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March 29, 2021 11:00 AM, EDT

February Used Class 8 Market Hot, Demand Outpaces Supply

2016 Kenworth T270 truckA 2016 Kenworth T270 at a dealership in Dallas. (Shutterstock)

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The average price of a used Class 8 vehicle in February rose 17.9% to nearly $50,000 compared with a year earlier, as year-over-year sales rose, too, ACT Research reported.

In February, the price hit $49,549. A year earlier it was $41,998, according to ACT.

Used Class 8 sales in February were 22,700 compared with 20,700 in the 2020 period, and February’s were flat with January’s volume.

That used Class 8 sales were flat month-over-month reflects a lack of inventory, ACT Vice President Steve Tam said. “That’s a big headwind for everybody. They can’t find trucks to sell.”

Each month, ACT 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.

Meanwhile, one truck maker executive said some industrywide shortages of supplier components for new trucks are part of the picture of the used market, too.

Tony Sinsa

Stinsa

“It’s affecting the OEMs’ ability to build trucks in the current quarter, and so what is happening is some of the people who would otherwise be trading trucks to us on a new truck, they are continuing to run their trucks until they can get a new truck. That is causing the used truck inventory to be more tight than usual,” said Tony Stinsa, Navistar Inc. vice president of used trucks.

Navistar receives almost all of its used truck inventory from trade-ins, he said.

“Navistar is currently selling more higher priced models,” Stinsa said. “Our new LT model that was released in 2018 is hitting the market in larger numbers, and we are realizing higher prices both because the market is strong and the market for the LT is a bit stronger than for older models.”

The second buyers who are purchasing an LT may be experiencing a few things for the first time, he said.

“Most of the LTs have automated manual transmissions” he said. “Also, we went standard on those trucks with our On Command Connection connected vehicle services. They also have advanced driver assistance systems, including the Bendix Fusion product.”

Tam agreed people are looking at a used truck — particularly the late models 3 or 4 years old with less than 450,000 miles on them — as an alternative to a new one given the mounting production issues.

ACT Vice President Steve Tam

Tam

“That’s where the big price increases are coming because of the competition for those units,” Tam said. “We have seen select cases of outsized price increases in a relatively short period of time.”

He mentioned a popular 2017 Class 8 truck selling for $10,000 to $15,000 higher compared with a comparable truck sold three or four months ago. “That’s how quickly the inventory is depleting and demand is even increasing,” he said.

Another industry expert pointed to a dip in dealer sales compared with January.

Dealers sold an average of 4.6 trucks per location in February. That was 0.6 trucks lower than January but up from 3.7 in February 2020, said Chris Visser, commercial truck senior analyst at J.D. Power Valuation Services.

“Wholesalers and dealers looking for stock continue to bid against end users, pushing auction pricing closer to retail,” Visser wrote in a blog.

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Pricing year-to-date for Visser’s benchmark group of 4- to 6-year-old sleeper trucks is running a “whopping” 59.6% ahead the 2020 period.

Navistar is offering a free one-year, 100,000-mile factory-backed warranty for engine and aftertreatment systems on its LT and RH on-highway series that meet certain criteria.

The trucks come either with Navistar’s A26 13-liter engine or the Cummins X15, Stinsa said. “It’s projecting our confidence in the products.”

Tam said the average Class 8’s mileage and age belie what is occurring with prices.

“It’s literally all supply and demand right now,” he said.

The mileage was 436,000 compared with 439,000 a year earlier. The age of the average Class 8 was 6 years, 6 months, the same as the year before.

The question on all the dealers’ minds right now, Tam added, is are they each willing “to pay uncharacteristically high prices” to acquire inventory.

“The tide will turn, and people will have trucks they can’t get rid of fast enough because the prices will be headed in the other direction,” he said.

But that is something ACT believes won’t happen at least until the end of the year.

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