Used truck market shrugs off summer slump

Used truck market shrugs off summer slump

After a dip in sales and prices this summer, the Class 3-8 used truck market is back on the march, albeit unevenly, according to data tracked by ACT Research. Sales volumes of used Class 3-8 sales recovered in September, gaining ground in the auction and wholesale markets while falling on the retail side, said ACT’s Steve Tam, vp-commercial vehicle sector.

After a dip in sales and prices this summer, the Class 3-8 used truck market is back on the march, albeit unevenly, according to data tracked by ACT Research. Sales volumes of used Class 3-8 sales recovered in September, gaining ground in the auction and wholesale markets while falling on the retail side, said ACT’s Steve Tam, vp-commercial vehicle sector.

“The majority of this month’s sequential improvement can be attributed to a very solid month in the auction segment,” he explained. “The average selling price for total used Classes 3-8 fell month over month, while both age and mileage numbers are expected to increase throughout 2011.”

However, Tam told Fleet Owner that used truck prices remain on average 25% higher now compared to the same period last year and he expects such a “price premium” to stick around as inventories will remain thin for at least several more years.

“We’re going to continue to see some price depreciation through 2012 and 2013, but base prices will remain above historical averages for a while – despite the fact that used truck age and mileage continue to rise,” he noted. “We’ll continue to be in this situation as we’ve been ‘deficient’ in manufacturing new trucks for several years.”

Tam stressed, though, that the “price premium” for used trucks cuts two ways: while it raises the equipment acquisition cost for operations that rely heavily on used trucks, it also boosts trade-in values – and higher trade-in values are one reason new truck orders and sales remain strong.

For example, WardsAuto.com reported that U.S. customers bought 15,937 Class 8 trucks in September; a 69.5% jump compared with the same month last year, along with 11,389 medium-duty Class 4-7 units; a 32.3% increase over September 2010.

Orders remained robust as well, with Class 8 net orders topping 23,600 units in September; a gain of 55% year-over-year and 12% month-over-month, pointed out Kenny Vieth, ACT’s president and senior analyst. Class 5-7 orders also witnessed a similar spike, climbing 8% month-over-month, he said.

“Given the steady drumbeat of bad economic news in July and August and the retrenchment of consumer confidence, we would have understood if [new] commercial vehicle order activity waned through the balance of the third quarter – but it didn't,” Vieth said. “Class 8 build so far this year stands at more than 180,000 units [as] years of deferred purchases buoy up demand.”

Mike Stephens, manager for Ryder Vehicle Sales in Dallas, TX, recently told Fleet Owner that while he’s seen “good times” during his 18-year career selling used trucks, “I’ve never seen it like this.”

(See video of Stephens explaining the inspection process for used equipment)

In particular, he said Ryder is seeing many more fleets than usual coming into the used truck market, buying five or six trucks at a time. He also reports far more willingness by fleets and owner-operators alike to purchase higher mileage equipment – as long as it’s clean and been maintained well.

“It’s tough to keep up with demand right now; buyers are willing to pay for good equipment with the right specs,” Stephens said. “Over the last 36 months, we’ve seen a lot more larger fleet customers than in the past, too. We’ve been getting a lot of repeat business over the last year as well.”

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