Sales of Used Trucks Rise 11% on Strong Replacement Need

This story appears in the April 10 print edition of Transport Topics.

Sales of Class 8 used trucks in February improved 11% year-over-year and prices steadied, but the oversupply of late-model sleepers continues and could grow by the end of the year, experts said.

Sales reached 3,684 compared with 3,306 a year earlier, ACT Research Co. reported, based on its sample of dealers, wholesalers and auctioneers as well as a few large fleets.

ACT uses the sample to determine average prices, age and mileage, and it includes about 13% of the total market, which is statistically enough to project market conditions, according to the company.

By that measure, total sales of used Class 8 trucks in February rose to 28,338 compared with 25,430 a year earlier — more than doubling the sales of 11,200 new Class 8s in the same month.

Used-truck demand is the same replacement phenomena as in the new Class 8 sales market, “just at a different tier,” ACT Vice President Steve Tam told Transport Topics.

The average price for all Class 8 trucks — including retail, wholesale and auction — was $40,731 compared with $42,047 a year earlier, according to ACT.

The year-over-year changes in average pricing each month are getting progressively less negative, Tam said.

“To me, that suggests pricing is firming,” he said. “I think a $40,000 number is a target for a floor. I think we are going to spend quite a bit of time in that neighborhood this year.”

Mileage on the average heavy-duty truck fell to 449,000 compared with 479,000 a year earlier, while the average age remained unchanged year-over-year at 7 years, 2 months.

Tam has forecast the 2017 used-truck market to be 250,000 compared with 270,000 in 2016.

The fundamentals are not supporting the early gains this year, he said. Instead, it is “little things here and there” that suggest improvements in freight demand and the larger economy, but there continues to be a “vacuum for the catalyst for any meaningful improvement,” Tam said.

Also, inventory will decline by the end of the year to about 50,000 trucks compared with 75,000 at the start of the year, he said.

Meanwhile, some used-truck buyers continue to seek very old trucks because they remain leery of those built beginning in 2007 to reduce emissions of nitrogen oxides, particulate matter, and, most recently, greenhouse gases, said Craig Kendall, specialty markets manager at The Pete Store in Knoxville, Tenn.

“But we are starting to see that most of the used-truck buyers have figured out that it is the way of the world,” he said. “If you go into California, you are going to have to have a fairly new truck. A lot of shippers are under tremendous pressure to be ‘green,’ so they want somebody with a pretty ‘green’ truck to haul for them.”

Model year 2014 trucks are beginning to enter the market, he said.

There were 220,405 new heavy-duty trucks sold that year, according to WardsAuto.com, making it the fifth-best year since 1999.

For customers who don’t shy away from late model trucks with automated manual transmissions and aerodynamic designs, “there are some deals out there right now.”

Chris Visser, senior analyst for commercial trucks at J.D. Power Valuation Services, noted the 3- to 5-year-old group of sleeper tractors continues to trend lower year-over-year.

The average price in February was $62,480, down 5.2% or $3,430 month-over-month, while the average pricing for this group through the first two months of the year was $5,904, or 8.4%, lower compared with the 2016 period. March’s pricing results are expected to be similar, Visser wrote.

“Individual makes and models generally lost more value than anticipated in February. We expect depreciation to relax in upcoming months, as pricing trends in the auction market cross over to the retail market,” he added.

To accelerate used-truck sales, truck maker Paccar Inc. launched a certified pre-owned program at the Mid-America Trucking Show last month for its Kenworth Truck Co. and Peterbilt Motors Co. brands.

The trucks must be four model years of age or less, have mileage less than 450,000 miles and pass a 150-point inspection. When a truck comes with its MX-13 engine, it will have a one-year, 125,000-mile warranty covering 105 components on the engine and aftertreatment system, Paccar said.

Tam said by the end of the year, “We will be at the confluence of a very good new-truck industry [sales years] in 2014 and 2015, and those larger fleets with more rapid trade cycles will be sending some of that into the used-truck arena in that timeframe.”