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July 27, 2022 9:32 AM, EDT

Used Class 8 Prices Continue Slide in June, but Remain High

Used trucksCNW Group/Ritchie Bros. Auctioneers

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The average retail price of a used Class 8 fell for the third consecutive month in June, ACT Research reported, calling the trend a significant downturn even as the average retail price remained above $90,000.

The average retail price for a used Class 8 in June fell 6% compared with May, which was down 2% from April’s average price. April was down 1% from March, according to ACT.

“The market turned with an exclamation point. That is the story in June,” said Steve Tam, vice president at ACT. “Supply and demand are getting closer together and that is taking some price pressure off.”

The average retail price for a used Class 8 in June was $92,734, compared with $62,400 in the 2021 period and $98,952 in May, according to ACT.

While one data point doesn’t make a trend, two, he said, “suggest something might be happening here. Typically, three data points are what the industry is looking for in terms of confirmation that the market has turned.”

He pointed to the industry’s inability to build enough new trucks to satisfy pent-up demand and low used Class 8 inventory. While ACT does not expect the market to fall to its previous low point, Tam noted, “We will be better off than we were the last time around.”

ACT estimated industry Class 8 retail sales in June came in at 21,500, down slightly compared with 22,800 a year earlier.

The average mileage on a Class 8 sold in June was 431,000 compared with 423,000 a year earlier. The average age was 7 years compared with 6 years, three months a year earlier.

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Meanwhile, fleets are feeling the pain of maintaining their trucks past the typical replacement cycle.

Tires, parts, maintenance and technicians all are facing inflationary cost pressures, Nick Hobbs, chief operating officer at J.B. Hunt Transport Services Inc., said during the company’s latest earnings call.

“The higher frequency of repairs as a result of an aging fleet is also impacting the utilization of our tractor equipment,” Hobbs said. “To support our replacement needs and the growth we’ve seen across our organization, we will be holding trades on roughly 4,000 tractors this year.”

Tam believes there is a possibility the industry could see an increase in the number of trade-ins, but not so significant that the market will be flooded with used equipment.

J.B. Hunt ranks No. 5 on the Transport Topics Top 100 list of the largest logistics companies in North America.

ACT’s forecast for new Class 8 truck sales is basically flat going into next year. “While J.B. Hunt may want to trade 4,000, I’m not sure they are going to be able to do it,” Tam said.

“Just as new truck buyers have had to extend trade cycles, so have used truck buyers,” he said. “Now that there are more trades becoming available, used buyers are acting. Bureau of Labor statistical data would also suggest we are still seeing folks jumping into the market.”

Another large fleet saw it a bit differently.

“The used equipment market is cooling because small carriers can’t afford the prices and can’t find credit,” Adam Miller, chief financial officer at Knight-Swift Transportation Holdings Inc., said during the company’s latest earnings call.

Knight-Swift Transportation Holdings ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

Eight-year-old trucks, preferred by owner-operators, “really got whacked in June,” Tam said. “They were down 19% to $32,358 compared with $39,924 in May, which was down 11% from April, but June still came in way above the year-earlier price of $21,140.”

Owner-operators typically look at 7- or 8-year-old equipment, he said, either to enter the market for the first time or because they are entrenched in trucking and enjoy the “older stuff,” Tam said. “They can pay cash and not have to finance anything,” he noted.

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ACT found the average price of a 3-year-old Class 8 was $137,975 compared with $98,124 a year earlier, and down from $149,252 in May.

Each month, ACT surveys a sample of dealers, wholesalers and auctioneers as well as a few large fleets to determine average prices, age and mileage, and estimated industry volumes.

Another analyst reported auction volume increased substantially in June. “Pricing continued to steeply decline,” Chris Visser, senior analyst of commercial vehicles at J.D. Power, wrote in a note. “It appears volume is driven mainly by small fleet liquidations, large fleets offloading their oldest units and individuals either exiting the industry or going to work for a fleet.”

Visser forecast a “relatively” healthy used truck market as the correction plays out and “we work through the excess capacity of the pandemic spot rate bubble.”