Following flat volumes in April, the 3% month-over-month decline in May was not unexpected, as historical data indicates that used truck sales volumes usually dip in late spring. Longer-term comparisons, however, show used truck sales volumes up 12% year-to-date compared to the same period in 2017, according to the latest release of the State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT Research. The report also indicated that the average price of total used Class 8 trucks rose 11% y/y, while average mileage fell 1% y/y.
“Dealers are reporting that used truck sales are very good, but some are reporting difficulties finding enough trucks to meet demand,” said Brian Armstrong, information systems manager at ACT Research. “As the used truck market stays strong, many fleets opt to sell their own used trucks themselves, since they can make more money that way, rather than by trading the trucks.”
Individual market segments yielded mixed results in May. “The auction and wholesale market segments fell 15% and 10%, respectively month-over-month, while the retail sector improved 1%. On a year-over-year basis, however, the retail and wholesale markets were up 18% and 14%, respectively, while the auction market fell 12%. Looking forward, we expect full-year totals to remain at or near current levels,” said Armstrong.
At the same time, total U.S. trailer net orders rose 27% y/y in May, and industry production is now committed for the rest of the year. Seasonal patterns predicted a significant sequential net order decline in May. Net orders were 22,900 not seasonally adjusted, off only 2% m/m, but this translated to a 27% increase when compared to May 2017.
As FreightWaves recently covered, supply is severely constrained because OEM suppliers can't provide the needed components required to build more trucks fast enough. This bottleneck is causing fleets to get more orders in the backlog in hopes of getting more trucks as soon as available.
The dramatic seasonally adjusted strength in net orders, up 23% m/m, was highly dry van focused, as most other trailer categories saw seasonally adjusted sequential declines or minimal increases.
“With assistance from dry vans, the industry posted the 18th straight month with year over year net order improvement, and fleets must now patiently await delivery of the trailers that fill the vast majority of this year’s production slots,” said Frank Maly, director of CV transportation analysis and research at ACT.
“May production was a bit weaker than we projected, with continued reports of component issues generating near-term challenges, and tariffs and trade wars listed as potentials for future difficulties,” Maly said. “May build of 27,900 trailers was up 3% month-over-month, but off 5% when seasonal adjustments were applied. This could be the first indication that some of the industry’s usual build season production increases might be a bit more elusive this year, despite the robust orderboard.”
FreightWaves produces three used truck price indices representing the cost of various ages of used trucks. These indices are not cost of ownership numbers. They are monthly indices that are available at a national level and only for charting. They can be used with other data sets for owner-operators.
Below, we look at what SONAR is telling us about used truck prices for three different categories: 3-year-old, 4-year-old, and 5-year-old trucks. While 3-year-old trucks generally give us the clearest picture related to larger fleets selling inventory correlated with owner-operators buying them up, there are a variety of ways that sales of one respective year may not necessarily parallel with others. In this case, the story is clear: sales of all used U.S. trucks has trended up for most of the year.
The 5-year-old Used Truck Price Index (SONAR: UT5) represents the average market price for 5-year-old class 8 tractors. After November 30, 2017, these class 8 tractors never looked back, from about $35,500 value and now rapidly approaching $41,000.
The 4-year-old Used Truck Price Index (SONAR: UT4) represents the average market price for 4-year-old class 8 tractors. From a trough of about $43,350 on August 31, 2017, we see a consistent upward trend rapidly ascending to $52,000.
Finally, the 3-year-old Used Truck Price Index (SONAR: UT3) represents the average market price for 3-year-old class 8 tractors. While there was a mild drop at the beginning of 2018, we see a strong and sturdy demand that's only slightly leveled off at about $62,650 through May, our latest data point.
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