Used Class 8 Prices Rise as Inventory Tightens

This story appears in the May 9 print edition of Transport Topics.

The average price of used Class 8 trucks rose again in March, increasing 6% from February, and buyers accepted higher-mileage vehicles as well, according to ACT Research Co. and retail dealers.

“Prices have continued to be firm or increasing during the first four months of 2011,” Steve Clough, president of Arrow Truck Sales, Kansas City, Mo., told Transport Topics. “Demand for used trucks is good and supply is low.”

In March, the average price of a used Class 8 tractor was $38,516, up from $36,195 in February, ACT Research, Columbus, Ind., reported April 26. The company has not yet reported April sales data, though dealers such as Clough said the market remained strong in the month.

“Prices have been rising every month this year so far and for five months in a row, mainly because the inventory is so tight,” Steve Tam, ACT’s vice president, commercial vehicle sector, told TT.

The average used Class 8 price rose to $33,674 in November, $34,339 in December and $35,082 in January, ACT data showed.

“In comparison, before the used Class 8 market turned around, the average price was only $27,923 in March last year,” Tam said.

ACT Used Truck database participants report about 2,700 transactions per month, which ACT estimates accounts for about 10% of the total U.S. market and is valid for determining averages. The data come from retail and wholesale transactions as well as through auctions.

Craig Young, president of Young Truck Sales Inc., Canton, Ohio, said his used truck division was doing well.

“There has been a price increase for used heavy-duty trucks lately, and while I couldn’t give a percentage, I would not hesitate to say it’s higher than 6%,” Young told TT.

“Customers have also modified what they expect in a used [Class 8] truck,” Young added. “They used to want only trucks that had 400,000 miles or less, but now, they’ll go to ones that have 550,000 miles or less.”

ACT’s Tam said that used Class 8 inventories, which sat unwanted on dealer lots in 2009 and through the early months of 2010, had become “very tight.”

“The trend is for vehicles coming to market with higher mileage, because fleets held onto their equipment longer during the recession,” Tam said. “Used prices will continue to rise, driven by tight availability of low-mileage and late-model units.”

Despite the high increase in orders for new Class 8 trucks that began in November, dealers have not yet seen a rise in used vehicles from trade-ins.

“I have not seen an increase in vehicles for the used market,” Young said. “Most new-truck sales in the early months were mainly done by large leasing fleets or major over-the-road fleets, and they generally remarket the used vehicles themselves.”

Even a small dealer noticed the price rise.

“Being a small independent dealer . . . what I have noticed personally is that prices still seem to be rising on used Class 6, 7, and 8 equipment,” Tim Ormsby, president of T&R Truck Sales Inc., Fort Wayne, Ind., told TT. “I have noticed in the last month or so that there seems to be a few more 2008 and 2009 models on the market, [but] demand still seems to be high.”

Richard Kane, owner of Grande Truck Center, San Antonio, said he had a different view.

“Our used truck [lot] rates stay at same levels, because we’re out buying what we need and not just staying with trade-ins from our new truck sales,” Kane told TT.

His two locations sell new Volvo and Mack trucks, both subsidiaries of Sweden-based Volvo AB, Western Star, the largely severe-service arm of Daimler AG, and Autocar LLC, Hagerstown, Ind., a manufacturer of refuse and severe-duty Class 8 trucks.

“We didn’t get greedy and rush to stock up on either new trucks or used ones back in the last run-up,” Young said.

Clough of Arrow Truck Sales, also part of Volvo AB, said that in a normal market, his company and others would be selling mainly 2008 model year trucks, with some 2009 models just starting to come into the used market.

“However, we still aren’t seeing many 2009 models, and we are seeing larger numbers of 2006 and 2007 models than what would typically be seen,” Clough said.

“Highway demand continues to be strong,” he said. “There are some signs that demand for construction equipment is waking up.”