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October 4, 2017 10:15 AM, EDT
Used Class 8 Sales Climb as Average Price Falls to Six-Year Low
Buyers From Mexico Headed North to Purchase Trucks in US
Used truck lot in Kentucky John Sommers III/Transport Topics

Sales of used Class 8 trucks improved in August, rising 16% year-over-year, while the average price slipped to a six-year low, according to ACT Research Co.

Sales rose to 3,667 units, compared with 3,155 a year earlier, based on ACT’s sample of dealers, wholesalers and auctioneers as well as a few large fleets that consistently report.

ACT uses the sample to determine average prices, age and mileage, and the sample includes about 13% of the total market, which is statistically enough to project market conditions, according to the research firm. By that measure, total sales in July were 28,207, compared with 24,269 a year earlier.

Tam

Year-to-date sales jumped to 213,500, compared with 174,907 in the 2016 period.

The price of the average heavy-duty truck dropped to $38,641, compared with $41,565 in the 2016 period, and was the lowest since early 2011, according to ACT.

“Pricing took, I don’t know that I’d call it a whole step backwards, but it certainly didn’t move in a direction at least half the parties in the transaction wanted,” ACT Vice President Steve Tam told Transport Topics.

Mileage dropped to 438,000, compared with 445,000 year over year.

All “channels” saw higher sales and lower prices, he added.

A possible factor could be buyers are purchasing more than one or two used trucks, so they are receiving discounts, Tam suggested.

“I don’t know what to attribute it to at this point,” he said.

The average vehicle’s age inched up to 7 years and 1 month, compared with 7 years old in the 2016 period.

One truck dealer said day cabs were hot but that sleepers were not.

“Used day cabs have been active, supply is short. We are actively looking for wholesale purchase opportunities on them. They are hard to find and prices are increasing,” Jodie Teuton, vice president of Kenworth of Louisiana, told TT.

The sleeper market remains challenged, she said.

“We have some decent mileage used sleepers and they are not moving very rapidly. We do not expect that to change, and we are managing sleeper inventory through auction disposals,” Teuton said.

A recent used-truck auction in Texas drew prospective buyers from Mexico, where tougher emissions regulations are slated to begin in 2018.

Ritchie Bros., a leading industrial auctioneer, reported it sold $52 million of equipment and trucks in Fort Worth, Texas, in late September, including 285 Class 8 trucks.

“Along with large numbers of local and national buyers, we saw a lot of bids from international registrants in this auction, particularly bidders from Mexico, who were buyers or runner-up bidders on many items,” Neal Black, regional sales manager for Ritchie Bros., said in a statement.

ACT estimates that annual used Class 8 sales are about 250,000. Of those, about 8% to 10% will go to export.

Mexico typically takes 33% of the used trucks exported out of the United States — and that number sometimes reaches 50%, Tam said.

The emissions mandate was supposed to go into effect in Mexico in 2017, but got pushed back to 2018 and right now is “basically stuck” in the legislative process, he said. “Though I think it is more than that. The sticking points transcend every group of stakeholders from industry to regulators, to politicians to oil companies, to you name it,” Tam said. “It doesn’t surprise me that truckers are coming up from Mexico and buying our used equipment as a potential hedge against the new mandate that at some point in time will go into effect down there.”

Once the regulation takes effect, Tam expects even more buyers from Mexico to turn up looking for used trucks in the United States.