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May 12, 2014 2:15 AM, EDT

Prices for Used Trucks Beginning to Ease as More Become Available, Analysts Say

By Seth Clevenger, Staff Reporter

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

Used Class 8 truck prices have begun to ease but remain near historic levels on continued strong demand, analysts said.

The average retail price for a used sleeper was $55,840 in March, down slightly from $56,226 in February and the record of $56,488 in January, American Truck Dealers reported.

However, the March average still was 9% higher than the same month a year earlier, when prices averaged $50,792, even though average age and mileage were nearly identical.

ATD analyst Chris Visser attributed the recent decline in prices to a greater supply of newer vehicles on the used market.

“The increasing number of late-model trucks entering the market has exposed the ceiling . . . on retail pricing,” he said.

ACT Research Co. reported the average price for all used Class 8 trucks sold through retail, wholesale and auction outlets declined to $42,019 in March from February’s average of $44,410, which was the highest on record.

That downturn was the first sequential decline in six months, ACT said.

Even so, March prices still were much higher than a year earlier, when they averaged $37,981.

ACT said the used trucks’ average mileage in transactions it tracked in March rose to about 586,000, and the average age increased to 93 months. Both were up about 5% from February.

“We just had some old stuff flow through the market in the month of March,” ACT Vice President Steve Tam said. “The mix of trucks that came through was just not as desirable.”

ATD’s Visser said used truck prices had been trending upward since late last year as more 2011 and 2012 models reach the market via trade-ins.

Those vehicles have been commanding high prices, driving up the industry average, but now the supply of used equipment has expanded to the point that average pricing is off of its peak, Visser said.

Nevertheless, late-model, low-mileage units remain relatively scarce.

“Demand still outstrips supply,” he said. “We’re not at the point yet where the number of trucks with under half a million miles is adequate to meet demand.”

Visser said carriers could turn to the used truck market to expand their operations as the freight market grows.

“The fleets will have to expand at some point,” he said. “They’re almost at peak capacity. Nobody’s going to give up the chance to move freight at the right price because they don’t have the iron to move it.”

Visser said that, despite their “extremely” high prices, late-model used trucks continue to be an attractive option for buyers because they still represent a substantial discount compared with a new vehicle.

Demand for used trucks had been “really brisk” this year until dropping off in early May, said Rick Wall, used truck manager for Gateway Industrial Power’s dealership locations in Wright City, Missouri, and Collinsville, Illinois.

He said late-model, low-mileage equipment still is hard to obtain but isn’t as rare as it has been in the past.

“It’s still scarce, but I have seen more of it in the past 30 to 45 days than I’ve probably seen in the past couple years,” Wall said last week. “There are some fleets that are trading in 2011 model trucks at this point. We’re starting to get our hands on them.”

Wall also said he has seen a spike in business from owner-operators and small fleets looking to replace their older vehicles with 2011 and later models.

He added that demand was driven in part by California emissions regulations that require truckers operating vehicles without diesel particulate filters to update to newer emissions technology.

ACT also reported that the dealers it surveys sold 2,316 used trucks in March, up from 2,145 in February but down from 2,780 in March 2013. The firm’s survey represents about 8-10% of the used market, Tam said.

Despite the year-over-year decline, ACT expects full-year, used-truck sales to rise to 250,000 units this year from 235,000 last year.

The decline in ACT’s survey may signal that fleets are increasingly remarketing their own units rather than going through dealers, Tam said.

“When there’s tight demand, you don’t have to work nearly as hard to sell a unit,” he said.