Used Class 8 Sales Drop in July; Low-Mileage Models Still Scarce

This story appears in the Aug. 27 print edition of Transport Topics.

With low-mileage used Class 8 trucks increasingly difficult to find, sales declined in July, ACT Research and dealers said.

ACT said the sellers it surveys sold 1,667 used trucks in July, down 9.5% from the 1,842 sold a year earlier and 2.4% lower from the prior month, according to preliminary data of same-dealer sales.

Sales volumes have been down on a year-over-year basis in six of seven months in 2012, with the only upturn occurring in March. ACT’s used truck figures represent  8% to 10% of the market.

ACT Vice President Steve Tam said used truck dealers have been hard-pressed to find low-mileage, high-quality equipment to sell.

“That inventory story has been the limiting factor for some time,” he said.

In June, some dealers reported an uptick in the amount of used equipment coming onto their lots. However, he described that temporary influx as “just a break in the logjam,” rather than a new paradigm.

Last month, dealers were not complaining about too much inventory. Instead, they were wondering where the customers were, he said.

“It’s July,” Tam said. “They’re fishing, and not for trucks.”

Todd Niblett, general manager at Heartland Used Truck Sales, Oklahoma City, connected sales to the quality of inventory.

“I think if you’ve got the right equipment, the sales are still gangbusters out there,” he said.

Niblett said many of his customers are inquiring about low-mileage equipment from before 2007 and earlier because it pre-dates the Environmental Protection Agency emission standards introduced that year.

“A 400,000-mile ’07 is like the most prime piece of merchandise on the Earth right now,” he said.

The problem, though, is there are almost none of them out there, he said.

Some truck buyers are avoiding power units with the EPA 2007-compliant technology because they believe those truck models require more maintenance, Niblett said.

Some carriers have prolonged their normal trade cycles to avoid purchasing new trucks, he added.

“When the pipeline gets disturbed like that, it really disrupts the normal order of things in the used truck market,” Niblett said. “I think that’s what we’re experiencing.”

Curtis Johnson, vice president and co-owner at Tandem Truck Sales, Oak Grove, Mo., said “there’s a glut of stuff that people don’t want” in the used market right now.

For about the past year and a half, it’s been tough to find the “big horsepower, big transmission, low-miles” trucks that many buyers are seeking, he said.

Instead, the market is saturated with too many “small power” and high-mileage vehicles, he said.

Despite that inventory problem, the demand is still there. “There’s still activity, it’s just that people want the nice stuff,” Johnson said.

The “undesirable trucks” with high miles that do not sell well in the United States sometimes end up going to other parts of the world, including Mexico, Central America, Africa and Russia, he said.

Johnson estimated that about 15% of his used truck business is international.

Gary Gobin, used truck manager at McDevitt Trucks Inc., Manchester, N.H., also said good inventory remains hard to get.

McDevitt’s, which operates two locations in New Hampshire and one in Massachusetts, does the majority of its business in vocational trucks, but also sells day cabs.

“In the refuse business, if you can find something late model, low mileage, you’ll get a lot of customers there,” Gobin said.

Many buyers are still “somewhat afraid” of the 2008-2010 trucks, he said.

There aren’t many trucks with the newer urea-based aftertreatment on the used market yet, Gobin said, but he expects those trucks to perform better than their predecessors.

“From what I see with the new ones, they’re working out great,” he said.

Rick Clark, president of the Used Truck Association, said used sales are down on both the retail and wholesale segments, and inventories are growing as fleets take advantage of trade-in packages.

ACT also reported that the average price of a used truck sold in July — including retail, wholesale or auction sales — was $42,010, up 4.3% from June and 9% from a year ago.

Looking only at retail sales, the average price was $50,086, a 0.3% gain from June and an 8.3% increase from last year.

The average mileage of trucks sold in July was 551,000, down from 566,000 in June but up from 545,000 in July 2011, according to ACT.

Tam described the mileage decrease from June as “month-to-month noise.”

“It just depends what iron got traded or sold during the month, but the longer-term, subtle increase in mileage has been a consistent theme for quite some time,” he said.