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In a market growing even hotter in September, the average price for a used Class 8 and for a 3-year-old Class 8 set records, blowing past those set a month earlier. The average price for an 8-year-old heavy-duty used truck even took an unexpected and dramatic leap higher, ACT Research reported.
The average price for a used Class 8 reached $66,258 compared with $42,069 a year earlier, a gain of 57.4%. September’s price replaced the previous record of $63,079 set in August, according to ACT.
The average price for a 3-year-old Class 8 reached $103,194 — passing the $100,000 threshold for the second time in a row. A year ago, the segment’s average price was $70,684. August set the previous record of $101,241.
The average price for an 8-year-old truck rocketed to $32,400, or 63.3% higher compared with $19,835 a year earlier. In August, such a truck cost $19,295. ACT Vice President Steve Tam could not explain the unexpected jump.
Sales were 22,800, up from 20,200 a year earlier, and flat with a month earlier.
“Now is probably the time when folks start to say ‘the market is getting kind of peakish,” Tam told Transport Topics.
He said at two recent auctions a week apart there was a 10% increase in price for basically the same Class 8.
“It’s nothing short of insane,” Tam said.
Ultimately, things will slow down gradually, he added. “The market is not going to crash.”
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Tam said, longer term, the people paying top dollar for trucks right now, if they want to sell in a few years, “they might be in a bit of a pickle. Their equipment may be overvalued if they don’t write it down.”
Each month, ACT provides an industry estimate based on its survey of a sample of dealers, wholesalers and auctioneers as well as a few large fleets to determine average price, age and mileage, and estimated used Class 8 sales volumes.
The average mileage was 449,000 compared with 442,000 a year earlier. In August, the average mileage was 439,000.
The average age was 6 years, 8 months. That compared with 6 years, 4 months a year earlier.
One large carrier with about 2,500 tractors sympathized with small carriers running older trucks in a market where new trucks are in short supply and used trucks are more expensive to maintain.
“I would hate to be a small carrier running a 7-year-old truck,” Tripp Grant, chief accounting officer at Covenant Logistics Group, said during a recent earnings call.
“We’re not going to get the order that we want next year. We’re not going to get a total order I mean. Our average age of 22 months will continue to increase because truck makers can’t manufacture the trucks. And so if you’re sitting there with a 7-year-old truck that you’re going to run another two years, I mean, the maintenance costs in itself will implode them.”
Covenant Logistics Group ranks No. 46 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
If you look at what’s happening in the freight markets, Tam said, they are still very robust, both spot and contract freight rates are still on the rise. “But like almost everything else that we look at, they seem and feel like they are getting near the top. So it’s just a matter of time for them, as well, before they start to roll over.”
He added that progress is being made on the driver side, which helps eliminate some of the capacity strain. “That’s really what we are looking at as part of the catalyst for normalization of the market. The other side is freight growth. It can’t continue to grow forever, at least not at the rate it is.”
Meanwhile, the service departments at dealers are fighting the same battles that everybody else is when it comes to having the parts to recondition or repair a truck.
“The difference with a used truck is they tend to be the last in line to get the part,” Tam said. “If you have a new truck in the shop waiting on parts, you have a carrier that’s down. As much as we tend to focus on the supply chain, uptime is actually everything. So it is very tough for the used truck guys. They are taking parts off of other trucks, doing whatever they have to do to make it roll.”
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