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August 25, 2022 4:00 PM, EDT

Average Used Class 8 Price Weakens Again in July

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The average U.S. retail price of a used Class 8 vehicle in July inched past $90,000 to tower over the year-ago price, but it also dipped slightly from the month before to extend the market’s ongoing softening, ACT Research reported.

July’s average retail price was $91,928 compared with $64,226 a year earlier.



July also was down 1% from June’s $92,734 — the fourth consecutive sequential decline. A monthly decline of 1% to 2% in used truck prices is typically viewed as normal depreciation.

Steve Tam

Tam

In June, the average retail price for a used Class 8 fell 6% compared with May, which was down 2% from April’s average. April was down 1% from March, according to ACT.

“I don’t think the general tone of the market has changed by any stretch. For sure, we are seeing softer demand for used trucks,” as the freight rates and the economy slow, said ACT Vice President Steve Tam. “But everything is coming off historically high or record levels.”

Retail sales in July of 21,500 fell compared with the year-earlier volume of 22,800. They were flat with retail sales in June.

One truckload carrier executive said used truck buyers remain picky and quotes for the carrier’s used trucks have plunged as the number of available trucks climbed.

“Certain buyers are after certain transmissions or engine manufacturers and will offer less if the truck isn’t precisely what they are looking for. Therefore, we seek out buyers that have similar tastes in the truck models we have,” Brian Matthews, vice president of operations at American Central Transport, told Transport Topics.

Liberty, Mo.-based American Central Transport primarily runs Kenworth T-680s with Paccar engines. It operates about 300 trucks.

He said the carrier is receiving quotes for used trucks that are down 60% from a year ago.

“It was a great opportunity while the prices were high,” Matthews said, “and we knew it wouldn’t last.”

The average mileage on a used Class 8 vehicle was 430,000 miles compared with 418,000 a year earlier and 432,000 in June, ACT reported.

The average mileage increased to six years, six months compared with six years, two months a year earlier. It slipped compared with seven years in June.

Each month, ACT surveys a sample of dealers, wholesalers and auctioneers as well as a few large fleets to determine average prices, age and mileage, and estimated industry volumes.

Another industry expert also said he believed used Class 8 pricing is heading lower.

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“While we expect that there might be another 10-15% reduction in values over the next few months, we don’t see the market collapsing and reaching pre-COVID levels anytime soon,” Dan Clark, head of BMO Transportation Finance, told TT. “The real question is, how much of the inflation we are seeing in new units will carry over to the used market?”

July’s average price in that regard was the highest of the year.

Tam said used truck retail prices this year have historically averaged 40% of estimated new truck prices compared with 38% pre-2021. “In July, the figure was actually 66%.”

More broadly, the federal Office of Management and Budget in late August forecast consumer price index inflation in 2022 of 6.6%. It is then projected to fall to 2.8% in 2023.

Clark said the path of prices will be uneven, depending on swings in the sales channel usage, available new equipment, fuel prices, seller-buyer “appetite for capacity” and average age of the units.

“Supply constraints in the new truck market over the past couple of years have prevented capacity from getting over-extended, as has been the case in past cycles,” Clark said.

He added used equipment values are likely to benefit from:

  • Upcoming emissions regulations expected to add substantial cost to new Class 8 equipment.
  • Dealers coming back into the wholesale market to replenish depleted inventories.
  • “The relative attractiveness of trucking as a preferred shipping mode as freight rates reset lower,” Matthews said, “and improvements in rail service are slow to arrive.”

Trucks move about 72.5% of the nation’s freight by volume and 80.4% by revenue, according to American Trucking Associations. There were 3.97 million Class 8s, including tractors and straight trucks, in operation in 2020, up 1.5% from 3.91 million in 2019. (ATA noted fresh data is due later this year.)

Meanwhile, July’s Class 8 auction volume was lower compared with a year earlier “but is trending generally upward as fleets offload their highest-mileage units and owner-operators either leave the industry or go to work for a company,” Chris Visser, senior analyst of commercial vehicles at J.D. Power, wrote in a note.

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