Used truck prices firm but demand still slack

USed International Trucks

Demand remains slack but prices for used Class 8 trucks appear to be firming, according to industry watchers.

Used Class 8 same dealer sales volumes dropped 12% in May compared to April. Year-over-year sales were down 20% compared to May 2019. Sales are up 2% for the first five months of the year, according to ACT Research.

Average prices and mileage exceeded April by 2% and 1% respectively.

“Dealers are reporting that low used truck prices and high inventories were challenges before COVID-19 struck and they continue to be an issue,” said Kenny Vieth, ACT president and senior analyst.

Used trucks are at the bottom end of the equipment funnel. Inventories rise and fall with new truck orders, backlogs and deliveries. With record orders and deliveries of new trucks in 2018 and 2019, the used market is overrun with newer trade-ins, especially sleeper cabs, as fleets upgraded to newer equipment.

“The upside for people buying trucks is that there are bargains available,” Vieth said. “Not surprisingly, most sales reps are reporting their business as much slower now than in early March, with…  aerodynamic sleepers continue to be grossly oversupplied.”

J.D. Power Valuation Services also found prices firming after more than a year of month-over-month declines. More used trucks sold at retail in May than April while auction volume fell but pricing was relatively stable. Retail prices held up better than auction prices, said Chris Visser, J.D. Power Valuation Services commercial vehicles senior analyst and product manager.

Dealers sold an average of 3.9 trucks per rooftop, about a half a truck more than in April, and identical to May 2019.

“This increase is encouraging, and perhaps indicates slightly more demand commensurate with the economic re-opening,” Visser said. “Retail pricing remains stronger year-over-year than auction, suggesting dealers are managing inventory by sending the less-desirable trucks to auction and holding somewhat firm on pricing for the cleaner, lower-mileage iron.”

The average sleeper tractor sold by a retail dealer in May was 67 months old, had 462,238 miles, and brought $40,206. 

Compared to April, this average sleeper was six months older, had 4,328 (0.9%) more miles, and brought $2,103 (5.0%) less money. 

Compared to May 2019, this average sleeper was two months newer, had 6,111 (1.3%) more miles, and brought $17,367 (30.2%) less money.

Compared to Power’s benchmark Class 8 used truck, May sales prices were higher than April across all years:

Model year 2017: $37,180 average; $2,180 (6.2%) higher than April

Model year 2016: $25,545 average; $545 (2.2%) higher than April

Model year 2015: $22,345 average; $5,348 (24.2%) higher than April

Model year 2014: $15,940 average; $215 (1.4%) higher than April

Model year 2013: $12,097 average; $1,653 (12.0%) higher than April

“We still see used truck pricing recovering roughly in step with the gradual re-opening of the economy,” Visser said. “We have not changed our residual value forecasts for mid-2021 and later.”

Click for more FreightWaves articles by Alan Adler.

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