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December 19, 2019 3:30 PM, EST

ACT Research: Used Truck Prices Fall 15% in November

A Kenworth used Class 8 truckA 2016 Kenworth T270 flatbed truck at a dealership in Dallas. November prices on used Class 8 trucks fell 15% to $40,320, down from $47,371 a year ago. (Shutterstock)

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Sales volume and prices of used Class 8 trucks were substantially down in November, according to ACT Research.

November prices fell 15% to $40,320, down from $47,371 in November 2018, according to the latest data from the Columbus, Ind., agency.

Steve Tam of ACT Research

Tam

And volumes dropped 20% from November 2018. Sales in November fell to 18,400 from 23,000 units in the same month last year, ACT Vice President Steve Tam told Transport Topics on Dec. 19.

He said overcapacity in the freight market has led to a glut in the used market.

“We have too many trucks sitting in inventory, and it’s really put the hurt on prices,” Tam said.

The average age was up, to 7 years, 1 month from 6 years, 9 months a year earlier.

Oversupply covered over the one bright spot — that used trucks sold in November had an average of 433,000 miles, ACT reported, or 4% fewer miles than in November 2018, when the average was 451,000.

ACT surveys dealers, wholesalers and auctioneers as well as a few large fleets to determine average prices, age and mileage, and volumes.

Chris Visser, commercial truck senior analyst at J.D. Power Valuation Services, told TT that aggravating price factors include a slowing freight market, tariffs that President Donald Trump slapped on some foreign imports and a decline in business investment.

For now, it means too many trucks for existing freight conditions, he said.

“We have a very high number of trucks,” Visser said. “We deal with this every eight to 10 years.”

In a Dec. 16 blog post, Visser said November’s retail environment was in line with expectations, with no notable pre-holiday bump, and average-mileage trucks continuing to lose ground.

Chris Visser, commercial truck senior analyst at J.D. Power Valuation Services

Visser

Visser wrote that his research found the average sleeper tractor sold in November was 6 years, 4 months old, had 485,541 miles and brought $45,762 in price. Compared with November 2018, this average sleeper was seven months older, had 21,157 more miles, and sold for $11,882 less.

Visser said the drop in prices came as the year progressed.

“Year-over-year, late-model trucks sold in the first 11 months of 2019 brought an average of 5.4% more money than in the same period of 2018,” Visser wrote. “This positive result is due entirely to market strength in the first half of the year. Narrowing our focus to October-November 2019 vs. October-November 2018, 2019 is running 6.5% behind.”

Visser said his 2020 outlook is that there will be mild price recovery. But some market analysts say first, there will be more supply.

New trucks delivered in September and October meant the older trucks they replaced ended up on dealer lots over the past few weeks, said Bennett Whitnell, a business analyst at KEA Advisors of Lawrence, Kan.

“That means an already saturated infrastructure is going to become even more saturated,” he said “Our sense is that a high-volume auction month is going to mix very unfavorably with saturated lots and continue to drag the market down, with day cabs and sleepers hit particularly hard.”

Whitnell said auction supply has pushed prices lower.

“Pricing at the auction block for linehaul [day cab and sleeper] was challenged again in November,” Whitnell said in an email to TT. “Supply is the primary driver of auction prices. Auction volume has been consistently high in the back half of the year, and because the volume of trucks already on the dealer’s lot is already high, those trucks have nowhere to go.

“As long as dealer lots remain as full as they are, the appetite to pick up inventory at the block will remain low, and prices will continue to be challenged.”

Tam said the freight-market challenges and the truck supply depressed prices in November, calling it “Economics 101.”

“The laws of supply and demand have not been repealed,” Tam said.

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