March Used Class 8 Sales Down 20% Year-Over-Year
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ACT noted that sales volume exceeded seasonal expectations for the month, as average prices fell 24.5% to $75,367 from $99,812 a year ago. However, on a sequential monthly basis, prices rose 4.1% from $72,384 in February. Average vehicle mileage in March declined 5% while age was down 2% compared with the prior month.
“Same-dealer Class 8 retail truck sales continued their topsy-turvy run in March,” ACT Research Vice President Steve Tam said. “Granted, sales normally experience a boost in March, but the increase is usually smaller.”
Tam said that the retail market declined 13% from a year ago while the wholesale market dropped 40%, but noted that these drops were more than offset by a 48% gain in the auction channel.
Vice President Steve Tam (ACT Research)
“As the year progresses, the year-to-date scenario continues to diverge from [year-over-year] performance,” Tam said. “Our best estimate suggests that inventory continues to increase, supporting buyers working to refresh their used truck fleets.”
Tam noted gains in trade-ins and new truck purchases along with owners exiting the market have pushed more units into the used mix. He also noted that fleet bankruptcy data indicates that while company closures have increased, they remain well below historical levels.
Used Class 8 Truck Volumes Exceeded Seasonal Expectations in March. https://t.co/pScRZdysHh#UsedTrucks, #Trucking #semitruck #transportation #truck #trucking, #ACT, #ACTResearch pic.twitter.com/6dQIpanFZW — ACT Research (@actresearch) April 28, 2023
“Depreciation is heavy as excess capacity continues to hit the market,” said Chris Visser, director of specialty vehicles at J.D. Power. “Auction and retail pricing is down to roughly 20% above 2018 levels, if you don’t adjust for inflation.”
Visser observed that excess capacity that built up during the pandemic is being bled off, with freight metrics that are at or below pre-pandemic levels. The upshot, he said, is that extra trucks that were put into service in 2020 through 2022 are no longer needed.
“Auctions are where we first saw the market shift in early 2022, which makes sense because auctions are where excess trucks end up first,” Visser said. “At this point, we’re probably in the period of heaviest depreciation. I expect pricing to stabilize somewhat as it gets closer to 2019 levels, which should be sometime in the summer at the current rate of depreciation.”
Visser sees some areas of relative strength. In particular, he noted that construction trucks are not suffering steep depreciation, and added that medium-duty truck prices in general are behaving more like the car and light-truck market. He also noted that day cab highway tractors are holding their value better than sleepers.
A dip in the market for used sleepers also has been noticed at Commercial Truck Trader, an online retailer for new and used commercial vehicles. The company’s website receives about 1.2 million unique visitors each month. Data on search impressions as well as feedback from dealers and manufacturers help it form an idea of market demand.
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“We’ve seen search impressions for used sleepers are down about 15% compared to February, but the vehicle detail page impressions, or VDPs, are up about 1.5%,” said Charles Bowles, the company’s director of strategic initiatives. “It seems to tell us that there’s less tire-kicking right now. It appears that those that are actually in the market are further down that buying funnel, and truly have an intent on purchasing a tractor.”
Bowles noted these buyers are acting despite market pressures that include inflation, high interest rates and concerns over a possible recession.
The thing that really concerns me is the precipitous drop in used prices.
Charles Bowles, director of strategic initiatives for Commercial Truck Trader
“The thing that really concerns me is the precipitous drop in used prices,” Bowles said. “This is really causing buyers to become upside down, with valuations continuing to drop. This is certainly going to continue as the supply grows. “
He noted that those who bought trucks in the past few years likely paid a premium; with prices falling, their trucks are losing value.
“I think it’s going to cause some significant short-term pain to a number of folks,” Bowles said. “As things normalize from a high like this, there is going to be pain, and the pain is usually going to be on the littlest guys — the guys who have the least amount of financial wherewithal to get through it. Those are the guys who bought a truck six months ago and now it’s worth 30% less.”
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