Truck-Buying Changes

Many fleets are shifting to late-model used trucks to meet their need for additional vehicles, according to registration data provided by R.L. Polk & Co.

So far this year, of the 229,904 initial registrations of Class 8 trucks throughout the country, about 77% have been used trucks and 23% have been new vehicles. (Click here for p. 1 story, this issue.)

To highlight the shift, during 2008, 42% of all initial Class 8 registrations were for new trucks.

At the same time, Polk also reported last week that registrations of new Class 8 trucks increased by 7.8% in the second quarter, compared with the same three months of 2009. (Click here for p. 1 story, this issue.)

This marks the first time since the economy began to tank in 2007 that new truck registrations have exceeded year-ago totals for three consecutive months.

ACT Research Co., meanwhile, reported that July Class 8 new truck orders grew 27% above a year ago. The company said sales were growing “as trucking company profitability continues to rebound strongly.”

We asked lots of industry experts why fleets are seemingly shifting more attention to used trucks, and mostly heard theories that the move was driven by the lower costs of older trucks and uncertainty about the performance of new trucks that carry engines designed to meet 2010 federal emissions standards.

Tightening federal pollution requirements have helped drive truck prices substantially higher; 2010-model tractors generally are about 50% more expensive than were 2006 models.

Several dealers reported that good, late-model used equipment is in short supply. And several reported that interest in new trucks also is picking up, with some fleet officials saying they are leery of the increased downtime of older equipment.

It appears that large fleets are mostly looking at low-mileage, late-model used equipment, while smaller fleets are happy to purchase older trucks with many more miles on their odometers.

One interesting sidelight of the data from Polk is that despite all of the buying and selling, the total U.S. Class 8 fleet actually declined by about 20,000 vehicles in the second quarter.

Polk reported that the decline occurred because new purchases failed to keep up with vehicle retirements, meaning that total freight capacity declined during that period.

This data is in line with increasing reports that freight hauling capacity is in tight supply in some traffic lanes and that many shippers are looking to lock in carriers now to handle what the companies hope will be increasing freight volumes as the economic expansion grows.