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July 30, 2019 9:30 AM, EDT

June Used Class 8 Prices Climb Even as Lots Grow Full

Used trucks John Sommers II for Transport Topics

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At a time of slowing freight volume and an increasingly adequate supply of power units, the average used Class 8 truck still brought a higher sales price in June than in the same month a year earlier, according to ACT Research.

Prices jumped 6% to $48,810, up from $46,032 in June 2018, according to the latest data from the Columbus, Ind., agency.

Yet sales volumes dropped 15.2% from June 2018.

Normally, fewer trucks being sold might depress prices, but ACT Research Vice President Steve Tam said the used truck market had some tricks left.

“[Used truck sales] seem to have a bit of legs, from a value perspective,” Tam said.

He added that the reason for this paradox is simple: The used trucks being sold are newer, have fewer miles on them and are well-equipped.

“You have a truck with a more usable life,” Tam told Transport Topics.

Sales fell in June to 19,500 from 23,000 units in the same month last year, he said.

Used trucks sold in June had an average of 432,000 miles. In June 2018, it was 440,000. In May 2019, the trucks had 441,000 miles, Tam said.

Used truck prices were up 10% year to date and 6% higher compared with June 2018, according to ACT Research’s report, released July 26.

Same-dealer sales volumes fell 10% from May, 26% year-over-year and 18% year to date, compared with the first six months of 2018. On a month-over-month basis, average mileage dropped 2%, while average age was down 5%, ACT Research reported.

The company surveys dealers, wholesalers and auctioneers as well as a few large fleets to determine average prices, age and mileage, and volumes.

But lower used truck prices likely are on the horizon, said Bennett Whitnell, an analyst at KEA Advisors in Lawrence, Kan.

“For sleepers, we are seeing significant downward pressure on retail prices,” Whitnell told TT. “The big thing is we are seeing lots are much fuller at this time than they were last year.”

Whitnell said that a year ago, there was a significant supply crunch. Freight companies sometimes had trouble finding new and used trucks for their fleets as freight boomed and businesses struggled to catch up.

In June, supply seemed to have caught up to demand, and now warnings exist, Chris Visser, commercial truck senior analyst at J.D. Power Valuation Services, told TT. One of the earliest indicators is the auction market, and sleeper units are beginning to sell for less than they did a year ago, Visser said.

In his July 23 report, Visser reported the auction sector saw its first year-over-year negative comparison for used sleeper units.

“Auction volume pulled back in June, and pricing was notably lower,” Visser wrote. “After more than two years of expansion, it appears the nation may have finally reached and then exceeded the total number of trucks needed to move freight. As is typical in this type of environment, only the lowest-mileage trucks are currently bringing strong money.”

The adequate supply of used trucks on the market is being noticed by analysts and investors, who have been asking trucking companies with major fleets about it in conference calls.

John Steele

John Steele by Ari Ashe/Transport Topics.

Werner Enterprises Inc. Chief Financial Officer John Steele was asked about the issue in an earnings call July 25.

“There are times when freight uncertainty takes hold,” Steele said during the conference call. “Carriers who are looking to buy trucks simply choose to take a timeout.”

Still, the relatively younger age of the trucks and their advanced equipment has kept Werner’s values afloat.

“Our trucks and trailers that we’re selling — and, in particular, on the truck side — are pretty dramatically newer than the population at large, with more safety technology on it that has become much more in demand,” Steele said. “And they’re now fully automated manual transmissions that are in our used truck inventory. And those are also in high demand. So, we’ll weather that storm better than many.”