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February 28, 2019 2:00 PM, EST

Demand Remains Strong for Used Class 8s in January

Used Class 8s Trucks at the Ritchie Bros. auction. (CNW Group/Ritchie Bros. Auctioneers)

Sales of used Class 8 trucks in January fell compared with a year ago, but the average heavy-duty truck brought 10% more money as customer demand remained strong amid a shortage of trucks, ACT Research Co. reported.

There were 21,500 Class 8s sold compared with 24,100 a year earlier, according to ACT, which surveys dealers, wholesalers and auctioneers as well as a few large fleets to determine average prices, age and mileage, and volumes.

The average price rose to $47,349 compared with $43,065 a year earlier.

“The market is holding up pretty well,” ACT Vice President Steve Tam told Transport Topics.

Steve Tam

Tam

“It surprised a little bit. We typically see January being a very soft month, and yet we were able to eke out an incremental increase in volumes [compared with December’s 21,000]. Go figure,” he added.

The average mileage rose to 444,500 compared with 434,000 a year earlier.

The age of the average Class 8 climbed to 7 years, 2 months. That was up from 6 years, 7 months.

Tam said that he found dealers he recently visited in Arizona to be “very upbeat and seeing lots of opportunity” as demand is strong, but a lack of trucks to sell remains the issue, as it has for many months.

“Even though some of them are seeing weaker sales, they are still very optimistic about the outlook for the industry for 2019,” he said.

One constraint on trucks available for dealers to sell comes from large fleets that are retailing their own trucks.

Derek Leathers

Leathers

“There may be some softening in the back half and there’s no indication of that currently,” Derek Leathers, CEO of Werner Enterprises Inc., said during a recent earnings call. “We’re selling automated manual transmissions with collision mitigation technology with low miles and warranty still available. We feel good about our positioning via our retail network to outperform the market,” he said.

Werner Enterprises ranks No. 15 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

“It happens every time values are strong,” Tam said. “The fleets want to sell their own used equipment and cut the middleman out of the transaction.”

Besides adding more to their bottom line, those fleets often market those trucks to owner-operators interested in contracting with them. That gives the fleet a little more control over the mix of trucks carrying freight, he said.

The fleets know the “provenance of the truck,” Tam said. “Arguably, it is going to be a more efficient or less costly unit [for owner-operators] to operate, too, in many cases,” he said.

At the same time, the average sleeper tractor retailed in January was 5 years, 10 months old, had 467,599 miles and brought $56,379, Chris Visser, senior analyst for commercial vehicles at J.D. Power, wrote in a recent blog.

Compared with a year earlier, the average January sleeper was one month older, had 1.8% more miles and brought 10.1% more money, he said.

At Rush Enterprises — the nation’s only publicly traded truck dealership with about 100 locations in 22 states — the aim is to turn used truck inventory every three months to keep the values from degrading, Chairman and CEO W.M. “Rusty” Rush said during a recent earnings call.

Rusty Rush

Rush

When the used truck market drops, the “first step out of the box” can be a 10% decline, he said.

“We review our inventories on — not a quarterly, not a monthly — on a weekly, if not daily basis around here, okay, watching our inventory levels. They’re up somewhat from what they were, say, 12 months ago, not dramatically, but somewhat up, because of the certain type of deals you do. You got some deals that have trades and some don’t. Well, we got a couple more deals ahead, more bigger packages with trades on them. We’re moving them right now,” Rush said.

Meanwhile, industrial auctioneer Ritchie Bros. sold about 465 Class 8s in one day during its annual premier auction in February in Orlando, Fla.

“Highlights included a 2016 Peterbilt 389 tri-axle sleeper heavy-haul truck that sold for $155,000, a 2013 Peterbilt 389 day cab that sold for $140,000 and a 2018 Kenworth T680 sleeper truck tractor that sold for $102,500, according to the company.

“It is still very much a seller’s market,” said Mike McMahon, director of transportation strategic accounts for Ritchie Bros.

In all, the six-day auction sold 13,500 pieces of various equipment arrayed across 220 acres. Sales hit a record $297 million, up 7% compared with last year’s $278 million total.