4Q Used Truck Prices Forecast to Remain Strong

Despite indications of a price ceiling on newer trucks, the retail market remains strong, says Chris Visser in September’s Guidelines report from the ATD/NADA Commercial Truck Guide.

“Wholesale prices for commercial trucks are continuing to climb,” said Visser, senior analyst and product manager for the ATD Commercial Truck Guide. “Dealers sold more used trucks in July than June.

“The main takeaways this month? Assume later-model trucks with average mileage are finding their upper limit. Older trucks with lower to average mileage still have some headroom. And wholesale prices continue to trend upwards. Demand continues to out-strip supply. Price and mileage have started to return to their traditional inverse relationship. This is further evidence that the market is establishing ceilings.”

With wholesale prices increasing, Visser also noted that the average age of wholesale trucks sold continues to trend closer to that of retailed trucks.
On the new side, orders and sales are running well ahead of 2010, with an uptick in August orders. On the used side, selling prices for sleeper tractors continued to rise through July on average. And dealers sold more used trucks in July than in June.

The report says, “Looking first at the sleeper market overall, we saw a surprising and substantial uptick of $2300 vs. last month. Sleeper trucks in every mileage category above 300K showed upward movement. This increase is surprising because qualitative feedback (word of mouth) is mixed. I suspect general economic news is coloring this feedback. Quantitative data, however, is black and white. Buyers continue to spend more on trucks with high mileage, indicating that there is no letup in demand for the sleeper sector.

“Focusing more sharply on newer sleeper tractors, the average selling price of four-year-old iron dropped by about $2600. This drop is largely explained by yet another major increase in mileage, this time by 26K. We adjust our figures for mileage, but our adjustment does not fully smooth out large swings of this type. Also, the 2008 model year is a bit of an anomaly in that some 2008 trucks feature 2007/8 emissions while others don’t. Price swings may be influenced by a large number of pre- or post- 2007 emissions trucks filtering through the market.

“Despite these qualifiers, it is probably accurate to say that newer sleeper tractors are hitting a price ceiling due to the high mileage of available trucks. $60-$65K is a lot of money to pay for a truck with mileage in the low- to mid-400s. Given the impending fuel economy/emissions regulations due in 2014, many buyers are likely finding it easier to make a business case for making the jump to a new truck or a lease. A new truck will take an owner comfortably past the first of the 2014 trucks, and a lease will soften the blow of any price increases 3-5 years down the road. “

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