With one exception — newer equipment with fewer than 400,000 miles on the odometer — used truck values are declining at auctions and dealerships.
After months of skyrocketing prices, the balloon is losing air. Increased manufacture of new trucks is spurring trade-ins, which were nearly non-existent during pandemic-related supply shortages.
The new truck supply is still limited. According to Wards Intelligence, sales of new Class 8 vehicles were up in July for all but one truck manufacturer. When compared to July 2021, revenues increased by 21.9%.
The disparity between new and used vehicle availability has never been more pronounced. Because wait times for new iron previously surpassed 12 months, fleets are keeping existing trucks for six months or more beyond the traditional four-to-five-year trade cycles.
Minor enhancements
A reduction in supply chain constraints, a cooling freight market, and increased new equipment availability are all working together to drive down used costs and bring the sector back to normal.
“Auction volume was lower than in June but is trending generally upward as fleets offload their highest-mileage vehicles and owner-operators either quit the sector or go to work for a firm,” according to J.D. Power Valuation Services’ current Commercial Vehicle Guidelines newsletter.
The depreciation difference between low- and high-mileage trucks is growing. Except for 2020 models, 2-to-6-year-old trucks sold for 5.6% to 18.9% less in July auctions, according to Power.
Late-model truck sales in the first seven months of 2022 averaged 68.6% more than the same period in 2021. 4-to-6-year-old sleeper cabs have depreciated 7.1% every month on average over the last year. Nonetheless, late-model trucks sold for 50.5% more in July than in January 2019, the month before the outbreak.
Power predicted that “pricing would continue to decrease closer to historical averages as demand returns to a more sensible level.”
Sandhills Global, a Lincoln, Nebraska-based information processing firm, stated that auction asking prices were up to 62% higher than prices paid.
“Fleet vehicle auction values have declined dramatically since April,” Sandhills Global sales manager Mitch Helman said in a press statement. “Despite the significant drop, auction values remain above historical norms and are 22% higher than in July of last year.”
Used vehicle prices fall more slowly before taking hold at retail.
The hunt for low-mileage desired secondhand trucks led in a smaller month-over-month reduction at retail than in June. Three-to-five-year-old trucks sold for 5.2% less in July than in June. Trucks in this age range earned 73.5% more money in the first seven months of 2022 than they did in the same period in 2021.
According to Power, retail prices are still roughly 50% higher than the last pre-pandemic peak in late 2018.
“By the end of this year, the retail price will most probably be lower than it was at the end of 2021,” according to the Guidelines report. “However, the calendar-year 2022 average may wind up being greater than the calendar-year 2021 average.” The statistics for August and September will provide more insight into retail demand.”
