April 2, 2020 1:00 PM, EDT

Used Class 8 Sales Fall 15% in February

Used Class 8Used trucks on a Penske lot. (Penske Used Truck Center)

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Class 8 used truck sales skidded by 15% in February and the average price dropped for the 10th consecutive month, ACT Research reported for the last month before the surge of the coronavirus.

Sales of used vehicles were 16,400 compared with 19,500 a year earlier, according to ACT, which 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.

The average price dropped 18% to $37,612 compared with $46,015 in the 2019 period.

A year ago, $46,000 was a very strong price for a used truck. But that kind of tough comparison is about to change, ACT Vice President Steve Tam said. Last May was when the first price drop hit and stayed. “We were down around $43,000 and it has devolved from there.”

Steve Tam of ACT Research


While it has been a buyers’ market for a while, “the ball has transitioned further in the buyers’ court for whatever that is worth,” he said.

Tam continued: “I would say what we are talking about is the last virus-free month of used truck sales data.”

The age of the average Class 8 dropped to six years, nine months compared with seven years, one month in the 2019 period.

Mileage stayed flat, or 461,000 compared with 460,000 a year earlier.

“We are in interesting times right now. You see all the headlines talking about how good freight is, but that is retail freight and grocery stores, food. It’s not the manufacturing world, where the GMs and Fords of the world are shut down. Now even our own industry is taking down days. So the manufacturing slowdown and the decreasing freight that accompanies that is only going to continue to worsen at the rate we are going now,” Tam said.

Those who typically buy used trucks are going to be challenged to find freight because they tend to be the flex capacity, he said, and so are the first to feel the bite when freight contracts.

The residual price of a used truck was a topic of discussion during Ryder System Inc.’s fourth-quarter earnings call, its latest.

“We’ve been lowering the residual values for our lease pricing for the last couple of years to reflect the kind of the new normal for the used truck market. So we really continued doing that. In addition to that, I think, given the volatility that we’ve seen in the used truck market, the risk premium on the leases has gone up, but we’re adjusting the pricing for that,” said Robert Sanchez, chairman and CEO of Ryder System.

Truck rental and leasing firms are major purchasers of new trucks and so eventually have large volumes of used trucks to sell.


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Sanchez said other private fleets and companies with used trucks to dispose of may afterwards turn to outsourcing with companies like his.

To help move its own used commercial vehicles, Ryder is offering terms of zero down or no payment for 100 days.

At Penske Used Trucks, a unit of Penske Truck Leasing, the spread of the coronavirus means sold used trucks must be picked up by appointment only, and that requires 48 hours notice so the company can complete the transaction, clean, sanitize and stage the vehicle. The Penske associate completing the transaction will practice social distancing and will leave the keys and final paperwork on the seat of the vehicle. If there are items that need attention at the time of pickup, the Penske associate will note those items and advise the buyer “on how to proceed,” according to the company.

Auctioneer Ritchie Bros. said that because of COVID-19, all its auctions are now online bidding only. It is limiting auction site inspections to what is allowed in accordance with local regulations. Also, load-out deadlines were extended to 30 days from 14 days.

Meanwhile, the trucking market had already reached a bottom at midyear in 2019 after a 25% drop in freight rates, and was poised for a slow recovery coming into this year, Chris Pickett, chief strategy officer for Coyote Logistics, a freight broker unit of UPS Inc., told Bloomberg News. A lot of smaller trucking companies went bust and larger truckers scaled back during the freight recession, taking excess capacity out of the market.

Even without COVID-19 Tam said the used truck market had several months to go of continued weakness. “Now of course, it is extended and its anybody’s guess how long.”

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