Shortage Means Higher Prices for Used Low-Mileage Class 8 Trucks

A continued shortage of available low-mileage used Class 8 trucks is being blamed for lower sales and higher prices in July, industry executives and dealers said.

“There is absolutely still a shortage of used heavy-duty trucks,” Rick Clark, president of the Used Truck Association, told Transport Topics. “Prices are higher too, though it depends on the truck and what the buyer is looking for. If you suddenly run across a small group of low mileage trucks, it’s almost certain they’ll be offered at a very high price.”

ACT Research Co. said in its monthly survey that used Class 8 sales fell more by 12.4% in July from June.

ACT also said the average price for a used Class 8 tractor in the seven months of this year was $38,100, compared with $29,600 in the first seven months of 2010. In addition, the mileage of the average used Class 8 on the market was 539,000 miles this year, compared with 500,600 over that same span last year.

“The Class 3-8 used truck market tumbled 10% in July, reversing the market gain posted during June,” ACT said. “Lack of inventory continues to be a challenge for the industry.”

Steve Tam, ACT’s vice president for the commercial vehicle sector, said a used heavy-duty truck costs almost 30% more than a year earlier, despite having on average 8% more miles.

Steven Waters, vice president of used truck operations for Navistar Inc., which builds International trucks, agrees there is a scarcity.

“Trucks that are five, six or seven years old with low mileage are virtually nonexistent right now,” Waters told TT. “The few that are out there are being held for high retail prices.”

He said that used trucks have regained the 40% to 50% drop in prices they suffered during the recession and added more price gains on top of that.

“Our retail sales [of used trucks] have been pretty consistent this year. On a month-to-month basis, July was the second-best month for us this year,” Waters added.

“I would say our situation is similar to what ACT Research described,” Dean Jeske, vice president of purchasing and wholesale at Arrow Truck Sales Inc., Kansas City, Mo., said.

Arrow is a division of Volvo AB, which also owns Volvo Trucks North America and Mack Trucks Inc.

“We get most of our trucks from trade-ins,” Jeske told TT. “Some fleets sell their own trucks, but the same fleets who have been selling their own trucks to Arrow have continued to do so.”

“We’re still buying enough trucks for us . . . because we pay what the market says,” Jeske said. “But for the industry, that’s more difficult.”

He said that the biggest change Arrow is seeing “is higher mileage.”

“Fleets are running for longer cycles,” Jeske explained. “We’re seeing trucks with 600,000 to 700,000 miles on them. Low-mileage trucks are a real premium.”

He also agreed that prices have risen.

“The truck that was $30,000 last year could be $34,000 this year,” he said. “However, prices vary so much from different manufacturers, different ‘specs,’ different conditions, it’s hard to give an average price.”

Jerome Nerman, managing partner of used truck dealer Truck Center of America, Leawood, Kan., said that he has had to “educate” customers about buying higher-mileage trucks.

“Prices are definitely up because of supply and demand, and there has been such a shortage of product,” Lewis told TT. “The fluidness of sales is not robust, but we’re still able to sell them despite of the higher price.”

Lewis said that before the recession, used trucks from first owners would come in at 400,000 to 500,000 miles, which has grown now to 600,000 to 750,000 miles.

“There’s no question this comes from fleets keeping their trucks longer, so that we’ve had to educate customers about how much life is left in trucks with this mileage on them, and what operating costs will be.”

UTA started an online forum in July for its members because of the shortage, Clark said.

“We’ve tried to make this as simple as possible, so that members with any smart phone, a BlackBerry or iPhone, can log in and keep track of what’s available at all times,” Clark said. “We sold the first truck on the forum within 24 hours of it going live.”

R.L. Polk & Co. reported Aug. 29 that 179,071 used heavy-duty vehicles were registered by their new owners in the first six months of this year in the United States, a 1.6% increase over the same period last year.

For the full year of 2010, Polk counted 319,980 used Class 8 registered (by their new owners), 40.9% over the 2009 total.

“This shows that the little guy is getting bigger because many major fleets are looking to offload their new business so they don’t have to buy trucks themselves,” Gary Meteer, Polk’s senior account director, commercial and aftermarket, told TT.