Used truck prices fell about 4% a month in the first 10 months of the year. But the rapid rate of depreciation might be coming to an end.
“The past three months’ less-than-expected declines present mounting evidence of pricing stability,” said Steve Tam, ACT Research vice president. “We expect lower prices through the end of 2023, with a return to month-over-month growth toward the end of 2024.”
J.D. Power Valuation Services found month-over-month auction prices for the typical Class 8 sleeper truck fell in four of five model years. Trucks from the 2020 model year bucked the trend.
Four-to-6-year-old trucks sold for 4.6% less than in September. They priced out at 37.5% below capacity-constrained values in October 2022, Power reported in its November Guidelines newsletter. In the first 10 months of 2023, late-model sleepers sold for 41.7% below the historically inflated gavel prices in the same period of 2022.
Prices getting close to strong pre-pandemic period
Monthly depreciation in 2023 is averaging 4.4%. Values for the newest used model years available are just below the strong pre-pandemic period of 2018 or just over 20% lower when adjusted for inflation.
“The universal average was dragged down this month by weak selling prices of trucks older than four years of age,” said Chris Visser, Power director of specialty vehicles.
In October, the average sleeper tractor sold at retail was 71 months old, had 437,227 miles and sold for $67,441. A month earlier, the average sleeper was four months older, had 20,547, or 4.9%, more miles and sold for $4,240, or 5.9%, less.
Retail selling prices for individual makes and models showed newer truck prices were essentially flat month over month. Older trucks with high mileage for their age exhibited stronger depreciation.
“One month is not a trend, but any relaxation of depreciation would logically show up first in newer trucks, so cautious optimism is not out of the question,” Visser said.
‘Too many trucks chasing too little freight’
Used truck prices soared as lingering effects of supply chain disruptions slowed production of new trucks. Fleets held on to their equipment longer, starving the secondary market of all but the most heavily driven, older trucks.
Newer used equipment sold for historically high prices as the number of Department of Transportation trucking authorities swelled to match record spot and contract per-mile rates. The freight slowdown has reversed both situations. Used trucks are in ample supply. Many newer or returning drivers gave up their authorities and signed on with for-hire carriers or took other jobs.
“There are still too many trucks chasing too little freight,” ACT’s Tam said. “Until the economy can strike a balance between those two factors, downward pressure on pricing will continue. Once the excess capacity is absorbed, the freight rate environment and trucker profits will correct, restarting the cycle that is the commercial vehicle industry.”
Power reported slow pre-holiday demand, but firmer prices for newer sleeper tractors provides some optimism going into December.
“We’re still looking at the second quarter of 2024 for the post-pandemic correction to finish playing out, although we could be mostly there by February or March 2024,” Visser said.
Related articles:
Yellow’s equipment may be sold off by auction houses
High-mileage, late-model used trucks fetching lower prices
Used truck prices: What was up has come down, way down
Click for more FreightWaves articles by Alan Adler.
The post Is the worst over for falling used truck prices? appeared first on FreightWaves.
