Carriers turning to the used truck market to supplement tractor count have ben met with record prices nearly every month, and that's not likely to change in the immediate future.
Through the first 10 months of the year, used truck sales activity is 4% higher compared to the same period a year ago, according to the latest preliminary release of the State of the Industry: U.S. Classes 3-8 Used Trucks published by ACT Research.
Average prices in October rose 3% at the dealership, as average miles and age gained 1% each compared to September. Compared to October of 2020, average price was 67% higher, with average miles and age greater by 3% and 5%, respectively. On a year-to-date basis, average price is 48% above its year-ago level for the first 10 months of 2020, with average miles down 2% and age unchanged on a year-to-date basis.
"Strong used truck pricing into 2022 is essentially guaranteed," said J.D. Power Senior Analyst and Commercial Vehicles Product Manager Chris Visser, who added that residual value forecasts saw a notable increase in 3, 4, and 5 year residuals.
Despite preliminary same dealer sales slipping into contraction territory on a month-over-month basis, ACT Research Vice President Steve Tam said at the unusual, on a seasonal basis, sequential softness held no sway over the longer-term year-to-date comparison, which edged higher.
"The industry’s ability to outpace 2020, albeit by a small margin, is nothing short of miraculous, given all the challenges used truck sellers have faced this year. In the context of the lowest level of inventory the industry has probably ever seen, dealers have pulled out all the stops in an effort to provide buyers with as many units as humanly possible.” Tam said. “However, since dealers are still not able to meet the voracious demand, used truck prices continued on their upward trek in October. Given the dynamics of underlying fundamentals, namely freight and freight-hauling capacity, prices are likely to continue climbing higher in the near term.”
The auction market isn't fairing any better and on a percentage basis, it battering would-be buyers more than retail. Month-over-month, the benchmark group of 4-6 year-old trucks brought 7.0% more money in October, according to J.D. Power. Compared to the first 10 months of 2020, this group is running 89.9% ahead, and compared to the same period of 2019, 71.2% ahead. Late- model trucks have appreciated 5.6% per month on average in 2021 to date.
J.D. Power Senior Analyst and Commercial Vehicles Product Manager Chris Visser said there's a lingering sense of urgency in the auction lanes, "with buyers continuing to pay record pricing for desirable trucks. We’ll be keeping our eye out for an increased number of model-year 2019 trucks in the auction lanes in upcoming months as those units turn 4 years old," he said. "Otherwise, expect similar conditions through the new year."
Visser noted that model-year 2019 deliveries were about 30% higher than model-year 2018 and that 2019 trucks turn 4 years old in January. "We’ve seen an incremental increase in the number of 2019’s sold in recent months," he said, adding that demand for these trucks is still outstripping supply. "This model year’s higher build could become more meaningful later in 2022 assuming economic conditions start returning towards historical trend."
Any meaningful inventory of fleet trucks without drivers, Visser said, is most likely negligible at this point as the expansion of the driver pool combined with an all-time-high value of a used truck means there’s no rationale for holding idle inventory.
"Otherwise, shipping backlogs and parts shortages have remained as critical as ever, instead of improving somewhat as we had predicted earlier in the year," he said. "This factor combined with superheated consumer spending are keeping used truck pricing in the stratosphere."