Used Class 8 Prices Down 16% Year-Over-Year in January
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Used Class 8 truck sales in January decreased 12% month-over-month to 18,500 units from 21,100 units, ACT Research reported.
ACT’s report also showed sales fell 18.9% year-over-year from 22,800 units. The average price for a unit declined 7% month-over-month to $74,694 from $80,716 in December. The price decreased 16% year-over-year from $89,029.
The average mileage increased 8% to 459,000 from 424,000. The average age for a used truck was up 1%.
“Same-dealer Class 8 retail truck sales saw a second month of sequential gain,” said Steve Tam, vice president at ACT Research. “Sales typically see a moderate decrease (7%) in January, so the increase was a departure from seasonality. However, expectations called for the disconnect. The assumption was based on strong new truck sales in November and December, which helped to relieve some of the pent-up demand the used truck market suffered through most of 2022.”
Rush Enterprises typically experiences a seasonal slowdown in used truck sales in January. Last year was different with the company hitting record sales. The months that followed also hit records until the trend peaked in March 2022. This year has been more in line with seasonal trends.
“In addition to the seasonal weakness, used truck values are continuing to depreciate at a faster than normal rate,” said Trey Golden, vice president of used truck sales at Rush Enterprises. “While we are carefully managing our used truck inventory during this period, we continue to trade for used trucks without limitations and have adequate used truck inventory to address all market segments.”
Golden believes the industry as a whole is working to bring used truck values down from the historically high numbers the prior two years given current market conditions. He noted that this year will see new truck OEMs returning to full production, which will increase both new and used truck supply in the market.
“Used trucks appreciating and depreciating faster than normal is not unusual at certain points in the truck supply-and-demand cycle; however, the increase in values in this cycle was much more extreme than normal,” Golden said. “We do have further to fall, but I believe we are getting toward the later innings of the correction game, and I do believe the accelerated depreciation rates will normalize by the third quarter of 2023.”
Ritchie Bros. Auctioneers didn’t start holding used truck auctions this year until February. The company receives most of its sales through auctions versus its online sales. This year doesn’t seem to be different with the company reporting that its first three auctions for the year were strong.
“Normally we see Q4 numbers carry over and there’s not a significant drop,” said Rob Slavin, senior pricing analyst at Ritchie Bros. “We’ve seen very strong results from those first three sales, much in line with what we saw in Q4. Maybe actually in some cases a little bit higher. So in, let’s say Q2 and Q3, we saw some significant drops from what we were collecting in Q1.”
Slavin noted that when the coronavirus first hit, a lot of fleets started preparing their trucks for auction or resale. The sudden supply chain disruptions and change in consumer trends brought with them a fall in freight demand. But as the pandemic progressed, that changed. He noted the year returned to a more normalized market by the end. But then sales increased even further.
“We started to see numbers go up and they went up like we’ve never seen before,” Slavin said. “Q1 of 2022, we reached a point in the market where certain age trucks and certain mile units were up 150% from where they were selling at Q4 2020, which Q4 2020 was kind of a normalized market.”
Slavin noted the new truck market has a huge impact on what the used truck market does. He added that a very lean year in new truck sales is probably going to result in residual high sale prices at the dealership and auction levels.
“I don’t ever expect to see the kind of numbers that we received in Q1 of 2022,” Slavin said. “It took 30 years for me to see what I just saw. I don’t think I’ll ever see it in my career again.”
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Slavin expects more equipment to be hitting the lots than in the last couple of years. Truck manufacturers struggled to keep up with demand the last couple of years because of constraints and parts shortages. But they have made progress working through that. Slavin is also anticipating a lot of repossessions from people who bought trucks when the spot market was very active now that rates are down.
“I think those people were paying a considerable amount for the trucks, and diesel has gone up,” Slavin said. “So, there’s a lot of factors that play into this oversupply that I think we’re going to see hitting our lots from a used truck standpoint.”