It is worth noting that the pandemic-induced surge in freight has resulted in a significant uptick in the mileage accrued by newer model trucks. Is this great news for consumers based on historical norms?
The current market retail price for used trucks is experiencing a surge in supply, as more vehicles are appearing on auction sites and dealership lots.
However, despite the demand for late-model trucks, heavy-duty trucks, full-sized trucks, compact trucks, and clean trucks, their value has been negatively impacted by the pandemic-induced increase in freight demand and subsequent higher mileage accumulation.
According to Chris Visser, the director of specialty vehicle services, trucks sold in May that were three years old had an average of 170,000 miles per year, leading to a decrease in selling price. While trucks with lower mileage are selling at a slightly higher price, overall pricing for used trucks continues to decline. For sure entire sale is affected by these trends.
According to the most recent edition of the Guidelines newsletter from Power, despite the fact that the number of trucks sold during May was comparable to that of April, auction prices experienced a universal decline.
The pricing trends for model years 2021, 2020, 2019, 2018, and 2017 were analyzed, revealing notable variations in their respective prices as compared to the month of April.
The automotive industry has recently witnessed a noteworthy trend with the high-mileage phenomenon observed among model year 2022 and 2021 trucks. This has resulted in these trucks being categorized alongside older models.
Consequently, the depreciation rate for these vehicles has increased, resulting in lower returns from auctions and retailers. This trend is indicative of a gradual regression to the mean, following the unprecedented surge in used truck prices during the pandemic, a period characterized by a scarcity of new trucks.
Although the availability of new trucks is not yet abundant, there has been a marked improvement in the situation. Manufacturers are working tirelessly to fulfill orders placed during the pandemic while prudently managing new orders.
According to Visser, the latest model years currently obtain nearly 20% more revenue than the robust pre-pandemic period in 2018, in nominal terms. If we factor in inflation, the adjusted amount is relatively similar.
The current market has witnessed a surge in trade-ins of trucks that boast an impressive mileage range of 400,000 to 700,000 miles. While these vehicles still possess a considerable lifespan to serve the purpose of long hauls, their availability remains a challenge, especially in a market characterized by declining spot and contract financing rates.
Even lowering the prices hasn't been effective in finding potential buyers. According to Visser, fleets appear to be hesitant in purchasing high-mileage trucks, and interestingly, they are the primary source of such vehicles. Typically, these trucks find their way to regional or local haulers or export markets.
According to a recent report by JDPA, the average annual mileage of class 8 trucks for the year 2021 was 170,000 miles, while the 2022 models have recorded an increase to 180,000 miles per year. Surprisingly, even the 2020 models, which were a year old when the pandemic hit, managed to cover an average of 185,000 miles per year, which is significantly higher than the pre-pandemic estimates of the American Trucking Association, which stood at 90,000 miles per year.
As a result of this trend, the market is expected to experience a challenging environment in terms of selling prices, as indicated by Visser.
Late-model trucks experienced a decline in monetary value in May, with an average decrease of 5.7% compared to April and a staggering 46.3% reduction in value compared to May 2022. Furthermore, the first five months of 2023 saw a significant drop in the value of late-model sleepers, with a depreciation rate of 46.9% in comparison to the same period in 2022. The current monthly depreciation rate for 2023 stands at an average of 6.5%.
The May retail market witnessed the sale of sleeper tractors averaging a mature age of 72 months, a mileage of 471,232, and a price of $72,064. In comparison to April, the average sleeper tractor was four months older, had a higher mileage of 29,828 (equivalent to a 6.8% increase), and sold for $2,503 less (a decrease of 3.4%). Year over year, the
According to Steve Tam, the Vice President of ACT Research, the wholesale trucks' mileage is on the rise, but the company's analysis of year-over-year auction and retail data suggests a slight decline in mileage. Tam observed that this trend appears to be a problem of the past.
When the market only offers high-mileage trucks, buyers must choose from what is available. Fortunately, today's market offers relief in both mileage and pricing, benefiting buyers.
Extended periods of truck ownership by fleets, beyond the industry-standard trade-in cycle of three to four years, have resulted in increased expenditure on maintenance.
However, these costs have been comparatively moderate, as per Tam's assessment. In the event of a more pronounced difference, the incremental expenses could have been significantly higher. This potential scenario has been averted, thus avoiding any further financial implications.
In conclusion, the used heavy trailer truck market is offering exceptional value to buyers, particularly those looking for high mileage and late-model vehicles. This goes both to electric vehicles and traditional vehicles.
Yes, there are other factors like fuel economy, fuel prices, extra mile, spot rates, factor warranty/mile warranty, retail sales, and parent company conditions that fleet owners or corporate flee should consider when it comes to buying or selling trucks.
As more consumers prioritize cost savings and practicality over brand-new models, the demand for used trucks has surged. This increased demand has resulted in lower average prices for higher mileage trucks that were previously considered less desirable.
Moreover, late-model used trucks are now fetching lower prices due to various factors such as technological advancements and improved reliability in newer models. With manufacturers constantly introducing new features and upgrades in their newest truck releases, older models quickly lose their appeal among buyers seeking the latest innovations. Consequently, these late-model trucks become available at significantly reduced prices compared to when they were first released.
Overall, buyers can benefit from taking advantage of the current state of the used truck market by finding excellent value in both high-mileage and late-model options. By carefully researching available listings and considering their specific needs and budget constraints, individuals can make informed purchasing decisions that allow them to get a reliable and capable truck without breaking the bank.
We are launching soon our Labworks USA Network soon where we will be listing different trucking companies and offering a resellers program.
On this network, you can connect with fellow trucking companies who might have great deals on reselling used trucks and more. Subscribe on our Newsletter that the footer section here.