Prices for Class 8 used trucks continued to fall in April, though some improvement in auction activity gave hope the bottom of the market is near.
Same-dealer sales were off 8% in April compared to March as the first full month of the COVID-19 pandemic ravaged the overall economy. Volumes fell 5% compared to the same month a year ago, according to ACT Research.
Month-over-month used truck prices fell 8%, ACT said.
“Our first reaction to the unit sales data was one of surprise that the market held up as well as it did in April,” ACT Vice President Steve Tam said. “One possible explanation is that buyers in search of inexpensive trucks helped support sales in the otherwise soft market.”
A short-term spike in demand could occur when the economy more fully opens up later this year, said Chris Visser, J.D. Power Valuation Services commercial vehicles senior analyst and product manager.
“But there will still be major fundamental issues to work through before conditions return anywhere close to where they were pre-virus,” Visser told FreightWaves. “By this time next year, used truck pricing should be feeling more ‘normal.’”
J.D. Power suggests increasing activity at used truck auctions could foretell better times.
“[Used] sales totaled 100,000 over the past two weeks, approximately equaling the number of sales that occurred over the prior four-week period ending April 19,” Power said in a post Monday on its Car & Truck Blog.
Wholesale auction sales of approximately 266,000 units since mid-March were 540,000 units lower than the same period in 2019, and down 475,000 units compared with Power’s pre-virus expectations.
“However, auction volumes are continuing to improve as we progress into May,” Power said.
Finding retail customers can be tough.
“We’re doing a lot more prospecting, going back into databases to look at previous purchases. We’re reaching out to people we wouldn’t have had to before,” said Eric Samp, used truck director for Girard, Ohio-based AIM Leasing, which has 50 U.S. locations.
Fleet Advantage, which leases new trucks to 28% of the nation’s top 100 private fleet companies, said excessive new truck orders in 2018 and 2019 led to too many trades of older equipment.
“And now COVID-19 hit, so it’s terrible,” CEO John Flynn told FreightWaves. “I’ve been in the business 30 years, and I know it’s cyclical, and I understand it’s going to normalize itself at some point.”
But Flynn said low prices helped him sell about 400 older used trucks, many to owner-operators, in the past 10 weeks.
“We did some transactions that made us quite a bit of money because the trucks were quite old,” he said. “We’ll probably take [in] some more younger trucks now.”