Not only are more used trucks flooding auction sites and dealerships, but highly desired late-model iron is getting less money because pandemic freight demand dramatically increased the miles driven.
“Most 3-year-old trucks sold [in May] had extremely high mileage — 170,000 per yr of service — which affected their selling price,” said Chris Visser, director of specialty vehicles at J.D. Power Valuation Services (JDPA). “Trucks with more typical mileage brought somewhat stronger money, although pricing across the board continues to say no.”
The variety of trucks sold in May was just like April, but auction prices were lower across the board, Power reported in its latest Guidelines newsletter.
- Model yr 2021: $79,800, $22,200 (21.8%) lower than April.
- Model yr 2020: $59,024, $705 (1.2%) lower than April.
- Model yr 2019: $42,492, $4,489 (9.6%) lower than April.
- Model yr 2018: $29,584, $2,787 (8.6%) lower than April.
- Model yr 2017: $21,844, $3,080 (12.4%) lower than April.
The high-mileage phenomenon for model yr 2022 and 2021 trucks put them in the identical bucket as older models. Higher depreciation means less money on the auction block and from retailers. It’s a seamless reversion to the mean after used truck prices reached unimaginable heights in the course of the pandemic when latest trucks were hard to get.
Recent truck availability, while not plentiful, is improving. Manufacturers are catching up on orders placed in the course of the pandemic while keeping a lid on latest orders.
Newer used model pricing near pre-pandemic levels
“The latest model years available within the marketplace are bringing just below 20% more cash than the strong pre-pandemic period of 2018 in nominal figures, or roughly comparable money if adjusted for inflation,” Visser said.
Trade-ins of trucks with 400,000 to 700,000 miles are flooding the market. They still have useful life for long haul but finding takers in a market where spot and contract rates have fallen is hard even at lower prices.
“Fleets definitely aren’t buying high-mileage iron. Actually, they’re the important source of it,” Visser told FreightWaves. “Typically, high-mileage sleepers go to regional or local haulers or export markets.”
JDPA found the everyday 2021 model Class 8 truck gathered 170,000 miles per yr and 2022 models racked up 180,000 per yr. Even 2020 models, which were a yr old when the pandemic began, averaged 185,000 miles per yr in comparison with the American Trucking Association’s pre-pandemic estimate of about 90,000 miles per yr.
“This dynamic represents a headwind to selling prices going forward,” Visser said.
Used truck prices proceed to fall overall
Late-model trucks averaged 5.7% less money in May than in April, and 46.3% less money than May 2022. In the primary five months of 2023, late-model sleepers brought 46.9% less money than the identical period of 2022. Monthly depreciation in 2023 is currently averaging 6.5%.
At retail, the common sleeper tractor May was 72 months old, had 471,232 miles and brought $72,064. Compared with April, the common sleeper was 4 months older, had 29,828 (6.8%) more miles and sold for $2,503 (3.4%) less. 12 months over yr, the common sleeper was one month older, had 26,971 (6.1%) more miles and brought $47,166 (40%) less.
While miles on wholesale trucks proceed to tick higher, Steve Tam, ACT Research vice chairman, told FreightWaves that mileage is starting to creep lower in year-over-year auction and retail data the corporate analyzes.
“Typically, it looks like the problem may be beginning to be a rearview mirror problem,” Tam said. “When only higher-mileage trucks can be found, then that’s what the market has to select from. Thankfully buyers are getting relief on each the mileage and price front in today’s market.”
One in all the implications of fleets holding onto trucks longer than the everyday three- to four-year trade-in cycle is rising maintenance costs. But those were subtler, Tam said.
“Had we seen a much bigger delta, the incremental cost might have been much greater,” he said. “One other bullet potentially dodged.”
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