Prices for Used Trucks Continue to Rise as More Late Models Hit the Marketplace

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

Used-truck values reached a record in October, with the average price for a sleeper cab at just more than $61,000, the American Truck Dealers reported.

“Our overall average [price] set a new record in October, for the same reasons that it has in the past recent months: an increasing supply of late-model tractors,” said Chris Visser, an ATD analyst.

Average mileage was under 500,000 for the first time since late 2010, and there was a higher proportion of newer model year trucks with lower mileage entering the market, he said.

“That trend really accelerated in the spring after the rough winter, and it’s been the trend all year,” Visser told Transport Topics.

The main reason is that more trucks were built after the recession ended — new truck sales jumped 78% in 2011 from 2010 — which is adding more inventory that is coming back into the secondary market, Visser said.

He said there has been a big increase in 2011s hitting the market and that more fleets are back on three- to five-year trade-in cycles.

“We’re seeing continued appreciation in prices,” said Steve Tam, vice president at ACT Research Co., whose average price for Class 8 trucks was a record $50,050 — up from just less than $49,000 in September and about $42,000 a year ago.

ACT’s figure covers about 10% of the overall market and includes all types of trucks, including day cabs and sleepers.

“It’s definitely a strong market,” Tam said. “Value is on the rise and sellers are happy. . . . Buyers are getting more for their trade or sale, but you’re also having to pay more when you buy new trucks.”

ACT data showed that average miles were up 1% month-to-month to almost 535,000 but down 1% from a year ago. Year-to-date cumulative average miles were down 2% to 546,000.

“Used sales have been strong the past couple of years,” said W.M. “Rusty” Rush, chairman and CEO of truck dealership Rush Enterprises.

Asked if he’s seen mileage on used trucks come down appreciably, he said, “Not yet, but that will happen. Mileage on some of the used trucks has been more than it was seven or eight years ago, because people held onto the product longer.”

“I think as we finish cleaning out the last of the 2009s and ’10s . . . we expect to see the mileage continue to come down,” he said at a Rush event in San Antonio last month (see story, p. 6).

Rush was on track to sell about 8,000 used trucks this year, with about 60% of them heavy-duty, Trey Golden, vice president of used trucks, told TT. Rush sold 6,400 used trucks in 2013, which was 35% more than 2012.

Rush has about 2,300 used trucks on hand, which equates to about four months’ inventory, he said, adding, “Each year, we’re also selling a bigger percentage of medium-duty trucks.”

Asked about Navistar values, with that company’s problems with its exhaust gas recirculation engines that were built until about two years ago, Rusty Rush said, “Obviously, they’ve taken a hit in the used-truck marketplace, no question.”

A Navistar executive said its “Diamond Renewed” used-truck program, which was unveiled in July and reconditions EGR-era trucks, is helping to boost its inventory’s value.

“We determined early in the year we needed to take some steps to support our residual value, given what’s happened in the last few years” with EGR engines, said David Gerrard, Navistar’s senior vice president of distribution.

“We’ve got to work a little harder,” Gerrard told TT at Rush’s event, adding that the “fundamental purpose of Navistar’s used-truck program is to support new-truck sales.”

Meanwhile, an executive with a leasing firm said a large influx of late-model trucks has pushed overall market values higher.

While a “record-low [number of trucks] were manufactured in 2008 through 2010” during the recession, a “steady build has allowed more used trucks to come back into the market,” said Dale Tower, vice president of remarketing services for AmeriQuest Transportation Services in Naples, Florida.

However, looking ahead, he said truck makers also are planning to roll out their 2016 models early this year, which will affect used trucks’ value.

“That’s kind of a new scenario,” Tower said. “I’m holding back on buying inventory right now, because I don’t want to see them drop [in value] by the end of January.”