Used Class 8 Truck Prices Surge as 2012 Models Hit Marketplace

This story appears in the June 16 print edition of Transport Topics.

An influx of 2012 models has pushed average used-truck pricing to record levels and could help alleviate the shortage of newer, lower-mileage equipment in the secondary market, analysts said.

American Truck Dealers and ACT Research reported that prices for used trucks surged to all-time highs in April, reversing a slight downturn in March and pointing to continued high demand.

ATD said the average retail price for a used Class 8 sleeper tractor sold in April jumped to $60,073, a 16.8% increase from $51,454 a year earlier and a 7.5% gain from $55,891 in March.

The April pricing average “simply blew away all recent months to set a new record,” easily surpassing the previous high of $56,459 set in January, ATD analyst Chris Visser said.

He attributed the spike to a much greater number of 2012 model year trucks hitting the market.

Large fleets on three-year replacement cycles are trading in their 2012 models, which they generally purchased during the 2011 calendar year, Visser said. The number of those vehicles sold in ATD’s sample jumped 135% in April compared with the previous month, he added.

“We’re just now seeing the result of the return to the traditional, shorter trade cycles,” Visser said. “Through the recession, fleets either skipped a year of purchases or extended their trade cycles.”

The pricing spike also may reflect some remaining pent-up demand after the winter months, Visser added.

Pricing also reached a high-water mark for all types of Class 8 trucks solid via retail, wholesale and auction channels, as tracked by ACT Research.

April’s average of $46,067 was the firm’s all-time high, climbing 16.8% from $39,438 a year earlier and rising 9.8% from $41,971 in March. The previous record was $44,410 in February.

As the price of new trucks increases due to more advanced aftertreatment systems, those vehicles are generally retaining their higher values when they reach the used market, ACT Vice President Steve Tam said.

Fleets selling late-model equipment “seem to be getting a large portion of their incremental investment back in the secondary market when they go to make the trade,” he said.

Tam said that rising sales volumes for new trucks should spur more trade-ins and increase the availability of low-mileage units on dealers’ used lots.

“It’ll be a pressure-relief valve for the pent-up demand,” he said.

ATD’s Visser agreed.

“It’s a combination of greater build numbers and the return to shorter trade cycles that’s going to result in increased numbers of later-model trucks available to the marketplace,” he said.

Despite the increasing supply of those late-model vehicles, Visser said he doesn’t expect their values to depreciate very much because demand is still high.

“These trucks are still bringing extremely strong money,” he said.

Looking ahead, a greater number of 2012 models eventually will reach the used market simply because manufacturers built more of those trucks than in any of the previous four model years.

According to historical data from WardsAuto.com, U.S. retail sales of Class 8 trucks climbed to 171,358 units in the 2011 calendar year, when 2012 models were sold. In contrast, the industry sold only 107,152 units in 2010; 94,798 in 2009 and 150,965 in 2008.

Average used-sleeper mileage in ATD’s sample declined in April to 506,381, the lowest since March 2011. Last month’s average was down 4.3% from a year earlier and 3.4% lower than the previous month.

The dealers surveyed by ACT sold 2,435 used Class 8 trucks in April, up from 2,236 in March but down from 2,502 in the same month a year ago. ACT’s survey represents about 10% of the total market.

Rick Clark, vice president of National Truck Protection Co. in Cranford, New Jersey, said his company is selling a rising number of warranties for late-model used equipment — mostly 2010s and 2011s but also some 2012 models.

“It’s moving pretty quickly, and we’re starting to see more and more ’12s,” he said.

Although sales typically taper in July and August, Clark predicted that business will remain steady throughout the summer.

One truck dealer said obtaining low-mileage used equipment remains a challenge, but demand is high.

“The trucks are easier to sell than they are to find,” said Neal McAtee, co-owner of McAtee Truck Sales Inc. in Oklahoma City.

Many used-truck buyers still prefer 2000-2007 models that predate the Environmental Protection Agency’s 2007 emissions standards, McAtee said, but there aren’t many of those trucks left with decent mileage.

Model year 2011 and 2012 over-the-road tractors depreciated by an average of $579 in April and $615 in May, according to a recent market report from Black Book.

“Certain sleeper trucks of both aero and traditional conventional design are doing very well with the 2011s naturally showing up in higher volume, which helps explain the slightly greater depreciation heading into May,” the report said.