February Used Class 8 Sales Down 20% Year-Over-Year
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Used Class 8 truck sales in February decreased 19.6% year-over-year to 17,600 units from 21,900 units, ACT Research reported.
The average price for a used truck fell 23.3% to $72,386 from $94,343 a year ago, and declined 3.5% month-over-month from $75,013 in January. Average mileage was unchanged while age was down 2%, ACT said.
On a month-to-month basis, sales slipped 4.9% from January’s volume of 18,500 units.
The decline was felt at the dealership level, noted ACT Vice President Steven Tam.
“Following two months of gains, same-dealer Class 8 retail truck sales retreated into negative territory in February, down 8% from January,” he said. “The drop was directionally consistent with seasonality, though a bit steeper than expected. It is no secret that ‘normal’ has been anything but in this cycle, so given the relatively small variance, it is tough to get too excited.”
According to the latest State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT, used CL8 retail volumes (same dealer sales) were 8% lower m/m in February. https://t.co/6v86ZDl7zc#UsedTrucks, #Trucking #semitruck, #ACT, #ACTResearch pic.twitter.com/RjrZ6CdwcH — ACT Research (@actresearch) March 30, 2023
Tam said used truck sales typically increase between 15% to 20% going into March, and noted inventories ticking up and new truck activity could support an increase of that magnitude this year. But he also warned that softness in the economy and overall freight market could affect results.
“Concerns remain regarding how owner-operators and small fleets will fare in 2023, particularly as freight rates fall and operating costs rise,” he said. “While the economy may avoid a recession, inflation remains a very real concern. And all of this says nothing about what fleets’ equity position in their equipment looks like. Those that bought at the top of the market are likely underwater or headed there. With that in mind, we expect the market to fall as much as 10%.”
Mission Financial Services Group saw an influx of dealer applications to finance used trucks during the month, fueled by smaller dealerships making gains over large franchises in acquiring used units to fill their lots. Smaller outlets primarily turn to auctions to source used inventory, while larger dealers rely on trade-ins — the market for which has been slow.
“We’ve noticed that they’re not getting a lot of trade-ins because a lot of the new trucks have been allocated already during COVID,” Charles Smith, regional business development and marketing manager at Mission Financial Services Group, said. “The ones that did come in were already allocated, so they’re still not getting trade-ins. But even with the prices dropping in February, going into March we’re starting to see the smaller dealerships pick up more used trucks, and we are starting to see an influx of applications come through.”
Smith noted that higher prices began a descent in January which has continued, and expects a drastic price shift around midyear as more used trucks become available. He believes prices will keep falling and level off just above where they were before the coronavirus pandemic.
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“Every week is a new market, so you have to buy and sell in current inventory,” said James Rys, general manager at dealership House of Trucks. “So, depending on specs, mileage and opportunity to replenish your inventory, you have to buy in today’s pricing and you have to move the inventory that you might have had for 30 or 45 days. The market is just very choppy, but there is a lot of retail opportunity if you find the right equipment at the right pricing. That’s what we see today.”
He noted that used trucks entering the market are older with higher mileage, and suspects fleets have become more flexible when it comes to running their trucks longer versus replacing them.
“The problem that we’re seeing is the mileage range has gone from 300,000-mile trucks to 400,000- and 500,000-mile trucks,” Rys said. “So you’re getting clobbered on both sides. You’re going to have the [price] increase of new equipment and now the decrease of trade values based on the additional miles.”
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