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Hangin’ in there: used truck prices are showing no signs of a decline, J.D. Power says

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The used-truck market just won’t go down.

According to this month’s J.D. Power report, the benchmark model year 2015 sleeper tractor’s average price in October sold at auction was $55,000, which was $17,000 or 31.1% more than in September. Tractors of the 2014 vintage were essentially flat from the prior month at $34,500, but 2013 models eked out a 2.1% gain to $28,350 and 2012 was up 3.6% to $27,750. You’ve got to get back to the 2011 models before you see a month-on-month decline, a 10.3% drop to $19,500.

It follows a drop in prices in September that J.D. Power now calls “unusual.”

“October’s stable pricing combined with a return to a more typical mix of model-year 2015 trucks caused average depreciation in 2018 to turn slightly positive,” J.D. Power said in its monthly report. And compared to last year, “(o)n average, trucks four to six years of age are bringing 18.1% more money in 2018 compared to 2017.”

There has been conventional wisdom in the market that with the record number of new orders for class 8 vehicles that the used truck market will eventually be pressured. But as J.D. Power looks forward, “we don’t see much change into early 2019, outside of typical fluctuations due to the holidays and winter weather.”

For sleeper tractors sold at retail, the market was not as strong. But the latest J.D. Power data is for September, as it lags more than the auction data, and as noted, the September auction numbers were down. September sales of 2016 vehicles at retail averaged $79,382, down 4.2% from August. August sales for 2015 vehicles at retail averaged $64,398, up 3.4% sequentially, and 2014 sales were up 1.3% to $50,983.

Year-on-year, just as in the auction market, things are stronger this year. J.D. Power said late-model trucks sold in the first three quarters of this year brought in 8.6% more money than in the first three quarters of last year. Depreciation is at 0.2% this year, compared to 1.7% last year.

 J.D. Power did say that the October preliminary indications for the retail market showed conditions similar to September, which could mean a slight pullback in prices.

With the strong market for new builds, J.D. Power said it expected some return to normalcy in pricing. With current orders generally running “in the low 40,000 range,” deliveries “rationally” should be at 20,000. “As long as orders remains stable or decline gradually, the build rate and deliveries should stay steady well into 2019,” the monthly report said. “Eventually, this dynamic will result in enough used trades to place downward pressure on pricing. “

Elsewhere in the report, J.D. Power issued a similar forecast. “Expect the extremely long lead time in new truck build rates to result in strong deliveries into the second half of 2019,” the report said. “At around that time, we should start to see used trucks depreciate at a more typical level due to returning supply.”

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.
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