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August 28, 2017 3:00 PM, EDT

Used Class 8 Truck Sales Rise, Prices Stable in July

Sales of used Class 8 trucks improved in July, rising 19% year-over-year and 20% year-to-date amid a freight market that showed modest improvement, ACT Research Co. and other experts reported.

Sales jumped to 3,347 compared with 2,810 a year earlier, ACT Research Co. reported, based on its sample of dealers, wholesalers and auctioneers as well as a few large fleets who consistently report.

Tam

ACT uses the sample to determine average prices, age and mileage and it includes about 13% of the total market, which is statistically enough to project market conditions, according to the company.

By that measure, total sales in July were 25,746 compared with 21,615 a year earlier, ACT said.

Year-to-date sales jumped to 190,730 compared with 159,500 in the 2016 period, according to ACT.

“Things are kind of looking up. We came out of the blocks running at the beginning of the year on sales, and the year-over-year gain is pretty strong testimony that optimism remains high,” ACT Vice President Steve Tam told Transport Topics.

“We have heard in the second-quarter earnings announcements from the publicly traded guys that something happened to freight right around the end of the first quarter. We have seen that backed up in a couple of the freight measures we watch,” Tam said.

For example, American Trucking Associations’ truck tonnage index climbed for the third consecutive month, rising 2.3% year-over-year in July.

Even more meaningful growth in the freight market, which analysts have been keeping an eye out for over the past year or year-and-half, “will tighten the capacity and that is what the sellers are hoping for,” Tam added.

The average price for Class 8 trucks fell to $39,800, down from $43,200 a year earlier.

But Tam said pricing remained stable, sitting at about $40,000 all year.

“We are not continuing to fall further. We’ve got a kind of safety net under us,” he said.

At the same time, retail prices for Class 8 sleeper models have declined an average of 1.4% per month so far in 2017, Chris Visser, JD Power senior analyst, commercial valuation services, wrote in a report. “This figure compares favorably to the 2% per month average in the first seven months of 2016.”

Also, late-model trucks wholesaled in the first seven months of 2017 averaged 2.2% lower than the same period of 2016, according to Visser.

“The Class 8 market has been leveling out since early this year. Look for milder depreciation to continue in upcoming months,” he wrote.

Another analyst agreed used-truck values have stabilized. However, he pointed to a catch.

“There is little hope for much improvement in used truck prices over the short- to medium term. As carriers upgrade their fleets to more fuel-efficient and more reliable trucks equipped with automated transmissions, a surplus of 3-, 4-, and 5-year-old tractors continues to be flushed [into] a used truck market that continues to be plagued by mediocre demand,” John Larkin, an analyst at Stifel, Nicolaus & Co., wrote in a note to investors in August.

Larkin’s report stemmed from his recent visits to several large Midwest-based truckload carriers, both private and publicly traded.

They told him, “Spot rates remain strong while some contract rates are beginning to move upward,” Larkin wrote. “Most carriers are optimistic in that they believe the stage is set for rate increases when annual contract renewals are up for negotiation in the 2017 fourth quarter and the first half of 2018.”

Meanwhile, the average age of a Class 8 climbed to 7 years and three months compared with 7 years and one month a year ago, according to ACT.

Mileage in July fell to 452,000, compared with 462,000 in the 2016 period.