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J.D. Power: ELD mandate contributed to subdued supply in June

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Some highlights from this month’s J.D. Power Valuation Services used truck report:

Volume at auction climbed somewhat

June brought an increase in the number of trucks sold at auction after several months of lower-than-expected volume. The volume of sleep tractors sold by leading auction companies jumped from 135 to 298, a 121 percent increase.

The report attributes the climb to seasonality and fleet trade-in strategies, noting that the 298 total merely matches March’s total. It does, however, signify a return to numbers that would be considered “more in line with expectations” after a stand-out May.

“Despite the increased volume, pricing for our benchmark model was mixed, with no real indications of a market shift,” the report reads.

The average auction price of 2015 model year trucks came in at $41,250, 4.1 percent lower than May. Prices for model years 2013 trucks also dropped 5.4 percent last month. Prices for model years 2014, 2012 and 2011 climbed between 0.2 and 4.2 percent.

Year-over-year, J.D. Power reports trucks 4-6 years old brought in 19 percent more money over the first six months of 2018 than during the same period last year.

Demand is still outpacing supply in the late-model, low-mileage segment.

“I am still a little surprised that we didn’t have enough trucks to at least get closer to meeting demand,” J.D. Power Senior Analyst Chris Visser said. “I would have expected that to change by now, but I think June could be the tipping point.”

The increase in demand has gone hand-in-hand with the volume of freight the nation is moving, which determines how many trucks a fleet is going to buy. This impact is likely made stronger by the ELD mandate because fleets now have to keep more trucks in service to move the same amount of freight, according to Visser.

He still expects the market to return to normal in the coming months as fleets take delivery of new trucks and trade activity increases.

Retail sales volume remained low

J.D. Power continued to report subdued volume at retail in May, the most recent month with available data. When newer, low mileage trucks did become available, pricing was strong.

The average class 8 truck retailed in May was 81 months old, had 448,612 miles and brought $53,062 according to the report. Compared to April, the average truck was identical in age but had 2.4 percent fewer miles and brought 7.6 percent more money.

Prices dropped 4.5 percent for model year 2016 trucks. Prices rose 3.9 and 4.1 percent respectively for model years 2015 and 2014 trucks.

Year-over-year, J.D. Power reports late-model trucks brought in 4.5 percent more money over the first five months of 2018 than during the same period last year.

“Looking at specific models, there was essentially no price movement in May,” the report reads. “The newest, lowest-mileage trucks are appreciating moderately across the board.”

Sales per dealership continued downward trend

Class 8 truck sales per dealership dropped from 4.9 trucks in April to 4.1 trucks in May. This is the lowest result since December 2015, according to the J.D. Power report.

“Fleets need all the trucks they can get to move freight and compensate for the impact of the ELD mandate, so trucks that would otherwise have been traded in are being kept in service,” the report reads.

J.D. Power expects retail volume to increase in the coming months commensurate with supply.

Supply still expected to rise

June’s increasing auction volume, historical patterns and an extremely high volume of new truck orders suggest that supply will increase in the second half of the year.

Visser said he is curious to see how July plays out. He is anticipating a more notable dip in pricing and increase in supply.

He said he expects trades to increase as OEMs overcome component shortages and deliver new trucks.

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Ashley Coker

Ashley is interested in everything that moves, especially trucks and planes. She works with clients to develop sponsored content that tells a story. She worked as reporter and editor at FreightWaves before taking on her current role as Senior Content Marketing Writer. Ashley spends her free time at the dog park with her beagle, Ruth, or scouring the internet for last minute flight deals.