The commercial truck market trends from J.D. Power Valuation Services on March Class 8 auction results have come out to be positive, with the pricing more stable than previously thought, but with somewhat lesser equipment sold year-on-year. This could not be said of the medium-duty segment, which performed poorly - likely because of the surge in capacity availability.
The volume of the most common sleeper tractors available for auction in January 2018 was considerably less compared to January 2017, but has since then picked itself up over the last couple of months. The prices have been fluctuating from the start of this year, especially between later-models and new-models - for instance, the model year 2014 sold at $35,250 on average, which was 4.7% lower than its February 2018 price. But the model year 2013 and 2012 saw an increase of 0.2% and 1.8% respectively compared to their February 2018 prices.
J.D. Power’s report explains that year-over-year, trucks four to six years of age sold in the first quarter of 2018 has brought in 19% more money than the same period a year ago. “Year-over-year gains are encouraging, but the returning supply of late-model trucks expected throughout the year should keep depreciation near our 2% per month estimate,” it said.
The retail selling price of sleeper tractors has seen a huge dip since the beginning of this quarter while evening out in March. This could be because of the scarcity in supply of sleeper tractors at the beginning of January. But since then, capacity has steeply climbed in the next few months. We can also see that this range in capacity increase coincides with the range of fall in retail selling price - making it the contributing factor for the price fluctuation that eventually played out.
The average price of the model year 2016 fell the highest since its January pricing, selling 16.3% lower at $75,893. The model year 2015 and 2014, sold 4.8% and 13.6% lower than its January prices. Nonetheless, the prices of these late-model trucks have done relatively better in the first two months of 2018 when compared to 2017, bringing in 3.9% more money than last year.
This could be explained by comparing the average volume sold in both 2017 and 2018. It can be seen that the monthly average of 2017 was 5.2 trucks per dealership, while it has fallen to 4.7 trucks per dealership in the first two months of 2018 - reinforcing the capacity factor as the probable reason for its price increase in the initial two months.
The report adds that the first quarter of 2018 has seen a record high in new truck orders, with them forecasting an elevated volume of new truck deliveries this year. This could be because fleets are taking advantage of tax breaks and incentives that came out this year and are bullish over their economic faring in 2018.
Sleeper trailers apart, the medium-duty trucks are seeing an enormous fall in prices month-on-month and even year-on-year. The February average pricing of Class 3-4 cabovers is $14,194 which is 25.1% lower than January 2018 and a humongous 34.1% lower than February 2017. Though volume was moderately higher than January, there still are no clear reasons for the price fall. But J.D. Power believes the segment would “see more strength than weakness” going forward.
Class 4 and Class 6 trucks have both seen higher volumes being sold in February compared to March, but at a lower cost. Also, the edge in pricing that Class 6 had against Class 4 over the last year all but snuffed out, as it depreciated heavily on account of its higher volume availability in the market. “This segment can be impacted by rental fleets liquidating equipment, and it appears February was one of those months. This lower pricing potentially trickled down to lighter GVW’s,” said the report.
Since trends in the auction channel generally predict trends in the retail channel, the report forecasts retail depreciation to be at the lower end of expectations post-March. The report concludes by reiterating its previous outlook, that it expects a similar scenario to pan out next month, albeit with a 2% per month depreciation.
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