ACT Research reported that used Class 8 trucks sales rose in March, 8% above February’s volume. According to Steve Tam, vice president-commercial vehicle sector with ACT, “The volume gain was expected, since sales usually gain through March or April before slowing for the summer months.” Healthy used truck sales have usually been a reliable indicator of a stronger economy.
Used truck sales correlated directly with new truck sales and 2014 started out with healthy new truck orders, although sales will likely level off as the year progresses. According to FTR, Class 8 truck net orders were 27,139 in March, the fourth consecutive month of solid order activity. December 2013 through March 2014 was the best four-month period since 2006, the agency says. Don Ake, FTR vice president of commercial vehicles, states, “The market is maintaining strength and confirms we are in a solid growth cycle. OEM’s are expected to increase build rates in response to their growing backlog.”
Recently, Martin Daum, president and chief executive officer of Daimler Trucks of North America, projected that the U.S. Class 8 sales for 2014 would be 209,500 (13% increase), Class 6 and 7 builds would be 102,300 (8% increase), with the total Class 6 to 8 builds coming in at 311,800 units (11% increase).
It is no secret that as the average age of the nation’s commercial trucking fleets continues to increase older trucks will need to be replaced. Larger, better-capitalized fleets are continuing to replace older model vehicles and purchasing new equipment to increases capacities.
As for those older models, according to NADA, the wholesale channel continues to be a story of two separate markets, with trucks with under 600,000 miles representing the late-model, higher-priced components and the segment represented by trucks with over 800,000 miles increasing in popularity. Volume and pricing for the high-mileage units increased through the first quarter of 2014. The organization stated, on average, the typical used truck sold at auction or dealer-to-dealer in March was just over seven years old, had 699,500 miles and was sold for $32,183. Month-over-month, this truck was three months older, had 23,965 (or 3.3%) fewer miles, and cost $492 (or 1.5%) more. Year-over-year, the average truck was months newer, had 43,785 (or 5.9%) fewer miles and cost $8,452 (or 26.3%) more.
The year-over-year increase is due mainly to a higher number of 2009 and 2010 model-year trucks moving through wholesale channels, their higher relative pricing comprising a larger proportion of the universal average.
Also, and more surprisingly, buyers continue to pay more for trucks with more than 800,000 miles, continuing a trend that began in the first quarter. In 2014 to-date, trucks in this mileage group make up a larger proportion of the market than theydid in 2013. These trucks are most commonly 2006 and 2007 model years, which are popular as the last of the pre-DPF models. Engines will need a major overhaulif they haven’t had one already, but some buyers may consider this procedure worth the investment, since the market for pre-DPF trucks with remaining useful life remains healthy outside of coastal/port regions.
If auctions are an indicator, pre-DPF trucks at moderate price points are an expanding market. Sooner or later the buyers will need to deal with the total cost of ownership of these older trucks.
