Used-Truck Sales Down in November; Short Supply, High Prices Are Blamed

Used-truck sales declined in November, the result of both a lack of supply and increasing buyer resistance to high prices, according to two trucking-industry research groups.

One of the groups said the high prices for used vehicles are encouraging fleets to buy new trucks, which could bring moderation to the rapid escalation in prices for used vehicles.

Many months of increases in both pricing and odometer mileage on used heavy-duty trucks have begun to convince some buyers to purchase new trucks instead, the December issue of ATD/NADA Official Commercial Truck Guide Update reported.

Used-truck retailers, wholesalers and auctioneers surveyed by ACT Research Co. sold 1,665 Class 8 trucks in November, down 13.2% from the 1,918 they sold last November, ACT said Dec. 22.

The research organization said its dealers represent slightly less than 10% of the total U.S. used heavy-duty market.

“The auction, retail and wholesale dealers ACT tracks sold 23,297 Class 8 trucks through the first 11 months of 2011, which was slightly lower than the 25,000 for the same period in 2010,” Steve Tam, vice president, commercial vehicle sector at ACT Research, Columbus, Ind., told Transport Topics.

“The exact reasons for the decrease are unclear, but dealers continue to report they are having a difficult time finding trucks to sell,” Tam added.

“It is also possible that participating dealers may have lost some market share during the year,” he said. “One thing remains clear from the data: The industrywide scarcity of late-model, low-mileage used Class 8s has driven the average selling price up from $30,862 in 2010 to a $38,969 average price this year.”

ACT said the average truck sold in the first 11 months of 2011 had 534,455 miles, an 8.1% increase from the 494,325 miles on a truck sold in 2010.

The Commercial Truck Guide Update put out by American Truck Dealers and the National Automobile Dealers Association also saw rising prices and falling sales among the dealers it surveys, which account for slightly less than 20,000 sales a year.

”After two full years of price increases, the used Class 8 [sleeper] market is starting to show signs of moderation,” the guide said.

“We have not changed our forecast of continued strength in pricing, but we are expecting price ceilings to develop in the Class 8 retail market, just as they have in the wholesale market,” the Guide said.

The Guide also said retail sales were down in October, and November “looks to continue that trend,” although it did not give numbers of sales.

“Prices have gotten so high for them that some buyers are making the jump to new trucks,” Chris Visser, senior analyst and product manager of the Commercial Truck Guide Update, told TT.

“The rate of increase in prices has slowed down in later model trucks,” Visser added. “If you were spending $47,000 last year to buy a tractor with over 400,000 miles on it, but it costs $60,000 this year, then you start thinking of a new truck.”

He cautioned that “demand is still definitely overwhelming supply. It’s just a question of what they are willing to pay.”

Despite the November drop and possible trend of slowing used-truck sales, some dealers reported they had a brisk December that continued into the usually slow week before Christmas.

Rick Clark, president of the Used Truck Association, said the used truck market had grown hotter in December.

“I just got off phone with two wholesalers who said they have had one of the best Decembers ever — mostly Class 8 trucks,” Clark told TT. “Sales usually slow down for the holidays, so this is important.”

“Retail Class 8 sales are also still very strong, which is rare for this time of year,” Clark added.

“In my business, warranty sales are still strong, and that coincides with everything else in the industry,” said Clark, who also is vice president of National Truck Protection Co., Cranford, N.J. The company writes warranties for used trucks.

Clark said he didn’t have enough data to know whether sales for the full month of December would show an increase compared with last December, or whether a reversal from the two downward months had begun.

“We’ll have to wait till next year and see how it goes,” Clark said.

“The [used Class 8] market is very strong,” said Kenny Doonan, owner of Doonan Truck & Equipment of Wichita Inc., a new Peterbilt truck dealer in Wichita, Kansas, with two locations.

“We buy 85% of the used trucks we sell, with the rest coming from trade-ins,” Doonan said. “We buy from all over the U.S., both on the Internet and at auctions.”

However, Doonan says he buys only used Peterbilts, a policy he said makes business sense in several ways.

“A Mack truck and a Freightliner truck do not sell well in our locations, so we’ll sell them to Mack and Freightliner dealers, because they make more money from them,” Doonan explained.

Doonan said if he sold other used brands, the owners would probably take them to that brand’s dealers for servicing.

“But when I sell a truck to a customer, they’ll typically come to me to buy parts and get maintenance,” Noonan said. “That’s why we sell only used Peterbilts for retail at our two spots, and wholesale the rest off.”