January 29, 2020 10:45 AM, EST

Used Class 8 Sales Down 11.9% in December

UsedUsed trucks at Jordan Truck Sales Inc.’s dealership in Carrollton, Ga. (Jordan Truck Sales)

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Used Class 8 sales in December were down 11.9% year-over-year compared with December 2018, according to ACT Research’s monthly report.

ACT Research found 235,000 used trucks were sold in all of 2019, a 16.1% drop from 280,000 a year earlier.

The Columbus, Ind.-based research agency said the average used truck sales price for December was $37,751, down 21.7% from $48,201 in December 2018. Prices also dropped 4.2% from November, when the used Class 8 price was $39,416.

“Dealers are reporting used truck sales have slowed and inventory levels are building, particularly with late-model aerodynamic sleepers,” ACT Research Vice President Steve Tam said in a statement. “The price depreciation is largely the result of inventories that have grown due to more trades coming to dealers, slowing freight and the cyclical nature of truck sales.”

ACT Research reported used Class 8 average miles increased by 9.4% in December, to 475,000 miles from 434,000 in December 2018. Average age of a used Class 8 truck went up by 2.4% in December, to 86 months compared with 84 in the previous year.

For the year 2019, average miles increased 4.5% to 467,000 miles, compared with 447,000 miles in 2018. Average age for a used Class 8 truck in 2019 was 88 months, up 8.6% from 81 months in 2018.

Analysts said abundance meant lower prices.

“In calendar year 2019, our benchmark group of 4- to 6-year-old trucks brought 14% less money than in 2018,” Chris Visser, senior analyst and product manager for commercial vehicles for J.D. Power, wrote in his report on December sales.

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Visser, writing on his J.D. Power blog, said year-over-year, late-model trucks sold in 2019 brought an average of 4.2% more money than in 2018, but there is a catch.

“As we’ve said the past few months, this full-year comparison is misleading since it doesn’t reflect the market shift in the second half of 2019,” Visser wrote. “Narrowing our focus to the last two months of each year, 2019 came in 8% behind. Average monthly depreciation was 2.1% per month in 2019, compared to well under 1% in 2018. Pricing remains roughly on par with the last market bottom in 2016.”

Visser told Transport Topics that sales data he has seen from January so far “looks like a continuation of December, with a substantial oversupply of trucks.”

Kea Advisors, a Kansas-based research organization, recently said in its report on December sales that used day cabs will see downward price pressure at auctions “well into 2020” because of high inventory levels.

Challenges remain in the sleeper sector too, Kea Advisors reported, “[Because] like day cab tractors, inventory levels continue to creep higher in Q4 2019. Pricing challenges will remain in Q1 2020.”

The report also said, “We do not look for any material improvement in the day cab or sleeper sectors until Q2 2020 at the earliest. If you have too many used linehaul tractors, our advice to our clients remains the same: Don’t wait. Prices for used linehaul tractors will not improve until Q3 2020 …

“We believe that used day cab and sleeper tractor prices will continue to be under stress in Q1 and Q2 2020. Doing nothing won’t work. Price your used linehaul tractors to market.”

Kea Advisors analyst Bennett Whitnell told TT that December sales have their own unique characteristics because of the end of the tax year.

“December is always sort of an interesting market,” Whitnell said. “Everyone is trying to close their books out.”

Today, to help clean out its inventories of used Class 8 trucks, Ryder Systems Inc. is offering no payment for 100 days, with no money down, on “quality used trucks.” Penske is offering $7,500 savings on select used Class 8 sleeper trucks and day cabs. Its sale ends March 30.

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