The bottom, at last

Nothing can bounce back until it first hits bottom. From the press time vantage point of mid-winter, it seems the low-water mark for used trucks was reached back in December. And that means this market is on the road albeit a slow and steady one to recovery. Thankfully, the market appears to be at the bottom now, as 2009 sales results seemed to remain stable month to month, avoiding significant drops,

Nothing can bounce back until it first hits bottom. From the press time vantage point of mid-winter, it seems the low-water mark for used trucks was reached back in December. And that means this market is on the road — albeit a slow and steady one — to recovery.

“Thankfully, the market appears to be at the bottom now, as 2009 sales results seemed to remain stable month to month, avoiding significant drops,” states Terry Williams, managing editor of Penton Media's Truck Blue Book and Trailer Blue Book (TruckBlueBook.com). “December, the most recent month with full data reported, saw an increase of 779 units reported to the Truck Blue Book or over a 20% increase in sales.

“In fact,” he continues, “December saw the highest reported total truck sales in 2009 to the Truck Blue Book. Arriving still are the January 2010 sales reports, which will reveal if things are indeed ticking up. Or they will show that the December increase resulted from used-truck retailers moving the inventory so as not to pay end-of-year inventory taxes to the city, county or state. In any event, I do not see January 2010 sales to be reported to Truck Blue Book dropping by more than 10%.”

“There's a lot of good used equipment out there at some good prices,” says analyst Eric Starks, president of FTR Associates. “Add in concern about the cost and performance of 2010 emissions control technology, and you get a lot of people looking seriously at used trucks.”

Starks contends that used-truck pricing will be a good indicator for trucking equipment sales overall: “If [used truck] prices start going up, and our data shows they are firming now, that's a very good sign in terms of industry truck demand.”

In his latest and positive forecast of new-truck sales, Kenny Vieth, partner and senior analyst with research firm ACT, points to strengthening in trucking in the second half of 2010 that will in turn create stronger demand for commercial vehicles late in the year and into 2011. He notes that the “modestly improving economy and used-truck values moving higher” are two leading indicators supporting that hypothesis.

With used trucks clearly now at the bottom of the market cycle, Williams is cautiously optimistic about prospects for the year going forward. “Valuation declines retreated from the double digits by year's end to return to a single-digit decline in January and February [2010] in the range of 3 to 8%, depending on the product,” he relates.

Williams points out that at this stage in the recovery game, however, there are still “more tire kickers than buyers looking at used trucks. Those most interested seem to be, from what I am hearing, fleets first, then highly creditworthy owner-operators. To be sure, at least folks are thinking about trucks,” he remarks.

“In terms of optimism, registration for our 2010 Truck Blue Book Conference is slightly ahead of 2009, and many dealers are saying January was the busiest they have been for awhile,” Williams notes.

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