Used truck prices continued their skyward trajectory in August, setting records as demand continued to overwhelm supply, a condition expected to last into next year.
The monthslong pricing rocket resumed in August after briefly slowing in July. The trickle-down effect of new truck production stalled by a lack of critical microchips and other component shortages is choking the supply of low-mileage used trucks.
Fleets that typically trade equipment after four or five years are holding onto their inventory longer because it cannot be easily upgraded with some unfilled 2021 orders being pushed into the first half of 2022.
“As is usually the case when demand is strong and supply is weak, competition heats up and prices become the battleground,” said Steve Tam, vice president at ACT Research. “Used truck price appreciation returned with a vengeance in August.”
‘Considerably fewer options’
The cycle will balance itself, but no one can say for certain when that will happen.
“The overall average retail selling price of every sleeper tractor reported sold set a record for the third month in a row,” J.D. Power Valuation Services reported in its latest Commercial Truck Guidelines newsletter. “We still don’t see much downside for retail pricing in upcoming months, assuming economic conditions remain stable.
ACT projects peak used truck pricing around mid-2022, based on current supply and demand.
“With considerably fewer options for both new and used equipment, the behavior drives up truck prices. This has the unintended consequence of attracting new operators/trucking companies, sending demand for units even higher, which ultimately means truck prices are likely headed even higher,” Tam said.
Sleepers pull in 77% more year over year
Dealers sold 5% fewer used Class 8 trucks in August than in July. The year-over-year decline was 24%, almost all because of a lack of supply, ACT reported.
Compared to August 2020, the average price was 47% higher. And the trucks this year had 3% higher miles on the odometer and were 11% older than a year ago. For the first eight months of the year, prices are running 33% ahead of a year ago. Miles are 1% lower and age is flat compared to the January-August period of 2020.
The average sleeper tractor sold at retail in August was 73 months old, had 452,890 miles and brought $74,499. The same sleeper cab in age with comparable miles brought 7% more ($4,899) in August compared with July, J.D. Power reported.
Compared to August 2020, this average sleeper was 5 months older, had 7,596 (1.6%) fewer miles and brought $32,409 (77%) more money.
“Looking forward, the semiconductor and parts shortage shows no sign of resolution, which means new truck supply should remain tight into 2022,” J.D. Power said in its newsletter. “As such, used truck pricing should stay strong as well, assuming economic conditions stay the course.”
Copyright Freightwaves.com by Alan Adler
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