10.9% from 6,139 in the first three months of 2012.

Ryder System Inc. bucked the trend and said its used-vehicle sales increased during the first quarter. The truck leasing and transportation company sold 5,800 used vehicles in the quarter, up 23% from 4,700 in the same quarter last year, the company said in its April 23 earnings report.

In ACT’s survey, the average price of a used truck sold in March was $37,611, a 0.3% dip from $37,712 in the same month a year ago. The March price was 4.8% below the February average of $39,502.

The average retail price for a used Class 8 sleeper with fewer than 1 million miles rose in March to its highest level in more than five years, according to American Truck Dealers, a division of the National Automobile Dealers Association.

March’s average retail price of $50,765 was up from $48,686 a year earlier and $49,524 in February, the group said.

“Trucks with under 600,000 miles are in as high demand as they’ve ever been right now, so with fewer and fewer entering the market, these high prices would be logical,” said ATD analyst Chris Visser.

At the same time, the wholesale market continues to absorb older trucks with higher mileage, which has driven down average pricing in that segment of the used market, Visser said.

“I think that’s just another symptom of the lack of average- to low-mileage trucks out there,” he said.

Frank Dodson, president and owner of Rose Truck Sales in Corpus Christi, Texas, said used sales at his dealership picked up toward the end of March, but emphasized that his business is driven by the local oil field industry.

Trucking companies that haul crude oil, pipe or sand for use in hydraulic fracturing purchase their equipment based on the ebbs and flows of oil companies’ production cycles, he said.

“When times get really good and there’s lots of money in the oil field, these guys just buy new” rather than purchasing late-model, low-mileage used trucks, Dodson said.