Peak used truck prices persist as Class 8 production lags

Used truck prices are running 31% ahead through July compared with the first seven months a year ago as new truck production lags and fleets are holding onto equipment longer, starving auctions and dealerships.

The skyrocketing prices could continue into 2022 as manufacturers struggle to turn out finished new trucks while navigating parts and component shortages led by a shortage of critical microchips that control a range of functions including safety systems.

The shortage is leading fleets to hold onto trucks they might otherwise have sent to auction or sold to retail used truck outlets. That, in turn, is driving prices higher, although they fell 3% in July compared to June and 19% year over year because so few low-mileage used trucks were available, according to ACT Research.

Prices still climbing

But the average price was 45% higher last month than in July 2020.

“I don’t think OEMs even know for sure how long the semiconductor and parts shortages will last. Overseas factories are still periodically shut down due to COVID outbreaks, and shipping disruptions are ongoing, so the goal posts are constantly being moved.”
Chris Visser, senior analyst and commercial vehicles product manager for J.D. Power Valuation Services

“Class 8 auction and retail pricing once again set records in July, Chris Visser, senior analyst and commercial vehicles product manager for J.D. Power Valuation Services, told FreightWaves. “The ongoing shortage of new trucks means users are hungry for late-model trucks as a substitute for new, and are also holding on to their iron longer.

“I don’t think OEMs even know for sure how long the semiconductor and parts shortages will last,” he said. “Overseas factories are still periodically shut down due to COVID outbreaks, and shipping disruptions are ongoing, so the goal posts are constantly being moved.”

As a result, inventory coming into the used market has slowed to a trickle, said Steve Tam, ACT vice president.

“Unable to take delivery of new trucks when originally planned, new truck buyers are hanging on to units they had planned to trade,” Tam said. “And of course, those new trucks have had their production hampered by pervasive part shortages.”

Pricing will most likely peak around midyear 2022 based on economic and freight activity, driving high demand and supply constraints.

A 2018 Freightliner Cascadia advertised by used truck retailer Arrow Truck Sales in Chicago had an asking price of $84,500 with 598,232 miles on the odometer. J.D. Power said in its Commercial Truck Guidelines newsletter that model year 2018 sleeper cabs of all makes with low to moderate mileage averaged $76,265 at auction, up 7% from June.

A new (higher-priced) normal?

“It is important to keep in mind that when the market inevitably slows, it will be doing so from a record level,” Tam said.

Visser said economic conditions are everything when it comes to predicting how long low supply and elevated prices of used trucks last.

“We will likely see a retail pricing plateau while auction pricing continues to move closer to retail,” he said. “There could be some mild seasonal pullback early next year, but fundamentals shouldn’t change much in that period.”

Good stuff gone: Older used trucks show up in June auctions

Late-model used truck prices go stratospheric

Seller’s market for newer used trucks is hot, hot, hot

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