During 2023, used trucks were primarily a buyer’s market. That’s because this year, many fleets with aging equipment have restarted their replacement cycles, resulting in a large influx of well-maintained trucks (often late models) into the used truck sales channel. This is because.
However, if cargo levels stabilize or increase and the number of trucks transporting cargo continues to decline, the balance could tip used truck capacity away from buyers’ favor.
Strong new Class 8 orders are driving up or down used truck purchases. Initial data on new truck orders for September released by ACT Research and FTR on October 4 indicates a strong order book for 2024. If the high level of activity recorded last month holds, more fleets will replace aging equipment. This should increase the inventory of used trucks and lower the price per truck.
Preliminary North American Class 8 net orders reached 36,800 units, up 67% month-over-month, according to ACT Research. The month with the most orders in the past year.
Similarly, FTR reported that Class 8 preliminary orders reached 31,200 units in September, a 94% increase compared to August and a 45% year-over-year decrease. According to the research firm, the build slot for 2024 is vacant. The market continues to “normalize” Following last year’s abnormal order volume. ”
“Decreasing carrier revenues and margins, still volatile truckload rates, weak spot rates reported by DAT, and the decline in the U.S. economy over the past six weeks or so,” said Kenny Wiese, president and senior analyst at ACT. In between reports about the downturn, “the outperformance to date was starting to lose some momentum, and it was unclear how the market would react when the 2024 order board officially opened.”
He said the preliminary data from OEMs for September is “unprecedented” as nearly all of the Class 8 backlog ending in August is expected to be produced in 2023. [order]The season started well.”
FTR Chairman Eric Starks said that although the large increase in September was expected given the available build slots, this “remains a positive indicator for the industry.” Despite the overall cargo market downturn, fleets remain motivated to order new equipment. He said that while there were no expectations to match the order levels seen at this time last year, “the increase in orders confirms our expectations.” [higher] Replacement demand in 2024”
a developing picture
The large increase in new vehicle orders is consistent with used truck activity in August reported by ACT Research. As expected, used Class 8 retail sales rebounded strongly in August, increasing 12% from the previous month, according to the research firm. Meanwhile, average used mileage decreased by 1%, while average price and average age both remained flat. However, ACT found that “over the long term, average sales volume increased by 3%, prices decreased by 26%, and both mileage and age decreased by 4%.”
ACT Vice President Steve Tam said auction sales improved again in August, but only recovered some of the drop suffered in July. “Wholesale trade closed out a strong August market, with dealers transacting 46% more trucks compared to July. In total, August market volume increased 15% month-over-month.”
“This month’s unusually large improvement likely reflects the increased availability of properties at more attractive prices,” Tam said. “August was the second best sales month of the year, more than 8% above average and 10% better than July.”
But Tam said next month’s used prices will drive long-term comparisons, and expects them to be “much lower than in the first half of 2023.”
This decline is being driven by shippers’ destocking of inventories on hand, with cargo levels “expected to slow down and perhaps return to growth soon.” Additionally, he said the number of trucks serving the freight market continues to decline. “these are, Precise factors for capacity rebalancing And then it’s back to the more normal used truck market. ”
Tam also addressed the impact of Yellow’s bankruptcy. “The curtain has been lifted a bit on the disposal of the transportation equipment of the bankrupt Yellow Corporation. As with the liquidation of the terminal, the company overseeing the closure is actively seeking buyers for the trucks and trailers.”
Talking in your sleep
Chris Brady, president and chief economist at Commercial Vehicle Consulting (CMVC), said: CCJ “Two years ago, used sleeper car prices rose significantly as OEMs were unable to fill new orders, leading fleet companies to extend the life of their sleepers. This significantly reduced the supply of sleepers to the market. However, the situation has changed over the past 12 months as second-hand buyers are also now updating their equipment.
“The risk for them is that there will continue to be downward pressure on the supply of used goods as new sales remain strong,” he continued. But unlike truck manufacturers, players in the used truck market cannot simply reduce production to reduce supply. ”
Brady said used and new car dealers are watching the situation closely and are being “conservative about stocking used cars in case prices go down.” The used market is more of a supply and demand market. Prices are also influenced by the specifications of the sleeping car. How equipped the sleeper is and whether it has a 13 or 15 liter engine. It’s all reflected in the pricing. ”
said Efrain Velasco, president of Class8.co, a used truck sales company in Los Angeles. CCJ In 2023, it said it saw strong demand for used sleepers with advanced engines such as the MX13 Packer and X15 Cummins. “These engines have the power, efficiency and reliability that trucking companies need to stay competitive.”
However, as the summer passed and the fall began, he observed that the used market at the dealer level was “softening as the number of aging trucks on the road increased.” Velasco also said that the high preference for high-horsepower engines at the top of the year has faded. “Prices have been flat because there is more inventory and high-horsepower products take the longest to sell.”
