High demand continues to absorb used truck supply: J.D. Power, FTR

  (Photo: Shutterstock)

(Photo: Shutterstock)

Some highlights from this month's J.D. Power Valuation Services used truck report and FTR’s preliminary trailer order report:

Volume at auction lower than predicted

The volume of used trucks going to auction continued to be lower than expected in May due to heightened demand. Fleets are keeping existing equipment on top of purchasing used trucks. J.D. Power described pricing as “stable to slightly downward” as a result.

The average auction price of 2015 model year trucks came in at $43,300, 5.5 percent lower than April. Prices for model years 2013, 2012 and 2011 trucks also dropped between 2.8 percent and 20.6 percent last month. An outlier, model year 2014 trucks rose to $36,000, a 5.9 percent higher than April.

Year-over-year, J.D. Power reports trucks 4-6 years old brought in 18 percent more money over the first five months of 2018 than during the same period last year.

J.D. Power Senior Analyst Chris Visser said he had been predicting a noticeable increase in used truck volume because of historical patterns and the high number of new truck orders.

“We should be seeing a lot more trade-ins than we’re seeing,” Visser said.

He attributed the lack of trade-ins to both accelerated economic improvement and the ELD mandate, which could be causing fleets to keep more trucks in service to move the same amount of freight.

Even with strong demand, used truck supply is expected to increase in the coming months, according to the report.

“The market can only absorb so much,” Visser said.  

Retail sales volume also lower than expected

J.D. Power reported lower than expected volume and stable pricing at retail in April, the most recent month with available data.

The average class 8 truck retailed in April was 81 months old, had 459,737 miles and brought $49,299, according to the report. The average truck retailed in March was five months older but had 0.7 percent fewer miles and brought 1.6 percent more money.

Prices dropped 7 percent and 2.9 percent, respectively, for model year 2016 and 2015 trucks compared to March. Prices rose 0.9 percent for model year 2014 trucks.

Year-over-year, J.D. Power reports late-model trucks brought in 4.8 percent more money over the first four months of 2018 than during the same period last year.

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Sales per dealership dropped

Class 8 truck sales per dealership dropped from 5.7 trucks in March to 4.9 trucks in April. The J.D. Power report describes the drop as “unexpected” and “contrary to predictions.”

“There is a mild shortage of newer used trucks under 400,000 miles, which could partially explain the lower sales volume,” the report reads.

New trailer orders seasonally strong

FTR reports preliminary May trailer order numbers at about 21,200. This number reflects the traditional seasonal drop in orders, but it is still strong for May, according to the report.

“At twenty-one thousand plus, this is still an impressive order total for May. In 2015, May was the weakest order month and this May’s number is 30% higher than that,” FTR Vice President of Commercial Vehicles Don Ake said. “There is a chance that May could be the lowest month this year if fleets start ordering for 2019 early. Some OEMs are booked solid for 2018 and are soliciting orders for next year.”

The report described production as “robust” despite supplier constraints holding the pace back somewhat.

Shippers have reported trailer shortages causing shipping delays in some markets and emphasizing the need for more trailers to keep things moving, according to the report.

Increase in supply still anticipated

While strong demand and long waits for new trucks are positive factors for pricing on the used side, J.D. Power predicts that historical patterns and increased new truck orders will still spark an increase in supply over the coming months.

“Even in a rebounding environment, there’s only so much supply the market can absorb,” the report reads.

J.D. Power continues to predict depreciation will average 2 percent per month by the end of 2018.