Used-Truck Sales Seen Slowing; Dealers Cite Lack of Equipment

Sales of used heavy-duty trucks in the United States appear to be declining, according to ACT Research Co., but some dealers disagreed with the firm’s finding that Class 8 volumes fell 18.2% in August, compared with the same month last year.

ACT, Columbus, Ind., also said used heavy-duty sales dipped by 1.4% in August from July and that sales this year through Aug. 31 dropped by 7.4% compared with the first eight months of 2010. Analysts say the decline has been caused mainly by a lack of used equipment.

“Anecdotal comments are still signaling solid demand for used trucks that continues, but sellers are still challenged to find trucks in general,” said Steve Tam, ACT vice president, adding that the firm’s survey covers about 10% of the used-truck market.

Some used-truck dealers took issue with the assessment of the decline, but there was broad consensus that the current used-truck inventory is stocked with older vehicles that have significantly more miles than would have been typical two years ago.

Even if there has been a decline in sales volume, it compares with landmark levels last year, said Steve Clough, president of Volvo Group’s Arrow Truck Sales, Kansas City, Mo.

“January and February of 2010 was the peak for inventory levels. Then in March, business started turning up. We saw traditional new-truck buyers buying 100 to 200 used trucks at a time, which is not the norm,” Clough said.

“By the end of the third quarter of 2010, all of the matched units — trucks with similar specs, probably from the same first-owner fleet — were mainly gone. Then in September 2010, retail volumes were already dropping, and since then it’s been more typical, Clough said. He added that 2009 was the worst year he has ever seen for used truck sales, whereas the 2010 boom was an “extraordinary event.”

Management at Freightliner Trucks sees a tight supply for used vehicles, but Drew Backeberg, director of used truck sales for Daimler Trucks Remarketing Corp., said there is a lot of change in the market.

“In general, used-truck supply is certainly more constrained today than in years past,” he said. “However, there are stark differences in availability when you segment the market. For instance, five- to seven-year-old trucks with mileage under 550,000 are nearly nonexistent due to longer first-owner utilization through the recession.

“As a result of this dynamic, there is a consistent supply of higher-mileage trucks of more than 650,000 miles,” Backeberg said. “The limited market supply has escalated used truck prices significantly over recession levels, and in some instances, late-model used truck values exceed pre-recession levels.

“Many large fleets operating new trucks are taking advantage of these higher values by selling their two- to three-year-old vehicles into the secondary market,” he added.

U.S. truck registration data from R.L. Polk & Co. showed used Class 8 sales growing slightly through June 30, decelerating significantly from the previous year. Used vehicle, heavy-duty registrations grew by 40.9% from 2009 to 2010. But for the first six months of this year, the year-over-year growth rate was just 1.6%.

Used truck sales for the Larson Group, Springfield, Mo., “have been good and steady for the last 12 to 18 months, with very little fluctuation up or down,” said company Vice President Mike Thurston, adding that has held in recent months from June through September.

Pleased with volumes and profit margins, he said the biggest challenge is in finding trucks to sell.

“It’s very, very difficult to find inventory from 2007 and older. What’s out there has skyrocketed in value. We’ve had to find unique sources for vehicles,” he said.

In 2008 and 2009, Thurston said, customers came in looking for trucks with 200,000 to 300,000 miles and often went home with 400,000- to 500,000-mile vehicles. Currently, he said, customers are looking for the 450,000-mile vehicles they used to buy but are now departing with trucks in the 600,000- to 800,000-mile range.

“It’s been a remarkable change, mind-boggling, really,” Thurston said. The change means that Larson and other used dealers are doing more business in parts and service and that the use of secondary warranties is rising.

Companies such as National Truck Protection, Cranford, N.J., and Premium 2000+ Warranties, Winston-Salem, N.C., are selling secondary coverage meant to kick in after original equipment manufacturer policies expire.

NPT Vice President Rick Clark, also chairman of the Used Truck Association, said “coverage for high-mileage vehicles has driven the business.” NPT’s secondary policies cover vehicles with mileage ranging from 300,000 to 1.4 million.

Staff reporter Frederick Kiel contributed to this story.