September 2002

| October 07, 2002

USED-TRUCK RALLY AVOIDS EXTREMES

The introduction of low-emission engines, whose government-mandated Oct. 1 deadline is at hand, has neither virtually wiped out the inventory of used trucks nor pushed their values back to those of two or three years ago.

Some in the industry had expected a used-truck sellers’ market by this time, predicting fleets and owner-operators would snap up every available used and new truck with proven engines rather than take a chance on trucks with the more expensive new engines.

Used trucks, the values of which plunged by as much as 40 percent in 2001, staged a rally beginning in late January, according to used truck dealers and price trackers, and regained much of the value lost during the economic downturn.

While certain trucks are still popular with buyers, the Truck Blue Book’s Terry Williams says the rally is over and prices have stabilized or started down again. “Some dealers say they’re starting to see a slowdown in sales,” Williams says.

The reason? The economy, which began to recover this year, has faltered. Williams expects his publication to lower values by 3 percent to 5 percent in the year’s fourth quarter.

Some dealers expected large fleets that usually buy new to buy used trucks. Schneider National’s Chairman Don Schneider threatened to do that rather than buy new trucks with low-emissions engines. “But we haven’t found any (large) fleets that usually buy new, buying used,” Williams says. “It’s only the second tier of fleets that always buy used in the market. We couldn’t find anyone that would admit to it. We think it’s a lot of bluff.” Instead, those fleets are asking to extend their leases or are pushing out their trade cycle.

As for owner-operators, traditional models spec’d with lots of chrome and amenities are still attracting buyers, says Eddie Walker, president of the Used Truck Association and owner of Best Used Trucks in Fort Worth Texas.

“Truck values are going up right now, especially on owner-operator type trucks,” Walker says. “It doesn’t make any difference what brand.”

Walker says small fleets that formerly bought new are looking at used owner-operator models because they want to avoid new trucks with low-emission engines.

- Sean Kelley


EPA SETS ENGINE NON-COMPLIANCE FINES

Those engine makers who fail to meet tough new emission standards Oct. 1 will pay for it – a lot in some cases. The Environmental Protection Agency issued its final non-conformance penalty rule for heavy-duty diesel engine manufacturers Aug. 1, with fines ranging from several hundred dollars to more than $12,000.

Caterpillar said Aug. 2 that the penalties were higher than what was outlined in the U.S. Justice Department consent decree signed by engine makers four years ago. “The issue of penalties will now be resolved in the courts,” the company said in a prepared statement. “We will also have EPA-certified engines in October 2002, which will be essentially unchanged from our current industry-leading engines, but with reduced emissions.”

The stiff penalties apply to companies unable to produce engines that emit 2.5 grams or less of nitrogen oxides and other particulates. Under the 1998 agreement, Caterpillar, Cummins, International Truck and Engine Co., Detroit Diesel, Mack and Volvo pledged to speed up production of cleaner engines to Oct. 1, 2002.

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