May Used Class 8 Sales Down 4.9% Year-Over-Year
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Used Class 8 truck sales in May decreased 4.9% year-over-year to 19,300 units from 20,300, ACT Research reported.
The average retail sale price for a used truck fell 30.9% to $68,411 from $99,054 a year ago, and declined 3.4% month-over-month from $70,811 in April. On a month-to-month basis, sales grew 9.7% from 17,600 units in April. Average mileage was flat compared with the previous month, while the average age declined 1%.
“Sales usually slow 4%-5% in May, so the increase was not only uncharacteristic, but also presents a bit of a conundrum in the context of the current economic and freight environments,” ACT Research Vice President Steve Tam said. “As owner-operators and smaller fleets, in particular, exit the industry, inventory continues to increase. This is providing remaining fleets with more options than they have had in a long time.”
Tam added that auction sales increased 32% month-to-month in May. But he pointed out that dealers are continuing to be risk-averse and selling 19% fewer wholesale units compared with April. He noted that the combined market swelled 13% month-to-month.
“When we say business is terrible, which is what we’d probably say if you just give us a one-word answer, we’re really talking about pricing,” said Trey Golden, vice president of used truck sales at Rush Enterprises. “Pricing is terrible, but volume is actually slightly up, and I’m just saying that’s due to probably more inventory. When business was good it was because inventory was so tight.”
Golden indicated that the increase in used truck volumes is due in part to truck manufacturers increasing production of new trucks. The increased availability has resulted in less of a need to hold on to older units. He also noted that three years of constrained production has meant these used trucks tend to be older with higher mileage, which reduces the price.
“It’s really a double whammy, because when you get increased new-truck production, two different things happen,” Golden said. “You got trade-ins or just people getting rid of their older trucks as they’re getting their new truck. But the other part of it is, in the supply chain-constraint world, we were selling a lot of our used trucks to the people that would traditionally be new truck buyers.”
Golden added that the biggest demand driver is going to be freight. He noted that is particularly true for spot freight when it comes to used trucks. But the trucking industry has seen a slowdown in freight demand this year, which has added to the oversupply of equipment.
“May was the first month that we’ve seen a sharp drop in values from a used truck standpoint,” said Rob Slavin, senior pricing analyst at Ritchie Bros. “In some cases, we are seeing as much as a 10% drop from the previous month, which is an abnormally large drop. So, we started seeing an oversupply in the market.”
Used Class 8 retail volumes (same dealer sales) improved by 12% m/m in May. Average mileage was flat, with average price down 3% and age 1%. Longer term, average age, price, and miles were lower, with volumes up y/y.
Get the update https://t.co/WtAawC1m14pic.twitter.com/ikXBPbOufW — ACT Research (@actresearch) June 28, 2023
Slavin added the market took a complete turn from early last year and now has too much equipment but not enough buyers. It reminds him of a similar situation that arose in late 2019.
“I think it’s a perfect example of supply and demand,” Slavin said. “We’ve seen a complete 180 from where we were in early Q1 of 2022, which I considered the top of the market. It was literally, Q1 of 2022 was the single best quarter in terms of what we collected per unit that I’ve ever seen.”
Commercial Truck Trader, an online marketplace for new and used commercial vehicles, tracks interest based on how actively people are looking into the specifics of different listings.
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“The inventory is beginning to grow, and we’re seeing higher buyer engagement than we did even pre-pandemic for Class 8,” said Charles Bowles, director of strategic initiatives for Commercial Truck Trader. “We’re starting to see some growth in the number of used units listed on the site, and the preponderance of units on the sites for heavy-duty Class 8 are used. Very few are new because, as you know, they’re sold before they even hit dealer lots now.”
Bowles noted that listings are up about 14% year-over-year. He added that, based on detailed page views, the truck brand that is garnering the most interest has been Freightliner. That is followed by Peterbilt, Kenworth, Volvo and International. He also noted that Sterling Trucks are still in the top 10 despite the brand going defunct in 2009.
“Spot rates had dropped so much and inventories are starting to rise, that you’re starting to see listing prices for used Class 8 go down significantly,” Bowles said. “Some are as much as 30% lower than they were a year ago. So, we’re starting to see things level back out and … it’s always the little guys who really get crunched in this.”
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