Editor’s Note: Updates with comments from Volvo and Rush Enterprises
J.D. Power Valuation Services said the group of late-model used trucks it follows cost 85% more for the first nine months this year versus 2020 as demand far outstripped supply.
The prices paid may leave today’s desperate buyers holding the bag when they sell them later.
Month-over-month, Power’s benchmark group of 4- to 6-year-old trucks brought 18.3% more money. Compared to the first nine months of 2020, the group is running 85.1% ahead, and 62.1% ahead of the same period of 2019.
Late-model trucks have appreciated an average of 4.9% per month this year, Power said in its monthly Commercial Truck Guidelines newsletter.
The stifling of the used market is due to a shortage of microchips and other components, as well as a tight labor market, preventing new truck manufacturers from meeting demand for new equipment. Fleets are holding onto their trucks longer than the typical four- to five-year trade cycle, meaning that when new trucks are available, used trucks being traded will have higher mileage.
“Prices, you shouldn’t use the word ridiculously high, but [have been] very high on used side,” Volvo Group Chief Financial Officer Jan Ytterberg said. “And inventories [are] extremely low. And that is a problem that is hampering the sales.”
‘Retail pricing for desirable trucks’
“The sense of urgency is as strong as ever in the auction lanes, with buyers continuing to pay essentially retail pricing for desirable trucks. Expect the rest of the year to feel similar,” said newsletter editor Chris Visser, the commercial vehicles senior analyst and product manager.
At retail, the average sleeper tractor in September was 74 months old, had 459,393 miles and sold for $78,207, up 5.1% over a comparable model sold in August. Compared to September 2020, the average sleeper was five months older, had 10,465 (2.2%) fewer miles and sold for $36,141, or 85.9% more money.
September’s average retail pricing for 2016 to 2020 models ranged from 2% to 9.4% higher than August.
“Retail inquiries were healthy in September, but many potential buyers walked away empty-handed as there were just not enough trucks available to sell,” Visser wrote.
Another data point: Vancouver, British Columbia-based asset management and disposition company Ritchie Bros. said U.S. vocational truck prices were up 35% with truck tractors up 46% for the three months ending Sept. 30.
Power expects the used truck market to remain hot into next year, barring any unforeseen economic changes.
Rush Enterprises Inc. (NASDAQ: RUSHA) , the nation’s largest chain of new and used truck dealerships, reported a 16.7% decline in commercial used truck sales for Q3.
“While it is increasingly difficult to maintain a robust used truck inventory, we believe used truck demand will remain strong, and we are doing everything we can to support the needs of the market,” said W.M. “Rusty” Rush, chairman, CEO and president.
“Used truck values remain historically high, but we expect used truck values and our used truck sales results to return to historical levels when new truck production begins to increases enough to meet customer demand.”