April Used Class 8 Sales Down 20% Year-Over-Year
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Used Class 8 truck sales in April decreased 20% year-over-year to 17,600 units from 22,100 units, ACT Research reported.
The average price for a used truck fell 29% to $70,116 from $99,054 a year ago, and declined 8% month-over-month from $75,858 in March. On a month-to-month basis, sales slipped 13% from 20,200 units in March. Average mileage declined by 1% while the average age increased 3%.
“With inventory on the rise, and more importantly, not a limiting factor for sales, the logical conclusion is that demand is softening,” said Steve Tam, vice president at ACT Research. “This is a plausible explanation, especially given waning economic and freight conditions.”
Tam noted the year-to-date scenario also continues to diverge from last year. The overall market extended its lead to 5% year-to-date. He suspects demand from truckers for used equipment will be curbed as freight volumes continue to contract. His estimates are suggesting that inventories continue to increase, supporting buyers working to refresh their used truck fleets.
“Examining each of the channels individually will shed light on how other indicators are faring,” Tam said. “Near-term channel results reveal the usual pullback from the quarter-end spike in auction volumes.”
ACT data found that after spiking 93% month-to-month in March, auction activity shrank 45% month-to-month in April. The data also found that wholesale transactions improved by jumping 72% month-to-month.
“From a financial standpoint and just being boots on the ground, going from dealership to dealership, speaking to independent owner-operators, traffic is real slow right now,” said Charles Smith, regional business development and marketing manager at Mission Financial Services. “Truck prices are right about at rock bottom. Some auction houses are not taking on units because they don’t have room for them.”
Smith added that everybody is trying to unload what they already have. But he noted that for the most part it has been slow with rates being down and freight being limited. He also has seen the market conditions impact new trucks as well with sales going up and down.
“I don’t know if it’s because of the economy, the interest rates going up,” Smith said. “A lot of people are holding onto their finances and really just not getting out to purchase. Now on the retail side of it, yeah, the consumer is spending a lot more money, but it’s not trickling over into the transportation side because nobody’s moving that freight.”
Smith has been expecting a freight market turnaround by the end of the second quarter based on feedback he has been getting from dealers. But as of late those projections have been pushed back until the end of the year. He is still hopeful it comes sooner than that though.
“We were looking at the end of the second quarter to start seeing a major turnaround in the market,” Smith said. “Hopefully it happens. That way, maybe, from a financing standpoint, we can have — how can I put it — a good year. We’re doing OK here. Delinquencies are low, but you always want to increase volume as opposed to be mainline.”
House of Trucks still has been seeing activity for its customer base. The used semi-trucks and trailers dealer even has been able to clear out some of its inventory of vehicles that were backlogged waiting for titles and parts.
“Our customer base is looking for the right equipment at the right price, right spec, right miles,” said James Rys, general manager at House of Trucks. “I think we have opportunities going into the third and fourth quarter, which is inventory, right price, right truck, right equipment. So, we’re very excited about buying into today’s market and satisfying our customer base and people that we do a lot of work with.”
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Rys suspects the slowdown in the freight market may be helping used truck dealers. He noted some fleets may not need all the equipment that they were planning on putting in their supply chain so some of that equipment is going to become available for those fleets that have been waiting to gain additional units.
“I think it’s going to work itself out in the market,” Rys said. “And if you have some additional surplus equipment, I think you will find a fleet that just uses the opportunity to go ahead and take some additional units. So, it is something that, it’s going to be a bumpy road, and I think the market as well as the equipment and as well as the freight is going to come back and it’ll balance itself out, I think in the third and fourth quarter.”