January Sales of Used Class 8 Trucks Decline

Analysts Say Trade-Ins May Offer Boost
By Frederick Kiel, Staff Reporter

This story appears in the March 12 print edition of Transport Topics.

Wholesale used Class 8 truck dealers have seen more of a drop-off in their business than retailers and auctioneers because of the difficulty of getting product, but the used truck market could get some relief from trade-ins resulting from burgeoning new truck sales, according to ACT Research Co. and some dealers.

“It’s been pretty consistent among wholesalers we survey,” Steve Tam, vice president of the commercial vehicle sector at ACT Research Co., told Transport Topics. “Their volume sales were down about 43% in January from the same month in 2011.”

ACT Research, Columbus, Ind., released its January used-truck report on Feb. 27. The company surveyed wholesalers, retailers and auctioneers that account for about 10% of the used Class 8 market.



Tam offered ACT’s usual caveat, that dealers it surveys could have gained or lost market share out of proportion to the overall market.

“Purely independent wholesalers are having a much harder time finding equipment to sell,” Tam said. “That is because wholesalers usually act as an interface between fleets trading in trucks and retail dealers.”

Because of the shortage of the most-wanted used trucks, those between three and four years old, prices have risen significantly.

Meanwhile, Rick Clark, president of the Used Truck Association, Stockbridge, Ga., said the wholesale market is recovering and a much larger supply of used trucks are already on the market or soon will be.

“The wholesale market dipped a little bit but seems to be coming back at end of February,” Clark told TT. “There is still a shortage, and getting the right truck is still a problem, but there will be more trucks entering the market over the next few months from trade-ins from the much higher new truck sales.”

New Class 8 sales jumped 59.9% last year compared with 2010, with 171,358 sales, WardsAuto.com reported. Nearly 38,000 of those sales occurred in the last two months of the year.

In addition, customers bought 14,119 new Class 8s in January (2-20, p. 1), meaning more than 50,000 used trucks already could have come onto the market in the previous three months or will be put on sale soon.

“The average price of a used Class 8 truck was $45,224 this January, up 28.8% from the average price of last January, of $35,114,” Tam said. “It’s a happy day to be in the business if you can get trucks to sell, but I wouldn’t want to be buying used trucks.”

Tam and other industry analysts said that, to take advantage of the higher prices, many fleets were trying to sell trucks directly instead of trading them in. Also, new truck dealers, who before the recovery usually unloaded trade-ins to wholesalers, especially trucks not of their brand, also were keeping most trade-ins to sell retail.

Chris Visser, senior analyst and product manager, at the American Truck Dealers/National Automobile Dealers Association Official Commercial Truck Guide, said that the dealers he surveys do not include independent used truck dealers.

“However, the dealers we do talk to have said that their wholesale market dropped sharply from 2010 to 2011,” Visser told TT.

Terry Hebron, who operates the website Heavy Truck & Equipment Wholesalers Inc., which is open only to licensed used-truck wholesalers, said that he’s seen a rebound in business on his site, based in Flatonia, Texas.

“Back in November and December, there wasn’t any inventory on the site, and the sales volume was running barely at $500,000 in November and December, and wholesalers were going through some tough times,” Hebron told TT. “The wholesale market had really dried up.”

“More inventory has come onto our site this year,” Hebron said. “There was about $1.3 million worth of trucks sold on the site in January, and about $1.1 million so far this month,” he said Feb. 27.

One wholesaler denied that independent wholesalers were being particularly hard-hit by the shortage of vehicles.

Al Hess, owner of the independent Wholesale Trucks of America, Kansas City, Mo., said he rejected reports that independent wholesalers were suffering in the current market.

“January was slower than December and November, but that’s because it’s winter and these are always the slower months,” Hess told TT. “But business is good, business is normal and it’s sound.”

He said that one reason for optimism is that he believes the market has finally found its ceiling for used Class 8 prices.

“Retail figures for sleeper tractors with the same mileage decreased by more than $1,000 from December to January,” Hess said. “I think the market has found a ceiling of what people will pay for trucks that have 550,000 miles, and that appears to be $46,000.”

 

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