May Used Truck Sales Rise 18% From 2023
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Used Class 8 truck sales in May increased 18.1% compared with the same period the prior year, ACT Research reported.
Sales increased to 22,800 units from 19,300 during May 2023. But there was no change in sales from the prior month. The average retail sale price fell 15.5% year-over-year to $58,380 from $69,073, and 1.5% from $59,269 the prior month. Mileage decreased 2.1% to 417,000 from 426,000 a year ago, and 0.5% from 419,000 the prior month.
“We anticipate the price outlook will soften in our next update, owing to a weaker-than-expected freight market,” ACT Research Vice President Steve Tam said. “Prices are expected to remain stable through most of 2024, transitioning to [year-over-year] growth in Q4. Sequential growth most likely will take place at the end of 2024.”
Tam noted that same-dealer retail truck sales slowed for a third consecutive month with a 3.9% decline in May. He pointed out, however, the decline matched the seasonally expected drop since the month is typically about 5 percentage points below average.
Tam
“Inventories continue to increase to some problematic numbers,” said Trey Golden, vice president of used truck sales at Rush Enterprises. “Affordability is getting really good though, so the pricing has got to be toward the bottom of the cycle. It’s just going to be hard to function if prices go much lower than this.”
Golden added that fleets may have difficulty from a financial perspective with activities such as trading their used vehicles. He noted that demand remains sluggish despite the lower prices because the current freight market condition means there is less need to buy new trucks.
“Nobody is going to go out and buy a bunch of trucks just to do this for practice,” Golden said. “There’s got to be some margin in there or there’s no reason to do it. That’s why we don’t see any growth in anybody’s fleet whether it’s new truck sales or used truck sales. It’s all just replacement.”
Golden
Golden has started to see softness in virtually all used truck segments. That includes the day cab market losing the strength it had early on even when sleepers started crashing. He noted that day cabs are now a problem, too, and he anticipates that inventories will increase for that segment. Also, the truck manufacturers are increasing availability on medium-duty.
“The month of May was a strong month for Ritchie Bros. live sales, selling over 3,000 tractors in the U.S. during the month with 6-year-old (2019 model year) being the most frequent model year sold,” said Rob Slavin, senior pricing analyst at Ritchie Bros. “This oversupply of used has certainly had an impact in pricing.”
Slavin
Ritchie Bros experienced its largest ever first quarter for transportation sales. Slavin noted that he continues to see record sales in all transportation categories and that market indicators are pointing to the second quarter being similar. He also is seeing more day cabs hit the market this year as a percentage of total sales than in previous years.
“Diesel pricing continues to drop,” Slavin said. “This, along with the stagnant spot-rate market combined, and national diesel will continue to force owner-operators and small fleets out of the market. We are also seeing finance companies tighten their credit requirements/approvals on those new to the transportation sector.”
Commercial Truck Trader is an online marketplace for new and used commercial vehicles. The number of units for sale on the website continued the trend of inventory buildup in the heavy-duty segment by growing 11.8% from May to June.
Bowles
“As more inventory continues to populate the secondary market, we’re going to see persistent downward pressure on pricing,” said Charles Bowles, director of strategic initiatives at Commercial Truck Trader. “Oversupply generally results in lower residual values and higher dealer competition for active buyers.”
Bowles added buyer interest in the website listings reached their highest point for the entire year in May. Those interest levels also were significantly higher than the same time period a year ago. He noted that this normally would translate into higher sales volume in June. But early data is showing a sharp decline in overall demand.
“The bottom line is that the heavy-duty segment will continue to suffer from downward pressure on pricing as long as freight rates remain low and interest rates remain high,” Bowles said. “There’s too sharp a margin squeeze on carriers, and this cycle will continue to push more units into the secondary market as carriers exit the game.”
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