Not only have there been an influx of previously owned trucks entering auction sites and dealerships, but the value of newer models that are in high demand has decreased. This decline in value can be attributed to the substantial increase in the number of miles these trucks have been driven, which is a result of the heightened demand for freight transportation during the pandemic.

“Most 3-year-old trucks sold [in May] had extremely high mileage — 170,000 per year of service — which affected their selling price,” said Chris Visser, director of specialty vehicles at J.D. Power Valuation Services (JDPA). “Trucks with more typical mileage brought somewhat stronger money, although pricing across the board continues to decline.”

The number of trucks sold in May was similar to April, but auction prices were lower across the board, Power reported in its latest Guidelines newsletter.

  • Model year 2021: $79,800, $22,200 (21.8%) lower than April.
  • Model year 2020: $59,024, $705 (1.2%) lower than April.
  • Model year 2019: $42,492, $4,489 (9.6%) lower than April.
  • Model year 2018: $29,584, $2,787 (8.6%) lower than April. 
  • Model year 2017: $21,844, $3,080 (12.4%) lower than April.

The increased mileage seen in model year 2022 and 2021 trucks has placed them in a category similar to older models. As a result of this higher depreciation, these trucks are fetching lower prices both at auctions and from retailers. This depreciation trend is a continuation of a return to normalcy after used truck prices reached unprecedented levels during the pandemic, when acquiring new trucks was challenging.

Although the availability of new trucks is not abundant, it is gradually improving. Manufacturers are catching up with the backlog of orders placed during the pandemic, while also maintaining control over new orders being placed.

Newer used model pricing close to pre-pandemic levels

“The newest model years available in the marketplace are bringing just under 20% more money than the strong pre-pandemic period of 2018 in nominal figures, or roughly comparable money if adjusted for inflation,” Visser said.

The market is currently experiencing an influx of trade-ins involving trucks with mileage ranging from 400,000 to 700,000 miles. While these trucks still have a considerable remaining lifespan for long-distance hauling, finding buyers has become challenging due to declining spot and contract rates. Even with reduced prices, the demand for these trucks has weakened in a market where rates have fallen.

“Fleets definitely aren’t buying high-mileage iron. In fact, they’re the main source of it,” Visser told FreightWaves. “Typically, high-mileage sleepers go to regional or local haulers or export markets.”

According to JD Power and Associates (JDPA), the average Class 8 truck from the 2021 model year accumulated approximately 170,000 miles per year, while the 2022 models saw an increase to around 180,000 miles per year. Surprisingly, even the 2020 models, which were only a year old when the pandemic started, averaged about 185,000 miles per year. This is in stark contrast to the American Trucking Association’s pre-pandemic estimate of approximately 90,000 miles per year for trucks of this nature.

“This dynamic represents a headwind to selling prices going forward,” Visser said.

Used truck prices continue to fall overall

Late-model trucks experienced a decline in value, with May seeing an average decrease of 5.7% compared to April, and a significant drop of 46.3% compared to May 2022. Furthermore, during the first five months of 2023, late-model sleeper trucks fetched 46.9% less money compared to the same period in 2022. The monthly depreciation rate in 2023 currently stands at an average of 6.5%.

In terms of retail prices, the average sleeper tractor sold in May was approximately 72 months old, had accumulated 471,232 miles, and was sold for an average price of $72,064. When compared to April, the average sleeper was four months older, had an additional 29,828 miles (an increase of 6.8%), and sold for $2,503 less (a decrease of 3.4%). Year over year, the average sleeper was one month older, had 26,971 more miles (a 6.1% increase), and was sold for $47,166 less (a 40% decrease).

As the mileage on wholesale trucks continues to increase, Steve Tam, Vice President of ACT Research, mentioned to FreightWaves that there is a slight decrease in mileage when comparing year-over-year auction and retail data analyzed by the company.

“In general, it looks like the issue might be starting to be a rearview mirror problem,” Tam said. “When only higher-mileage trucks are available, then that is what the market has to choose from. Thankfully buyers are getting relief on both the mileage and price front in today’s market.”

One of the consequences of fleets holding onto trucks longer than the typical three- to four-year trade-in cycle is rising maintenance costs. But those were subtler, Tam said.

“Had we seen a bigger delta, the incremental cost could have been much greater,” he said. “Another bullet potentially dodged.”

Source: www.freightwaves.com