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February 27, 2020 11:30 AM, EST

Used Class 8 Prices in January Fall as Sales Drop

Ritchie Bros. building and trucksRitchie Bros. Auctioneers

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The price of the average Class 8 truck in January, typically the weakest sales month of the year, came close to falling below $40,000 for a fourth consecutive month, ACT Research reported.

The average price dropped 13% to $40,336 compared with $45,433 a year earlier.

December’s average price was $37,742. November’s was $39,416 and October’s was $37,981, according to ACT.

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

January’s sales fell 19% to 18,000 compared with 21,500 a year earlier.

“Sales was a little squishy,” ACT Vice President Steve Tam said, compared with the 2019 period. “But I am not too concerned. We are looking for sales this year to be down probably about 10%. Obviously, it is earlier in the year, and our hypothesis and analysis would suggest that the second half would be better than the first half.”

At the same time, he is defining better as simply reduced contraction.

The uncertainty surrounding the spread of the coronavirus could further slow any rebalancing effort in the freight market.

“It is not having a favorable impact on anything right now,” Tam said. “The likely tendency is going to be for businesses to slow investment and slow production, so ultimately it ends up being less freight, which means our hypothesis about freight growth gets pushed out further into the future.”

ACT is scheduled to meet internally to come up with an alternative scenario should the coronavirus progress to the point of denting the North American or global economies, he said.

Tam said there could be a spike in used truck demand if sales of new trucks wobbled.

“Lots of different potential outcomes,” he said.

A significant number of used trucks from a single source are headed to the auction market shortly.

Ritchie Bros. has been chosen to sell select trucks and trailers owned by Celadon Group, which filed for Chapter 11 bankruptcy protection in December. Celadon ranks No. 38 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It operated about 3,850 tractors.

Celadon truck

Celadon trucks and trailers will likely be sold starting in March. (Bloomberg)

The auction company announced it anticipates most of the assets will be sold at its unreserved public auctions in the U.S. and Canada starting in March.

Also, 734 Class 8 tractors were sold Feb. 17 in Orlando, Fla., Ritchie Bros.’ largest equipment auction, and most were tandem axles. Two were heavy-haul trucks and one was a yard tractor.

Brands from all U.S. truck makers were represented, and prices ranged from $2,000 to $109,000.

In the Orlando auction, a 2006 Peterbilt 379 sleeper truck tractor had more than 225 PriorityBids and ended up selling for $85,000. PriorityBids allow bidders to place online proxy bids on items ahead of the auction.

The highest truck sale was $109,000 for a 2019 Volvo VNL760 sleeper model with 125,451 miles, a Volvo 13-liter engine with 455 horsepower and an engine brake, among other specs.

Overall, the Ritchie Bros. auction sold 13,500 equipment items and trucks for $237 million. The six-day event set an attendance record with 18,100 attendees from 85 countries.

Host Seth Clevenger went to CES 2020 in Las Vegas and met with Rich Mohr of Ryder Fleet Management Solutions and Stephan Olsen of the Paccar Innovation Center to discuss how high-tech the industry has become. Listen to a snippet above, and to hear the full episode, go to RoadSigns.TTNews.com.

ACT reported the mileage on the average Class 8 sold in January was 456,000 compared with 461,000 a year earlier.

Tam said the lower miles reflect too many trucks and too little freight. “The trucks were not working as hard, and those are some of the trucks starting to work their way into the secondary market.”

The age of the average truck in January was 7 years, 1 month compared with 7 years, 4 months in the 2019 period.

One truck maker executive said during a fourth-quarter earnings call that he expected the used truck market to continue to be a headwind for the truck maker’s finance company.

“We expect that that will continue in the first quarter and customers continue to pay their bills,” said Paccar Chief Financial Officer Harrie Schippers. “Past dues are low, below 1%, and credit losses are favorable, too. So we expect with all of that, the first-quarter results of the finance company to be very similar to the fourth quarter.”

Paccar’s brands include Kenworth Truck Co. and Peterbilt Motors Co.

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