ACT: Used truck prices poised to increase

Though they fell 5% in 2017 year-over-year, the firm expects sticker prices for used trucks to jump in the second half of 2018.

Sales of used Class 8 trucks are getting stronger, according to recent analysis by ACT Research, with their sticker prices expected to increase in the second half of 2018.

Longer term, however, other analysts believe the ability to profitably deploy used trucks in the freight market may decline as “first-owner” specifications become more specialized.

ACT said that that while Class 8 used truck sales fell 9% year-over-year in December, they were only down just 1% for all of 2017 compared to 2016.

Steve Tam, ACT’s vice president, added that dealerships are reporting that used truck sales are now strengthening and improving from the earlier levels seen in 2017.

“They appear to be headed in a good direction,” he said in a statement. “Most dealers are reporting better, but not great, sales, while freight rates have improved and appear to be stable, which helps all truckers, but particularly owner operators and small fleets who often buy used trucks.”

Tam noted that all three used truck market segments – retail, wholesale and auction – were up year-over-year in December, as well as for all of 2017.

On the pricing side, the average sticker price for used Class 8 trucks gained 5% year-over-year in December but lost 5% overall in 2017 versus 2016. Yet Tam thinks that pricing slide will reverse course later this year.

“Given the expected strength of the new truck market in 2018, it is likely pricing pressure will resume in the latter half of the year,” he explained. Still, Richard Mihelic, president of Mihelic Vehicle Consulting, believes that specification changes now occurring in the “first owner” market could alter the trajectory of used Class 8 truck sales longer term.

“For example, you have downsized engines, you have downsped powertrains [and] you’ve got them focused on on-highway use with a lot of aerodynamics designed for that environment and with van trailers that are aerodynamically equipped for that on-highway use,” Mihelic said.

All of that is reducing the potential applicability for that vehicle to operate in some other marketplace, he pointed out.

“So an eight-year-old on-highway tractor is not necessarily going to be competitive against a brand new tractor in its own market niche and the residual value of those vehicles will be challenged because they don’t have as good of a use in the aftermarket,” Mihelic noted. “And, as a result, designs may become more obsolete after their first use—rather than running 20 or 30 years.”

This article was originally published by American Trucker.