Although 2013 Class 8 used truck sales are a bit sluggish so far, things are expected to pick up and remain about equal with 2012’s numbers—a trend similar to new heavy-duty truck sales.
According to Steve Tam, vice president of the commercial vehicle sector for ACT Research, Class 8 used truck market sales were just shy of 260,000 units last year; for 2013, he estimates sales of 250,000 used truck units.
“The market’s probably going to be a little bit down this year based on the sample we’re seeing and data through the end of May [ACT is still in the process of collecting June data],” Tam said. “For the first five months of the year, the Class 8 used market was down about 5%—I think that’s ultimately where it’s going to end up for the year.”
As far as used truck inventory goes, buyers are paying more for older, higher-mileage equipment. Tam noted that the changes are subtle: In 2012, average mileage for Class 8 used trucks was 560,000 mi.; the average mileage figure for the first part of this year was 565,000 mi., an increase of about 1%. Regarding age of equipment, last year the average was just over seven years, or about 85 months; in 2013, that has increased to 90 months, a climb of about 4%, he added.
In terms of used equipment customers, Tam said ACT has found that in general, “there is a core group of truck buyers who always buy new and will never consider used trucks—and on the flip side, there’s a contingent that always buy used trucks and wouldn’t consider changing.
“There is a percentage that kind of sits on the fence and looks in both directions—we think that’s probably around 10% of buyers,” he said. “I would say nobody’s moved across the fence because there’s no catalyst to force somebody one way or the other. If there were something plausible right now, it would be the shortage of inventory on the used truck side for specialty trucks—heavy-haul, cement mixers, dump trucks, etc. Someone who’s usually a buyer of used equipment in those markets may be forced to buy new just because of lack of availability in the used market.”
Another factor that can affect used truck sales is the credit market and lending trends. “There is no shortage of lenders who are willing to lend to solid credit risks [B+ and above], and there’s also no shortage of lenders who are willing to go into the sub-par markets [D+ and below] because they charge great big down payments and huge interest rates—they get people over a barrel and it can be quite a profitable business,” Tam explained.
“Where we have an issue is in that middle market,” he continued. “For those who are considered to be an average credit risk, there seems to be a shortage of lenders and money in this space. These fleets are hard-pressed to find funds to be able to finance the transactions that they’d like to make. So I think that’s slowing things down a little bit.”
Tam said it’s a little too early in the year to assume the slight slump will continue. The threat of sequestration in the first quarter had fleets nervous about how spending cuts could impact their businesses.
“On the new truck side, we’ve got ten past that and the market seems to be getting some traction and is headed in a more positive direction,” he said. “I think it’s just taking a little bit longer for that to translate through to the used truck market, which seems to be paralleling the new truck market.
“One thing we hear from fleets, regardless of whether they’re buying used or new equipment, is that they’re not increasing fleet size, they’re just replacing old equipment. In that case, every new truck purchase results in a trade-in, which becomes a used truck. So the fact that these markets are running neck and neck makes a lot of sense right now.”
