Used-Truck Sales Decline 4.1% During April

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

Sales of used Class 8 vehicles declined in April for a fifth straight month on a year-over-year basis, ACT Research reported.

Sellers moved 1,834 used trucks in April, down 4.1% from the 1,913 sold in April 2012, according to ACT’s survey of retailers, wholesalers and auctioneers representing about 8% to 10% of the market. The April total was 5.5% below March’s tally of 1,940.

“The customers aren’t going away even though inventory remains scarce,” ACT Vice President Steve Tam said.

Steve Clough, president of Arrow Truck Sales, attributed the decline in used inventory to the drop in sales of new trucks during the recession.

Given carriers’ typical trade-in cycles, many of the used trucks entering the market were first purchased three to five years ago, a timeframe that includes 2009 and 2010, when new truck sales were especially low, he said.

The used-truck business has been “fairly solid,” but “is down a little bit from the prior year,” said Clough, whose chain of used truck dealerships is based in Kansas City, Mo., and owned by Volvo Group.

“Inventory in general has been tighter,” he told Transport Topics.

U.S. retail Class 8 sales totaled 94,798 in 2009 and 107,152 in 2010 after cresting at 284,008 just a few years earlier in 2006, according to figures from WardsAuto.com.

“You have to work a little bit harder to find the [equipment] you want to sell,” Clough said.

Derek Leathers, president and chief operating officer at truckload carrier Werner Enterprises, said last month that used sales are “not as hot as they were maybe a year ago,” but are still “pretty robust.”

“In general, used equipment is still pretty tough to come by, and you can still get a pretty decent rate for it,” he said during the ALK Transportation Technology Summit last month.

Leathers said Werner sells 2,000 to 2,500 trucks into the used market each year.

“The velocity of that pipeline actually looks pretty good,” he said, but “it’s a little bit softer than a year ago.

“I think that softness is driven by the fact that we’re probably in slightly less certain times right now from an economic perspective, because people a year ago would have thought that this recovery by now would have been a little more sustainable.”

In terms of cost, ACT’s Tam said the average price of a used truck rose to $39,949 in April, from $37,448 in March, even though the trucks sold in April had higher mileage on average than the ones sold in the previous month.

On a year-over-year basis, however, average pricing was down from $42,034 a year earlier, Tam said.

In a separate report, the American Truck Dealers said the average retail price for a used sleeper tractor with fewer than 1 million miles rose in April to $51,391, the highest recorded since it updated data-collection methods about five years ago.

The organization’s analyst, Chris Visser, said the price gap between retail and wholesale sales of used trucks is rising.

“I think the reason for that is we’re seeing a lot more trucks with 600,000 miles and higher being sold through the wholesale channels, while trucks with miles in the 500,000s and lower are being funneled through the retail channels,” he said.

ACT’s Tam said that many used-equipment buyers continue to seek trucks that predate the 2007 engine-emission standard, but “those are going to be in finite supply.

“Eventually, we’re going to run out of them,” he said.

Arrow’s Clough said it’s not just customers’ skepticism toward the 2007-2010 technology that has boosted demand for those older trucks.

“What we’re seeing is some people continue to look for those [pre-2007 trucks] because that’s the only way they can get the pricing down to where they feel comfortable making their payments,” Clough said.

Buyers typically have to pay about $10,000 more to buy a 2008 model than a 2007 model with the same specifications and mileage, he said, compared with a usual $5,000 price premium to move up by one model year.

He attributed the higher-than-usual price premium for the 2008 trucks in part to high demand among customers looking to comply with emission regulations in California in order to operate in that state.

Additionally, Rick Clark, vice president at National Truck Protection in Cranford, N.J., said warranty sales for used trucks at his business were flat compared with April.

Clark, who is president of the Used Truck Association, said he had expected an upturn in May, but it didn’t materialize.

“I think it has to do with the economy and people just holding off on used trucks,” he said.