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Glut Of Used Trucks Creates Buyer's Market


The number of used Class 8 trucks for sale continues to grow as new equipment deliveries drain the backlog created during a 2018 order binge.

Manufacturers trying to resell their used trucks coming off leases are using incentives to move them even as prices fall with a rising supply.

Deferred Payments

Daimler Trucks North America, for example, is promoting used Freightliner Cascadias for as little as $1,250 a month with two months of deferred payments and up to two years of warranty coverage for potentially expensive diesel exhaust aftertreatment.

"If you want a 2015 Cascadia or a 2015 used truck, our truck is still the most fuel-efficient used truck out there," Daimler Trucks North America President Roger Nielsen told FreightWaves in an Oct. 28 interview. "Those advantages that we had in '15 are the advantages we still have even though it's 4 years old."

Paccar Inc. (NASDAQ: PCAR), the parent of Kenworth and Peterbilt brands, also touts the value of its PacLease 3- to 6-year-old models turned in by first-time users. Most of the trucks have low mileage for their vintage and qualify for extended warranties, said Justin Barnhart, general manager – PacLease Texas Company Stores.

"PacLease adheres to an aggressive preventive maintenance program," Barnhart said. Both long-haul and medium-duty trucks coming off lease "have plenty of low-maintenance life left," he said.

They also come with complete maintenance records kept by PacLease technicians trained on Peterbilt and Kenworth equipment, according to Barnhart. 

Record Year

When 2019 ends, manufacturers could report record deliveries of 320,000 to 340,000 new Class 8 trucks. Some of that volume comes is additional capacity ordered during an overheated freight market in mid- to late 2018. An easing of freight demand led to some orders being canceled and others being retimed for delivery in early 2020.

The result is a bonanza of 4- to 6-year-old trucks arriving at auctions and dealer lots at the same time new trucks take their place in carrier fleets.

Comparing October 2019 to September 2019, average prices dropped 10% and average miles rose 2%, while the average age of the trucks was the same in both months, according to ACT Research.

"The biggest volume change in almost four years and the largest price drop in three years call to mind how truck sellers and buyers are behaving in today's market," said Steve Tam, ACT vice president. "With the average selling point below the $40,000 mark for the first time in more than two years, prices appear to have reached the point where they are too good to pass up."

Business As Usual

Nielsen sees business as usual.

"We hear reports of small fleets giving up their operating authority so there's definitely older trucks out there available," he said. "The market [for] 3- to 5-year-old trucks is still strong. We see the prices stabilizing, and we do not see an oversupply in those trucks either now or in the coming future."

Incentives are offered from time to time by Daimler Trucks Financial, the truck maker's captive finance company, which supports sales in SelecTrucks used vehicle centers.

By The Numbers

The volume of 4- to 7-year-old trucks sold at auction in October returned to typical levels after surging in September, according to J.D. Power Valuation Services.

Prices dropped only on 2015 models month over month, which could reflect Daimler's off-loading of used fleet units after accounting for 63% of the industry's new Class 8 models in September.

Here is a year-by-year breakdown, according to J.D. Power:

  • Model year 2016: $33,931 average; $1,046 (3.2%) higher than September
  • Model year 2015: $24,171 average; $1,764 (6.8%) lower than September
  • Model year 2014: $21,622 average; $259 (1.2%) higher than September
  • Model year 2013: $19,941 average; $2,888 (16.9%) higher than September
  • Model year 2012: $16,580 average; $3,495 (26.7%) higher than September
  • Model year 2011: $14,843 average; $3,379 (29.5%) higher than September

"In the first 10 months of 2019, our benchmark group of 4- to 6-year-old trucks brought 10.7% less money than in the same period of 2018," said Chris Visser, J.D. Power commercial vehicles senior analyst and product manager, adding that market strength in early 2019 skewed the average.

At retail, the average sleeper tractor in October sold for $50,581. It was 72 months old and had 462,703 miles. In October 2018, the same truck was five months older, had 3,600 fewer miles and sold for $6,101 (10.8%) less.

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