J.D. Power: New truck order cycle may be reaching peak

Some highlights from this month’s J.D. Power Commercial Truck Guidelines industry update:

Volume at auction on the rise

The number of trucks sold at auction climbed notably in September, and pricing trended lower. Model year 2015 trucks took a particularly hard hit thanks to higher volume and higher average mileage. The average auction price of 2015 model year trucks came in at $38,000, a staggering 31.8 percent lower than August.

The average auction price of 2014 model year trucks came in at $34,750, 4.8 percent lower than August. Prices for model years 2013 trucks dropped 7.5 percent last month. Prices for model years 2012 and 2011 climbed 8.1 and 6.1 percent, respectively.

“The severe drop in our pricing average for 2015’s is a bit misleading. This month’s figure was unusually low and is being compared to an unusually strong previous month,” the report reads. “There was simply a much higher volume of trucks with high average mileage sold in September compared to August. Newer trucks are indeed seeing more notable depreciation now that more volume is entering the market, but the 31.8 percent result is not representative of what to expect in the real world.”

Year-over-year, J.D. Power reports trucks 4-6 years old brought in 20 percent more money over the first nine months of 2018 than during the same period last year.

J.D. Power Senior Analyst Chris Visser predicted trade-in volumes would ramp in when production constraints were alleviated at factories and  carriers began taking delivery of more new vehicles last month. This month’s report supports his prediction.

Retail pricing begins slight decline

J.D. Power continued to report stable pricing at retail in August, the most recent month with full data available. Incoming September data indicates a slight decline in pricing commensurate with a higher number of trucks sold.

The average class 8 truck retailed in August was 71 months old, had 455,782 miles and brought $53,480 according to the report. Compared to July, the average truck was three months older but had 1.3 percent fewer miles and brought 0.3 percent more money.

Prices rose 7.2 percent for model year 2016 trucks. Prices dropped 2.3 for model year 2015 trucks and rose 0.9 percent for model year 2014 trucks.

Year-over-year, J.D. Power reports late-model trucks brought in 7.5 percent more money over the first eight months of 2018 than during the same period last year.

Sales per dealership finally climb

Class 8 truck sales per dealership finally increased in August after multiple months of holding steady, coming in at 5.2 trucks per rooftop.

September data points to a similar result, likely due to dealers receiving more trade-ins to sell, according to the report.

New truck order cycle may be reaching peak

The report suggests the current new truck order cycle may be reaching its peak, which means deliveries should increase over the next few months.

“This means the volume of trade-ins will increase through the first quarter. Wall Street appears to be adjusting to a more traditional interest rate environment, which generally points to a cooler rate of economic expansion,” the report reads. “However, the economy is still expanding, and most measures remain positive.”

The outlook should be clearer after the midterm elections and winter weather pass.