Used Heavy Truck Sales Drop

This story appears in the July 4 print edition of Transport Topics.

Sales of used Class 8 trucks fell 20.4% in May from the same month last year, while prices jumped 5% from April, because of low inventories, numerous sources said.

The industry sold 1,963 used Class 8s in the United States in May, down from 2,466 last May and down from 2,386 in April this year. ACT Research Co. said June 28 in its monthly used truck survey.

“We think that the primary reason for the drop in sales is that there are not enough trucks to sell,” Steve Tam, ACT’s vice president, commercial vehicle sector, told Transport Topics.

ACT, Columbus, Ind., said that it receives data from used truck retail and wholesale dealers, as well as auction sites, which account for about 10% of monthly transactions and provide a valid sampling of the industry.

“There is definitely a widespread shortage of product in used Class 8s right now,” Terry Hebron, president, Heavy Truck and Equipment Wholesalers, Flatonia, Texas, told TT.

“In normal times, I’d have an inventory of 1,100 to 1,200 trucks listed on the site every month, but it’s down to the 700-to-800 range now,” Hebron said. “The market is totally crazy, unstable now, with prices running all over the place.”

Hebron’s website serves as a marketplace for only authorized used truck wholesalers, he said, adding that wholesalers often decided to sell to other wholesalers, despite the tight retail market.

“They can maybe make $3,000 for each vehicle immediately if they sell to another wholesaler, plus they don’t have to worry about arranging financing for fleets, which can still be difficult,” Hebron said.

He emphasized the “wild” price swings made the current market unstable.

“Something that sold for $25,000 earlier this year suddenly goes for $35,000,” he said. “There could be a lot of reasons for that, whether it’s a day cab or sleeper, but no one knows what to expect with prices. It’s like trying to hit a moving target nowadays.”

John Deason, corporate used truck manager for Bruckner Truck Sales, Wichita Falls, Texas, said he saw the same trend.

“We definitely have a severe shortage of used Class 8s because of a higher demand and the low building numbers of new trucks over the past two to three years,” Deason told TT. “Prices are up sharply now.”

Bruckner, which sells Mack and Volvo trucks, gets 50% of its used trucks from trade-ins, 40% from purchases and 10% from the company’s own leasing company, Deason said.

“Yes, definitely, a lot of customers are remarketing their own trucks now,” he said. “Any time you see an uptick in the market, fleets will do that.”

He said that Bruckner gives an assured trade-in price for each new truck it sells.

“When we sold a truck, if we gave a trade-in price for this year at $30,000 and that truck is listed for $35,000 now, what do you think the owner is going to do?” Deason said. “But if the price happened to be $25,000, you can bet that Johnny will be seeing that truck back on my lot.”

Sheri Aaberg, general manager at ATBS Leasco, Lakewood, Colo., which leases used trucks to owner-operators, also said that her company has seen less sales activity in May compared with April.

She added that Leasco did not buy trucks in May but did in June, and had to deal with both rising prices and vehicles with higher mileage.

“Leasco has purchased equipment in June and experienced up to a 12.5% increase in pricing over December 2010 like-kind purchases on low-mileage equipment,” Aaberg, a member of the Used Truck Association’s board of directors, told TT.

“Average used Class 8 prices were up 5% over April,” said Tam of ACT. “We typically don’t see monthly price increases that jump so quickly, where generally it’s just a percentage point, so that this was very unusual.”

He said the main reason for the price increase was scarcity, but other reasons were involved, as well.

In April, “we saw the first decline in prices in a long time, and that was because most of the equipment available in April was older with high mileage,” Tam said. “The available trucks were a little newer in May.”

Tam and the two used truck executives said more used trucks should be on their way to market as high order numbers late last year and in the first quarter translate into deliveries.