The North American market for used trucks continued to slide in April, according to Price Digests, a trucking information services company.
Price Digests’ Price Stability Index, a measure of used truck values and the strength of the resale market in the U.S. and Canada, fell to 97.54 in April from 98.09 in March. A measure of 99 to 100 represents a stable market.
Price Digests, which collects data from used truck dealers and vehicle auctions, said overall inventory levels dropped from March to April, especially on the auction side, which fell 50 percent. Retail sales experienced a 9.1 percent decrease during the same period.
Compared with last April, retail volume rose 107.8 percent, the third consecutive month of year-over-year inventory growth on dealer lots. The volume of trucks left at auction dropped 66.4 percent.
Used truck values averaged $37,451 in April, a 7.9 percent decline from the same period a year earlier. Auction prices – which tend to be lower and vary widely be vehicle and model year – also fell 6.6 percent from last year.
Price Digests attributes the decrease of value on the retail side to ballooning inventories and large depreciation of 2011 and 2012 model year vehicles.
Retail pricing still shows depreciation on par with late 2016, but we expect that channel to moderate as well, analysts wrote in J.D. Power Valuation Services’ Commercial Truck Guidelines.
Navistar International Corp., which has a large inventory of used trucks, saw pricing slip in May, but believes it will begin to solidify later this year, Troy Clarke, the truckmaker's chief executive said in a recent call with analysts.
Later model year trucks like 2014, 2015 and 2016 are selling well, said Steve Reichard, general manager of Freightliner and Peterbilt dealer Truck Country in Mosinee, Wis.
“Over the last 60 days we are seeing the later models holding pricing decently,” Reichard said.
“When you get into 2012 and 2013, that’s what has taken a hit,” he said. “The reason is because there is so much of it out there. We look at our inventory every three weeks to see activity based on model year and price accordingly.”
Despite a steady decline of values since the beginning of the year, “April truck value depreciation began to slow,” said Jessica Carr, senior analyst for Price Digests.
Growth in the number of used trucks in auction and on dealer lots also slowed, Carr said.
“This tends to happen prior to the ramp up in activity that occurs between June and August,” she said.
Pricing for heavy-duty conventional sleeper tractors was strong in April. Used resale values for the over-the-road haulers rose 8.2 percent to an average $44,405 from the same month a year earlier. The value of medium-duty crew cabs grew 7.2 percent to $28,268.
Resale prices for medium-duty conventional day cab chassis had the biggest decline, falling 13.8 percent from the same month a year earlier to $17,544. From March to April, prices held steady.
The average sleeper tractor retailed in March was 71 months old, had 440,744 miles, and brought $49,094, according to the J.D. Power Valuation Services report.
“We are moving a lot of big sleepers,” said Reichard. “The Freightliner and Peterbilt brands are also doing well.”
The number of Peterbilt trucks on the resale market had the biggest gain from March to April, rising 12.2 percent to 5,109 vehicles. Freightliner had 9,633 trucks on the market in April – the most compared with other brands – but levels were down 16.2 percent from last month. Navistar’s International brand had 8,302 vehicles on the market in April, though inventory dipped 18.6 percent from March.
The number of used Kenworth trucks on the market fell 19.2 percent to 2,476, and Hino’s inventories were down 0.7 percent to 1,967 vehicles.
After a significant inventory drop from February to March, Volvo’s levels increased almost 11 percent in April to 5,190 vehicles.
The used truck market in all U.S. and Canadian regions were weak, according to Price Digests. Pricing drops were consistent across the board though inventory levels shifted in different directions by region. The largest drops in volume were in Arizona, Colorado, New Mexico and Utah. Iowa, Kansas, Missouri and Nebraska saw the largest increases.
“Overall sentiment about the trucking economy is improving,” said J.D. Power Valuations Services analysts. “It is possible we are finally seeing a degree of increased demand for used trucks. Values will continue to be impacted by returning supply, but evidence is building that pricing has found its floor.”