Let’s start out with a few facts:
- Used truck sales were down 23% in November, according to the National Automobile Dealers Association.
- Their values have fallen by as much as 20% to 30% in the last six months with late model sleepers taking the biggest hit.
- Inventory levels are growing.
- Fleets and dealers are taking trucks to auction to free up cash.
- Soft freight volumes and increasing inventory levels continue to push 2012 – 2014 truck values down.
Could it get any worse? Yes it can, especially since strong OEM order boards mean more trades are on the way.
Given the condition of the used truck market, Dale Tower, VPt of AmeriQuest Remarketing Services, says fleets are going to have to make some tough decisions about whether or not to purchase new trucks. Their options are keeping their existing trucks longer; taking a loss on the sale of their used truck when they replace it with a new one; or trading it to a dealer and accept over-allowance cost on the new truck.
Tower says all of these choices have a downside.
Keeping the truck longer can lead to increased operating costs because older trucks need more maintenance and repair. The decision to take a loss on the sale is a direct hit to the bottom line. An over-allowance decision is a gamble in that the fleet is counting on the used truck market being better when the new trucks enter it in the future.
While there is nothing you can do about the over supply of used trucks or their current low selling prices, Tower says you can try to make your trucks as marketable as possible.
- Spend time cleaning them up and repairing any visible body damage.
- Make sure they are mechanically sound and that all components work the way they should.
- Tout features that have proven to bring increased value like automated transmission and aerodynamic devices.
- Price to sell.
Used truck prices are likely to continue to be soft. Keep your eye on the situation so you can make adjustments as needed.
And remember, as with most things in the trucking industry, this situation will change. It was not that long ago when used trucks were in short supply.