Pricing a truck isn’t like pricing a car. Many websites and publications can give you the retail and wholesale value of a 1998 Honda Civic two-door with air. But if you’re ready to unload a 1998 Volvo VN 770, finding out its current value is nearly impossible.
“It’s worth what someone is willing to pay,” says Mike Huff, a Bushnell, Fla., owner-operator leased to Atlas Van Lines.
Huff should know. He recently sold a 1998 Volvo 770 with fewer than 500,000 miles on it. He got $42,500 as a trade, and his dealer resold it for $50,000 five days later.
If you’re planning to dispose of your equipment, prepare for a disappointment: Your truck probably isn’t worth what you think. At the same time, as a buyer you should be able to take advantage of the same low prices. The hard part is getting a grip on current values so that after selling and buying you come out with a fair shake.
“Truck owners are shocked when they hear how much a truck is worth if they haven’t stayed current in the market,” says Paul Wachter, president of auctioneers Taylor & Martin.
Used truck prices have plunged by more than 30 percent for most models, says Steve “Bear” Nadolson, a dealer who’s president of the Used Truck Association.
“Take a 1998 truck,” Nadolson says. “A year ago, the market trade value for that truck may have been $40,000. Today, you can take $12,000 off that.”
Others, such as Terry Williams, editor of the Truck Blue Book, puts the decline in values closer to 40 percent.
Kurt DuRuy, chief operating officer for Internet auction site www. hookup.com , says he sees values dropping more than 2 percent a month. “The devaluation has accelerated in the past 12 months, and that makes it very difficult to evaluate trucks in the used truck market,” DuRuy says.
Many owner-operators base their estimates on prices in truck trader magazines or on their loan balance rather than on what their dealer or another trucker might actually pay. Prices in truck classified ads are the hopeful wishes of other truck sellers, says Wachter, not what the truck will actually fetch.
Used truck books offer a good starting point, but Wachter says even those are out of date by the time they make it into the hands of truck sellers. Williams says his company tries to project prices far enough ahead to be of value. The book is published four times a year, but still the company has to be very aggressive in the current market.
“We’ve had to make larger depreciation changes than we usually would,” Williams says. The book is still useful, Williams says, because the company has more data and details than its competition.
Such books, however, are geared toward financial institutions, dealers and large fleets – not small fleets or single-truck owners. UTA’s Nadolson says the books are good guides, but don’t take into account differences in inventories of certain models, which can drive prices up or down.
Component differences also affect pricing. Owner-operator rigs, in particular, tend to be unique, Williams says.
“A car is seen as a whole unit,” he says. A car’s engine ratings may be important, but the engine make will be irrelevant. On the other hand, “When you buy a truck, there are loyalties to the engine and transmission. If a buyer has had luck with an engine or transmission, he’s going to stick with it.”
Chrome packages, upratability, rear ends – all play a part in the evaluation. A truck spec’ed for certain jobs may not be in demand like one with standard features. A truck with a standard sleeper may get less attention than one with a custom sleeper.
Whatever the book value, experts say you should lower your expectations for selling your truck and look to get a comparable deal on the truck you buy. “Dealers are discounting trucks $10,000 to $20,000 to sell them brand new,” Nadolson says. “Owners are taking a hit on the front side and benefiting on the back side. The exchange of cash is still the same.”
That was Huff’s experience in selling his Volvo. “I got $12,000 less than what I thought it was worth in good times,” he says. But when Huff finalized his deal on a new Western Star, he got it for $10,000 less than he would have in a better market. “I was only out $2,000,” Huff says. “That’s something people forget to think about.”
A smart seller shops around geographically. “In 50 different states, a truck will bring 50 different values,” Williams says. A dealer low on supply might offer you more than one overflowing with inventory.
Mike Huff says when he was trying to sell his truck, he looked at used truck magazines and did some Internet research, but he found shopping around particularly helpful. “I stopped at a lot of different dealers and asked how much they were willing to give me for it.” Huff sold his truck in Denver, more than 1,000 miles from his home in Bushnell, Fla. “We’re owner-operators – we don’t have to sell around the corner.”
When owner-operators Mark and Tammy McDonald began looking for a new truck to replace their 1995 Mack, they did the same thing. Mark had assumed the truck would fetch several thousand dollars more than the couple actually got.
But shopping around got them closer to their goal than trading with a dealer in their own backyard. The Sylacauga, Ala., couple chose another dealer over one in nearby Birmingham.
“You have to shop around,” Tammy says. “I went some 500 miles to buy our new truck.”
Auction houses also provide an opportunity to evaluate a piece of equipment, Wachter says. An owner-operator can contact Taylor & Martin for a free estimate if he knows all the specs on his equipment.
“We evaluate every single piece of equipment that goes into our auctions,” Wachter says. “Sellers need to know what to expect – whether they want to or not.” Taylor & Martin auctions are absolute, meaning the seller can set no “reserve,” or minimum price. So the final sales price usually is closer to wholesale than retail prices.
Plunging values have left many owner-operators “upside down” in their loan – owing more than the truck is worth, Watcher says. In past years, that might not have mattered much because lenders were willing to take zero down and roll leftover payments into the new loan. All that has changed. “Dealers are taking huge hits on new and used inventory,” Nadolson says. “Those hits are going to be transferred to owner-operators trying to sell and buy. The piper is being paid. There are no more no-down-payment and low-down-payment deals.”
Most lenders now require a large down payment of 10 percent to 20 percent. If selling or trading your rig doesn’t net that down payment, dealers say you won’t be able to finance a new truck, and you will be stuck with your old truck longer. But Nadolson says that position can force a discipline that is best in the long run.
“The owner-operator can buy a truck and run the life out of it,” Nadolson says. Watcher agrees. “If they owe, the best thing most owner-operators can do is put diesel fuel in their truck and head down the road.”
After all, no matter what you think your truck is worth, it’s worth only what a buyer will pay for it. For now, it might be worth more to you earning miles.
Going by the book
There is no one infallible source for determining a truck’s value. Used truck publications are a good start if you understand their limitations, such as possibly outdated data.
As for books like the Truck Blue Book and True Value Guide, both are looking at putting vehicle estimates on the Internet to increase timeliness. Auctioneer Taylor & Martin plans to post its book online in the next few months, showing prices as current as last week’s auction.
Online auctions, though limited in volume, are growing and can be used to gauge up-to-the-minute prices. “You can look at the bids to determine what the marketplace is doing,” says Kurt DuRuy, chief operating officer for auction site www. hookup.com . “You can look at the reserve price (what a seller is asking), but bids will tell you what its real value is.” The site processes 4,000 bids a month.