Used Truck Prices Jump 16% in August

A bid catcher takes bids during an auction in Fort Worth, Texas.
A bid catcher takes bids during an auction in Fort Worth, Texas. (Ritchie Bros. Auctioneers)

Strong demand for used trucks continued in August as the average price of a Class 8 vehicle jumped 16% year-over-year in the midst of a historically strong freight market, ACT Research reported.

The price was $45,371 compared with $39,047 a year earlier, according to ACT, which surveys dealers, wholesalers and auctioneers as well as a few large fleets, to determine average prices, age and mileage.

On an estimated market basis volumes hit 25,100, up from 24,200 in August 2017.

The 4% gain meant sales industrywide had pumped up nicely, ACT Vice President Steve Tam said.


Volvo and Mack trucks on the sales lot in Clarksville, Ind. (John Sommers II for Transport Topics)

“It goes back to mostly fundamentals,” he said. “The freight market continues to be very strong. A good quality, young used-truck has made its way into the substitute-for-new category, in some cases. Buyers need a truck, and they need it now. I know dealers wish they had more inventory. They would be able to sell it.”

Meanwhile, the used trucks sold in August appear to have been working harder.

The average mileage rose 3% to 459,000 compared with 443,000 in the year-earlier period.

The age of the average Class 8 was 6 years, 11 months, down slightly from 7 years, 1 month a year earlier.

One carrier is preparing to test the auction market again.

“For the past couple of years, we have sold about a dozen trucks at auction. We will be testing the market in November when we place nine or 10 into that market as we take delivery on new trucks,” said Jay Foley, president of Diversified Transfer & Storage, a transport company in Billings, Mont.

“We also have regional P&D fleets at our terminals, and that allows us to use trucks in a second-generation opportunity,” Foley said. “We are selling two trade-in trucks for every five new trucks arriving.”

Dealing with trade-ins at truck dealers is extremely frustrating, he added.

“Trade terms, in quotes, can nickel-and-dime the trade value, thus we have moved our efforts to auctions and direct sales,” Foley said.


A Diversified Transfer & Storage truck. (DTS)

Another research executive called the auction space the floor of the market.

“The used truck market has always built from the bottom up. Everybody sort of looks to find the floor. And then what the ceiling looks like depends on how effective an operator you are,” said Bennett Whitnell, an adviser with KEA Advisors, whose clients range from large dealership groups to one-truck garages that it supplies with advice on valuations using data and measurement-based metrics.

KEA is based in Lawrence, Kan. The company follows eight or nine national auction houses, and those make up about 95% of the auction activity. The floor of the market remains very strong, Whitnell said.

“Demand is at the top of the typical band because the economy is good,” he said. “Not many used truck buyers are making over-ask offers on used trucks, and the ones that are certainly can’t get financed. Lots of buyers in a market like this are willing to pay full ask, though.”

At the same time, late-model trucks sold in the first eight months of 2018 brought 7.5% higher prices than in the same period of 2017. Depreciation is running 0.4% per month in 2018, compared to 1.8% last year, Chris Visser, senior analyst for commercial vehicles at J.D. Power, wrote in a blog.

Class 8 sales per dealership “finally blipped up” in August, coming in at 5.2 trucks per rooftop. “A result above 5 is more in line with what we had expected at this point, and there is more upward pressure than downward as the supply of trades slowly ramps up,” Visser wrote.

Turning to the auction market, Visser agreed it was strong.

He noted a 21% increase in prices for trucks 4 years old to 6 years old compared with a year earlier.

Whitnell cautioned that buying a used truck is always going to be fraught with risk.

“The number of places where things can go wrong on a truck is increasing,” he said. “And the possible expense associated with that is similarly going up. To replace a failed emissions system could be $10,000.”

With more choices of where to buy, knowing whom to trust is crucial.

At an auction, for example, it is a willing buyer and a willing seller performing an arm’s-length transaction.

“No over allowance, rarely a warranty, no talented salesperson driving up the price,” Whitnell said. “Just a truck and a group of people working against each other to decide a value.”