Strong value

Dec. 1, 2004
This year proved to be a very positive year for used truck dealers and the used commercial truck market. Values remained consistent due to tight used truck inventories, limited availability to low mileage trucks, high freight capacity utilization and ever-increasing back orders of new trucks. These conditions should continue at least for the first half of 2005, so used truck values should remain strong.

This year proved to be a very positive year for used truck dealers and the used commercial truck market. Values remained consistent due to tight used truck inventories, limited availability to low mileage trucks, high freight capacity utilization and ever-increasing back orders of new trucks. These conditions should continue at least for the first half of 2005, so used truck values should remain strong.

Members of the Truck Blue Book Advisory Council attending its 29th annual Workshop meeting, October 3-6 in Park City, UT, shared this optimism. The Council is comprised of leading used truck professionals representing truck manufacturers, franchised and independent dealers, financing and auction companies and component manufacturers. Selection for the Blue Book Advisory Council is by invitation only and each member's continued participation is reviewed annually. To maintain membership, each member must meet a standard set of requirements.

Over the course of the 2004 Workshop, all of the market charts presented — from 11,000-lb. GVW tilt cabs to owner-operator highway tractors — were positive, with a few even recommending an upward adjustment of values.

The dealer attendees expressed a strong need to acquire equipment to maintain an inventory balance. In fact, for the first time in the four years I have hosted the Advisory Workshop, even cabover tractors were in demand. So much so that a dealer from Salt Lake City remarked, “There are so few I can make them bring rain and will take any if you have some.”

While the overall used market mood is positive, Chris Brady, president of Commercial Motor Vehicle Consulting, presented a note of caution in November during his economic presentation at the Used Truck Association convention.

Brady said a stumbling block to the current positive economic trend is the 2004 holiday buying season. After a fairly bullish year a few red flags have popped up: three months of declining consumer confidence, a soft labor market, worry about job stability, concern over pay increases and the ongoing high cost of energy.

The impact on trucking is somewhat immediate, Brady pointed out, as unsold items would build inventory. Therefore fleets would be shipping less raw material and finished goods.

While Brady does not believe an economic falloff will occur with poor holiday spending, the moderate growth he predicts for 2005 could become sluggish.

In light of good news and expert economic forecasts as the Truck Blue Book prepares its January 2005 data, a modest drop in value for three-year-old tractors is expected in the first quarter vs. a value of a three-year-old tractor in January 2004.

Looking at on-highway fleet tractors, the prediction is for a $3,133 drop; an owner-operator tractor is expected to drop $2,515. The chart demonstrates that values for a three-year old tractor increased between January 2003 and January 2004 as demand outstripped supply.

If the current business cycle holds, even with moderate growth 2005 should sustain used truck values. OEMs did not ramp up capacity as in the past, so a flood of used trucks is unlikely. Three-year-old or newer trades could be less plentiful than in the past, since a number of fleets held on to 2000-model-year equipment to delay accepting new emissions technology.

If this leads to an increase in the average age of used inventory, it will only strengthen newer model-year values. But if there is an over-supply of high-mileage trucks it could hurt later model-year equipment.

As with all things, this will play out. And should the experts turn out to be wrong, I am sure they'll have a good reason. Just ask them.

www.truckbluebook.com

About the Author

Terry Williams

Sponsored Recommendations

Tackling the Tech Shortage: Lessons in Recruiting Talent and Reducing Turnover

Discover innovative strategies for recruiting and retaining tech talent in the trucking industry at our April 16th webinar, where experts will share insights on competitive pay...

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

How Electric Vehicles Help You Prolong the Life of Your Fleet

Before adopting electric vehicles for commercial/government fleets, prioritize cost inquiries. Maintenance is essential; understand the upkeep of EV fleets. Here’s what you need...

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!