Used truck prices reversed year-over-year gains in November for the first time since 2020, suggesting a normalized environment is returning after a year of unprecedented high prices.
“Following the once-in-a-lifetime pricing boom in 2021, the used-truck market in 2022 started coming back down to Earth as the freight environment cooled and the supply of new trucks increased incrementally,” said Chris Visser, J.D. Power Valuation Services commercial vehicles senior analyst and product manager.
For drivers who paid top dollar on a used tractor hoping to make a killing in an elevated spot market, well, that dream is over.
“It’s safe to say there will be many truck owners underwater on their loans in 2023. Many will face repossession,” Visser told FreightWaves.
Federal Motor Carrier Safety Administration data shows the number of monthly net operating authority revocations in 2021 surpassed the most recent pre-pandemic peak in 2021. The current figure is roughly double 2019. But that doesn’t mean each revocation resulted in a truck hitting the used market.
Year-over-year retail used truck prices drop for 1st time since August 2020
At retail, the average sleeper tractor was 73 months old, had 469,492 miles and brought $89,810, according to Power. For the first time since August 2020, year-over-year prices for used trucks dropped in the aggregate, ACT Research reported.
“There is no escaping the reality that is excess freight-hauling capacity in a declining economy and freight market,” said Steve Tam, ACT Research vice president. “That simple fundamental imbalance carries quite a bit of sway when it comes to used truck pricing.
One response: independent truckers parking rigs they overpaid for and taking jobs with for-hire carriers. Others leave the industry altogether.
Month over month, Class 8 used volumes sold by the same dealers fell 15% and were 38% lower compared with November 2021, ACT said.
Used truck pricing holds up on some models in secondary market
Despite slowing volumes and lower prices, some secondary values are holding up.
Three- to five-year-old trucks brought an average of 4.2% less money month over month but 2.1% more than November 2021, Power reported. Trucks in this age group brought 52.1% more money in the first 11 months of 2022 compared with the same period of 2021.
A truck’s specs and odometer reading played heavily in sorting equipment winners from losers.
“At the height of the used truck pricing bubble in late 2021, buyers were paying top dollar for any truck they could get their hands on. Make/model and specs were less important than simply getting any usable truck,” Visser said.
As the bubble deflated, the selling price of competing models and prices for specific drivetrains diverged. For example, some OEM proprietary drivetrains commanded less than those from Tier 1 engine supplier Cummins Inc.
Would-be buyers watching used truck pricing from the sidelines
Some still-motivated potential buyers watch from the sidelines as they balance higher interest rates resulting in less equity against a cooling freight market.
At auction, pricing for clean trucks with average to low mileage have held stable since September. Since the market correction began in the first quarter, trucks with 400,000 miles or fewer have barely lost any value, Power said in its monthly Guidelines newsletter.
While new truck deliveries rise, the production is insufficient to generate much in the way of late-model trade-ins. Selling prices remain 40%-45% higher than the last pre-pandemic peak.
Looking ahead, analysts predict a continuing decline in the percentage of trucks engaged in moving freight. The nadir should come in the third quarter of 2023.
“The current floor in auction pricing should shift back to depreciation as the supply of new trucks results in more late-model trades,” Power said.