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January 28, 2021 2:00 PM, EST

December Used Class 8 Price, Sales Climb

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

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Used Class 8 sales rose in December along with double-digit gains in prices as the average heavy-duty truck’s mileage and age remained below year-earlier levels, ACT Research reported.

December marked the seventh consecutive month of year-over-year increases in sales, ACT Vice President Steve Tam told Transport Topics.

Sales reached 21,500 compared with 19,300 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.

The average price of a used Class 8 sold in December, ACT estimated, rose 17% to $45,598. That compares with $38,866 in the 2019 period.

“The buyers could have gotten better prices if they’d bought earlier in the year,” Tam said, “but they still got very good value for their money, and of course the sellers — I guess I could put words in their mouths — are just elated with the market.”

ACT Vice President Steve Tam

Tam

The lower mileage and younger age of the average used Class 8 supported the higher price, as it did in November.

Average mileage was 431,000 compared with 474,000 a year earlier, and average age dropped to 6 years, 5 months from 7 years in the 2019 period.

“There is not much not to like about trying to come and participate in this industry right now,” Tam said.

Spot rates and spot loads remain high, said Charles Smith, regional business development manager at Mission Financial Services Group Corp., an Atlanta-based lender.

“We’re still seeing an increase in applications from first-time buyers looking to break into the trucking industry, as well as first-time owner-operators,” he said.

Requests for loans showed a decrease in the Northeast due to heavy COVID-19 issues throughout the year, but a significant increase in the Southwest and Southeast. Smith cited applications submitted to the company on its web portal, and by dealers and brokers.

“Our overall sales still seem to be rising as we went from 900 to about 1,200 applications from September to December, giving us a 13% increase, with a look-to-book increase of about 16%,” Smith said. “Look-to-book is a formula we use based on the number of applications funded divided by the number of applications received over a certain period of time.”

One truck maker executive noted retail sales of its used trucks were high and its inventories falling.

“If you look at the used truck inventory, that has come down nicely. It’s not that we don’t have any used trucks anymore. We continue to have used trucks, but it’s like 16% lower than it was at the beginning of the quarter,” Paccar Chief Financial Officer Harrie Schippers said during the truck maker’s fourth-quarter earnings call. “It’s lower than what it was at the beginning of the year. We continue to sell those trucks through our used truck center.

“Typically, we would get a premium over there; $5,000 per truck. So that will support margins. Better used trucks, of course, provide better trading values for our customers and will be a good thing for them, too.”

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Paccar’s North American brands include Kenworth Truck Co. and Peterbilt Motors Co.

Meanwhile, SelecTrucks, the used truck brand of Daimler Trucks North America, recently opened four locations in the Chicago suburbs, bringing the number of sales centers in its network to 34.

Three locations are part of the TransChicago Truck Group, which started with a single commercial truck dealership in Franklin Park, Ill., in 1982. It sells new Freightliner and Western Star trucks.

The other is at a Truck Country dealership. The company operates 24 new Freightliner truck dealerships across the Midwest and has been in business for nearly 60 years.

Freightliner and Western Star are DTNA brands.

Tam said ACT estimates 2020 full-year sales were 250,000, up 6% compared with 235,000 in 2019.

Some buyers who typically go back and forth between new and used trucks came down on the side of used trucks in 2020, Tam said.

“[They bought] just because of the availability [in a booming freight market] of the equipment, and really the average lower age and mileage of the trucks that went through the used market,” he said.

For the full year, mileage for the average used Class 8 fell to 451,000 compared with 466,000 in the 2019 period.

The average age over the 12 months dropped to 6 years, 7 months versus 7 years, 3 months a year earlier.

ACT is looking for used Class 8 sales in 2021 of “probably 265,000, although that is not a number we formally forecast, at least not yet,” Tam said. “We are working on that.”

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