Analyst: Lower Used Truck Prices Expected, “OEM Resistance” Slowing Trailer Orders

Little Rock, Arkansas – The average price of total used Class 8 trucks sold in 2018 was up 10% compared to 2017, according to the latest release of the State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT Research.

The report also indicated that used Class 8 same dealer sales volumes fell 9% month/month, but rose 8% for all of 2018. Average mileage was flat compared to 2017, while average age declined 3% in 2018.

“Dealers are reporting that used truck sales continue at a very high pace, with the only immediate dark clouds being that there are not enough trucks to meet demand,” said Steve Tam, Vice President at ACT Research.

 

He continued, “However, dealers are also cognizant of slowing freight growth and the subsequent dynamics expected to play out in the new truck market. Ultimately, the industry expects an abundance of inventory that will inevitably put downward pressure on prices.”

Analysis of the individual market segments continue to indicate mixed results. Tam explained, “The retail segment posted its first year-over-year decline since December 2016, but was up 13% year-to-date. On the other hand, the auction channel was up 8% year-over-year, but down 4% year-to-date. The wholesale segment dropped 30% year-over-year, remaining flat for full-year 2018.”

Trailer Orders Finish 2018 Up 35%, But “OEM Resistance” Beginning To Soften Market

2018 was a record year for trailer orders as the industry set all-time highs in net orders and production. However, a new ACT Research report indicates the market is slowing and expected to continue to do so.

The report explains that the long-running order stream that started in the fall of 2017 is finally running out of steam, but not from lack of demand. “While some fleets may have stepped back to better assess the market, indications are that there was still significant interest in placing orders,” said Frank Maly, Director–CV Transportation Analysis and Research at ACT Research.

He continued, “However, it takes two to tango, and there were indications of OEM resistance to add to the record-setting backlog. Comments included an unwillingness to accept orders that would extend commitments deeper into 2019, or even into 2020, driven by a lack of long lead-time component pricing to support price quotes.”

 

Additionally, Maly said, “The seasonal order softness has resulted in a bit of a dichotomy for backlogs. Orders were sufficient enough to push the year-end orderboard to just under 247,000 units not seasonally adjusted, but that’s much less improvement than normally occurs at year-end. And while we have a couple of different ways to measure it, the method isn’t as important as is the fact that the industry is already committed through most of 2019.”

 

About ACT Research, State of the Industry: The report from ACT provides data on the average selling price, miles, and age based on a sample of industry data. In addition, the report provides the average selling price for top-selling Class 8 models for each of the major truck OEMs – Freightliner (Daimler); Kenworth and Peterbilt (Paccar); International (Navistar); and Volvo and Mack (Volvo).

Featured image courtesy of Wabash National Trailer

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