Used Class 8 Prices Increase in August; Low-Mileage Inventory Remains Scarce

This story appears in the Oct. 8 print edition of Transport Topics.

Used truck prices continued to rise in August while low-mileage inventory remained scarce at many dealerships, according to ACT Research and American Truck Dealers.

The average price of a used Class 8 truck sold by retailers, wholesalers and auctioneers increased to $42,060 in August, up 0.5% from $41,835 in July and 2.2% higher than the average price of $41,150 in August 2011, said ACT Vice President Steve Tam.

The pricing increase is more dramatic on a year-to-date basis. Through the first eight months of 2012, the average price was $42,213, up 9.8% from $38,457 in the same time frame a year ago, according to ACT.

The short supply of desirable used trucks, coupled with higher demand, has driven prices upward, Tam said.

“The industry still is struggling to get late-model, low-mileage trucks,” he said. “The stuff that’s breaking loose from the new side of the business is, by and large, somewhat aged because of the delayed replacement cycles we’ve had.”

According to ATD, a division of the National Automobile Dealers Association, the average retail price of a used Class 8 sleeper with fewer than 1 million miles was $50,767 in August, up from $50,067 in July and $49,791 a year ago.

Chris Visser, senior analyst for ATD/NADA, said the average price in August was the highest recorded by ATD in any month since the group revised its data collection in January 2008.

“It’s just a function of a severe lack of trucks with under 600,000 miles that are available out there,” Visser said. “It’s a supply issue.”

Although used truck pricing has fluctuated from month to month, the long-term trend has been a steady increase, according to ACT. On a year-over-year basis, used truck prices have risen for 29 consecutive months, Tam said.

Strong demand for used trucks is also pushing prices higher, Tam said.

More carriers are turning to the used market in response to the climbing price of new trucks, he said.

“A guy who is kind of on the bubble and is considering both may opt for the used truck instead of the new truck as a way to save some money,” Tam said.

Meanwhile, sales volumes for used trucks increased in August, according to ACT.

Tam said the truck sellers surveyed by ACT sold 1,905 used trucks during the month, up 5.4% from 1,808 in July but down 5% from 2,005 in August 2011.

Rick Clark, vice president of National Truck Protection, Cranford, N.J., said warranty sales for used trucks at his business increased 5.5% in August from the previous month.

Nevertheless, many customers said they’re waiting until after the November election to make their truck-buying decisions, said Clark, who is also president of the Used Truck Association.

Demand is strongest for 2011 model year used trucks, as well as for 2007 and older models, but sales of 2008-2010 trucks are lagging, he added.

Dealers “are going to have to start adjusting the prices on the 2008s, ’09s and ’10s,” he said. “If you’ve got low miles on an ’07, you’ll do well — if you can find it.”

Mike Lakin, a salesman at Steve England Truck Sales Inc., Searcy, Ark., said there’s a shortage of pre-2008 models in the used market.

He said buyers are reluctant to purchase newer models with emissions-reduction technology designed to meet 2007 Environmental Protection Agency regulations. “They say they’re not near as dependable, less fuel efficient and they cost more to operate,” Lakin said.

He also said prices are holding steady compared with previous years, but are higher on units with lower miles.

Randy Monro, a manager at DM Bowman Used Truck Sales, Williamsport, Md., said his customers, mostly small companies with fleets of five to six trucks, tell him it is “fairly difficult” to find low-mileage models.

Monro said he has about 30 trucks in his inventory, all with more than 700,000 miles. All the trucks are models used by his dealership’s parent, dry van and flatbed hauler DM Bowman Inc., Frederick, Md.

Munro said buyers also face another major obstacle — getting the cash to make purchases.

“People’s credit is just terrible,” he said. “If I could get financing for everybody that wanted a truck, I would not have any trucks.”

The average mileage for used trucks dropped to 541,000 in August, down from 554,000 in July.

On a year-to-date basis, however, the average mileage for the first eight months of 2012 is 551,000, 3.4% higher than 533,000 in the same timeframe a year ago, ACT said.

ATD also recorded a decline in average mileage in August. The average mileage of a used Class 8 sleeper was 537,540 in August, down from 557,364 in July, Visser said.

Staff Reporter Greg Johnson contributed to this story.