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May 28, 2020 1:45 PM, EDT

April Used Truck Prices Post Sharp Decline

KenworthKenworth trucks on a dealership lot in Louisville, Ky. (John Sommers II for Transport Topics)

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Used Class 8 pricing fell for the 12th consecutive month compared with a year earlier, down 22% for the largest drop in that extended period, ACT Research reported.

The average price was $36,318 compared with $46,675 a year earlier, which was the highest price in 2019.

Sales fell, too, reaching 17,200 compared with 21,500 a year earlier, according to ACT. Each month, the company surveys a sample of dealers, wholesalers and auctioneers as well as a few large fleets to determine average price, age and mileage, and estimated industry volumes.

April started with freight demand doing well, ACT Vice President Steve Tam said. “I think that probably encouraged some people to jump into the marketplace, and now, they might be regretting that decision.”

Steve Tam of ACT Research

Tam

Tam said this is what occurs when there are “microbursts,” such as what happened with replenishing grocery stores, and the resulting ignition in spot rates.

The age of the average Class 8 sold in April was 6 years, 10 months compared with 6 years, 11 months a year earlier. Mileage on that truck was 452,000 compared with 462,000 miles in the 2019 period.

First-time buyers are generating activity in the used truck market now, agreed Eugene Tangney, vice president of global Ryder vehicle sales.

“We find it interesting. There are people who have been furloughed, laid off, driving for others with reduced hours — and they are making the conscious decision to get into the trucking industry under their own shingle,” Tangney said. “They want to be working for themselves at this point. And they are coming out looking for trucks.”

Ryder also is seeing repeat business, like other fleet groups are, he said, as those buyers return based on past treatment and reputations.

For Ryder, which listed 4,549 used Class 8 trucks for sale on its website in late May, the goal is to get the customer the best possible truck within their budget, he said.

Ryder in April began free delivery of purchased used trucks as a part of its Ryder Relief program for a marketplace still restricted by the novel coronavirus.

Tangney said repeat buyers, especially, were becoming more expert in using the web and using the data tools like people do to buy cars. “I would tell you that, generally speaking, we are seeing more of that level in the used truck industry. They are doing their research.”

Asked if ever it would be possible to buy a used truck from Ryder’s website, he said, “I’d answer that by saying not yet. And leave it at that.”

Tam said, “On the new equipment side, the franchise laws are just too hairy to let that happen. On the used vehicle side I don’t think the restrictions are quite as tight. We have been moving in the direction of online transactions with all the virtual auctions, for example.”

Meanwhile, Ryder expects used truck prices to continue falling as inventories remain high.

“Previously, we were expecting that [price] decline to reverse course in Q3 and Q4. But now we’re expecting that, with rising inventory levels back, to continue through the balance of the year,” John Diez, Ryder System Inc.’s president of fleet management solutions, said during the company’s latest earnings call.

Ryder Supply Chain Solutions ranks No. 11 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

Another fleet executive also said he was having a hard time understanding where the used truck prices would be later in the year.

“I mean, the used equipment market right now is tough,” Zach King, chief financial officer for USA Truck, said during the carrier’s latest earnings call. “We think that we’re depreciating our tractors down to a level at which we should be able to exit from them. … But I wish I knew what we could sell a truck for in three or four months. But right now, we just don’t know that at this point.”

RoadSigns

How can trucking companies adjust to ensure that essential freight keeps moving while protecting their workers from coronavirus? Host Seth Clevenger speaks with Lilli Chiu of Hub International and Dave Cox of Polaris Transportation. Hear a snippet, above, and get the full program by going to RoadSigns.TTNews.com.  

USA Truck ranks No. 64 on the for-hire TT100.

“That’s part of the reason it is a sellers market,” Tam said, “because many of these folks are writing down trucks to what the market will bear at this point. So that’s why there are some good values out there.”

The longer trucks sit around, the less valuable they become, he added, describing the situation as “lot rot.”

“It’s all about velocity and turning the inventory,” Tam said.

He underscored that the used truck market pre-COVID-19 was expected to be down 25% this year anyway, compared with a year earlier, because it faced a situation in which there were too many trucks and not enough freight.

ACT’s 2020 outlook is for the price of the average Class 8 to be 20% less compared with last year, while the issue is the comparable prices from 2019 get a lot easier moving ahead this year — so 20% less than say $40,000, not $46,675, he said.

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