After more than a year of falling prices and slack demand, used truck prices and sales are having a nice summer.
Class 8 conditions across the board generally stabilized in July,. That suggests June’s recovery was more than a one-shot relief in pent-up demand, according to analysts from J.D. Power Valuation Services.
Prices solidify
“Pricing is solidifying, customers are buying more used trucks and new truck orders and deliveries are heading back in the right direction,” said Chris Visser, J.D. Power commercial truck senior analyst.
Late-model sleeper cabs, a bellwether for used truck activity, command their highest average prices in 12 months. Class 8 auction results remain solid for a second consecutive month. Class 8 retail pricing also was stable.
Same-dealer preliminary sales grew 16% month over month in July, according to ACT Research. Volumes jumped 48% compared to July 2019. Measured against the first seven months of last year, they are up 7%.
Month-over-month average prices increased 4%. Average miles and average age fell 4% and 1%, respectively, compared to June. Year-to-date, average price, miles and age were 17%, 2% and 7% lower compared to the first seven months of 2019.
Services slowdown boosts freight
“The current economic slowdown is largely driven by a dramatic reduction in spending on services,” said Steve Tam, an ACT vice president. “In the commercial vehicle world, that means freight continues to move, albeit at a somewhat lower pace.”
Driver furloughs during March and April at least temporarily tightened the job market. With spot freight rates now at two-year highs, some drivers who suspended their authority are returning. And they are snapping up used equipment, Tam said.
“The used prices at least in the midterm have bottomed, and we’re seeing them come back,” Jim Griffin, chief operating officer at Fleet Advantage, a Fort Lauderdale, Florida-based provider of equipment leasing and lifecycle management services, told FreightWaves.
” We’ve seen the auction values start to rebound a bit over the last six weeks. And now we’re starting to see a little bounce in the retail as well.”
Smaller fleets adding drivers and trucks
Smaller fleets and contract drivers who hung on through the early months of the pandemic are adding drivers and trucks.
“They’re taking up some of our used assets,” Griffin said. “Most of what we’re seeing is with established channels or established smaller fleets that are looking for capacity.”
Like the rate of coronavirus infections, many unknowns surround what the used truck market will look like a few months from now.
“When a massive black swan event blows up everyone’s forecasting models, the human gut becomes the main driver of decisions,” J.D. Power’s Visser said. “Fleets waited to see what would happen to freight volumes once the stockpiling effect shook out. And they seem to be OK with what they are seeing.”
Related articles:
Makeup orders boost tractor and trailer production – for now
Auction volumes soar for used trucks
Ryder sees a steep drop coming in the value of used trucks
Click for more FreightWaves articles by Alan Adler.
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Used trucks sales continue climb from abyss - FreightWaves
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