Used-Truck Prices Set Record as Newer Models Hit Market

This story appears in the March 10 print edition of Transport Topics.

Used heavy-duty truck values have hit record highs this year as lower-mileage models command high prices, industry analysts said.

The average price for a used Class 8 sleeper with fewer than 1 million miles rose to $56,488 in January, the highest retail average on record, according to American Truck Dealers. That price was up 4.2% from $54,196 in December and a 15.9% jump from $48,718 in January 2013, ATD said.

“The primary reason for the continued record pricing on average is the increased number of newer trucks available to the market,” ATD analyst Chris Visser told Transport Topics.

In particular, the industry has seen a “steep increase” in the availability of 2011 models, a sign that fleets are turning over their equipment more quickly and returning to shorter replacement cycles, he said.

High demand for low-mileage trucks is propping up average pricing across the board, Visser said.

“Basically, anything with 600,000 miles or less, regardless of the emissions standard it meets, is going to bring strong money,” he said.

Meanwhile, ACT Research Co. reported record pricing for all types of used Class 8 trucks, including sales by retail, wholesale and auction. The firm said its average stood at $44,031 in January, a nominal gain from December’s $43,998 but a 15.4% increase from $38,142 a year earlier.

The dealers tracked by ACT sold 2,075 used trucks in January, down from 2,346 in December and 2,415 a year earlier. ACT’s sample represents about 10% of the used market.

Harsh winter weather likely contributed to the decline in sales volume, Tam said.

During 2013, U.S. registrations of used Class 8 trucks rose 1.1% to 260,703, according to the latest quarterly commercial vehicle report from IHS Automotive.

In the fourth quarter, however, used truck transactions fell to 58,508, down 16.2% from a year earlier. Gary Meteer, director of global commercial vehicle products at IHS, said the used market still is hampered by a shortage of clean, low-mileage equipment.

That’s primarily due to the low level of new trucks built from 2008 to 2010, resulting in a smaller pool of late-model trucks available on the used market today, he said.

“Those were some of the lowest new registration quarters and years we’ve ever seen,” Meteer said. “Now those low levels of new trucks are cycling out on a five-year lease.”

He said today’s high prices of used trucks reflect the escalation of new truck prices as manufacturers added technology to meet federal emissions rules.

Three years ago, truckers were paying less for used vehicles that pre-dated the 2007 emissions standards, Meteer said, but now they’re paying more for newer models that have the added expense of more advanced emissions technology built into the price of the truck.

National Truck Protection in Cranford, N.J., has seen warranty sales for used trucks rise steadily since August, including an “outstanding” month in February, said Rick Clark, vice president at the firm.

There continues to be a “slight shortage” of 2009 and 2010 models on the used market due to those being low build years, but more of those trucks have become available in the past few months, said Clark, who is president of the Used Truck Association.

Despite the increasing presence of newer trucks on used lots, dealers continue to say they don’t have enough of those vehicles to sell, said Steve Tam, vice president at ACT.

However, he also predicted pricing will cool later this year as some of the demand for used equipment is satisfied.

“I think we’ll get some pent-up demand out of the way, and that’s largely because of improved sales on the new truck side that will result in trades and will be a pressure-relief valve for some of the price appreciations we’ve seen [on the used market],” he said.

ATD’s Visser said buyers will increasingly have their choice of lower-mileage trucks as more equipment reaches the used market so there won’t be as many trucks with 700,000 miles sold via retail or wholesale channels.

“That’ll continue to prop up our universal averages, but when you look at specific model years, it might have a very mild negative impact,” he said.

Visser said higher volumes of 2011 and 2012 models likely will place slight downward pressure on pricing, “but demand will remain strong, mainly because 2011 was a low build year and 2012s are still just starting to enter the marketplace in meaningful numbers.”