ACT research says prices for used Class 8 trucks are going up

Data from ACT Research, a provider of data and analysis for trucks and other commercial vehicles, indicates that the average retail sales price of Class 8 used vehicles sold in September was up 3 percent from August at $42,100.

The firm also noted in its “State of the Industry: U.S. Classes 3-8 Used Trucks” report that while the average retail sales price was up, the number of units sold declined by 5 percent from August, with dealers reporting tightening supply of late-model equipment.

ACT officials said that having fewer than necessary trucks of the right specifications is exacerbating the shortage of equipment and helping to drive up prices. And while the number of transactions was lower compared to August, all three used truck sales channels—auction, retail, and wholesale—are ahead of 2009’s pace year-to-date. ACT added that the used dealer industry is cautiously optimistic about future prospects, with freight, trucker profitability, and new truck demand improving.

In an interview with LM, Steve Tam, vice president-commercial sector at ACT, said that as available truck capacity continues to tighten on a sequential basis, freight hauling capacity is modeled by ACT as what he described as an active population, which examines the current state of freight hauling capacity.

“We think that pretty much all of the vehicles that are in operation on the Class 8 side hit a ‘balance point’ in the middle of the second quarter and beginning of the third quarter,” said Tam. “We don’t think there is much, if any, excess freight hauling capacity…out there right now.”

Even with a lack of capacity, Tam said that does not mean the trucking industry is using 100 percent of its available fleet. He added that 100 percent capacity utilization is not an ideal situation for shippers and carriers, as trucks need maintenance and re-positioning.

According to ACT estimates, total active Class 8 utilization at the moment is in the low-to-mid 90 percent range, which is the ideal amount for full utilization on an ongoing basis. It the economy was doing better, Tam said this rate could be bumped up a few percentage points.

“For where we are at, we are already starting to see—as a result of being at that level—some incremental demand for new purchases coming in,” said Tam. We saw some nice increases on a sequential basis for new Class 8 orders coming in for October, and that is where things start translating through on the used trucks side.”

Conversely, used truck sales have been beset by what is happening on the new truck side over the last three or four years, according to Tam. Putting fewer new trucks into the marketplace means that fewer used trucks are being manufactured as a result, he noted, as Class 8 sales are well below average replacement levels of roughly 15,000-20,000 trucks per year. 

Contracting the size of the new fleet, coupled with carriers holding onto trucks for longer periods of time is also slowing the flow of trucks into the used truck arena, said Tam.

“We have contracted the supplies over time to a point where we just don’t have much late-model, low mileage, desirable equipment in the used truck marketplace to choose from,” said Tam. “That has the net effect of putting more upward pressure on prices, as we have seen a sequential increase on average prices this year.”

What’s more, Tam said that in the past the ‘perfect’ used truck was a four-year old truck with about 400,000-to-500,000 miles, whereas now it is a five-year old truck with 500-to-600,000 miles, adding that that standard for used trucks has changed, although they are commanding a higher price compared to a year ago.