Prices for Used Trucks Soften; Analysts Expect More Declines
The average sales price for used Class 8 vehicles softened in August amid a strong supply of lower-mileage aerodynamic sleepers and a continuing trend of price depreciation in the market overall, analysts said.
Prices in August averaged $47,732, down about 1% from $47,994 a year earlier, ACT Research reported. They also were down 2% from July’s average price of $48,629.
ACT surveys dealers, wholesalers and auctioneers, as well as a few large fleets, to determine average prices.
“We are in an interesting period of time,” ACT Vice President Steve Tam told Transport Topics. “I think it is kind of a transition period as far as used-truck pricing is concerned.”
Over the past few months, ACT has seen the number of model year 2010-2012 aerodynamic sleeper cabs increase, he said.
“Now supply is exceeding demand, so prices are softening, and, in general, they are also helping to hold down prices for the total market,” he said. “We have reached that tipping point.”
Nonetheless, used-truck prices remain near historic levels. The record average price of $49,928 was set in May, ACT said.
Michael Baudendistel, an analyst with Stifel Transportation & Logistics Research Group, said truck prices are likely to come down over the next year or two “once the shortage of late-model and low-mileage equipment is alleviated as the tractors produced in 2011 and 2012 start to come into the market in greater numbers.”
He added that used-tractor prices are important “because the large majority of new-tractor purchases are for the purposes of replacement, which means they coincide with the sale of a used tractor and the price received for the used equipment will impact the net investment required for the new tractor.”
ACT President Kenny Vieth agreed. He said during the Technology & Maintenance Council’s fall meeting in Orlando, Florida, that used-truck prices have been stagnant for more than a year and suggested they could begin to fall as much as $10,000.
“Used-truck prices will be under significant pressure by the end of this year,” he said.
Chris Visser, an analyst with the American Truck Dealers, said the average retail price for all Class 8 model years was $61,565, or $660 above the July price of $60,905 and $1,106 more than the August 2014 price of $60,459.
“Surprisingly, the number of sales per dealership has been off fairly substantially from the same period as 2014 on the retail side,” he said. “Supply and demand is strong, judging by pricing, so there really is no reason that dealers should be selling fewer trucks.”
He said dealerships averaged 4.4 sales in August, down from 5.6 a year earlier. Visser also said he has seen a “mild uptick” on dealer-to-dealer wholesale sales, “but that is about the only dynamic I can determine.”
Craig Kendall, fleet account manager at Peterbilt of Knoxville, Tennessee, said he considered demand to be very strong.
For instance, pre-2007 trucks are demanding a premium. At the same time, Kendall said, he is starting to see buyers more accepting of various levels of emission equipment required to meet clean air standards in 2007 through 2010.
Many of his customers are small fleets and owner-operators, said Kendall, who also is vice president of the Used Truck Association.
In addition to lower prices, used Class 8 trucks are selling with lower mileage in August, ACT said.
“It’s the best of both worlds for a period of time, anyway,” Tam said.
The mileage on the average Class 8 truck fell almost 5% to 501,000 miles from 526,000 miles in August 2014, he said.
Since the beginning of 2013, when the average mileage was about 560,000, there has been “very subtle erosion,” Tam said.
He suggested low-mileage trucks also were those that fleets once “parked along the fence” during the recession.
