Used truck prices fell about 4% per month in the first 10 months of the year. But the rapid pace of depreciation may be coming to an end.
“The less-than-expected declines of the past three months show increasing signs of price stability,” said Steve Tam, vice president of ACT Research. “We expect lower prices until the end of 2023, with a return to month-on-month growth towards the end of 2024.”
JD Power Valuation Services found that month-over-month auction prices for the standard Class 8 bed truck declined in four out of five model years. Trucks from the 2020 model year bucked the trend.
Trucks four to 6 years old sold 4.6% less than in September. They were priced 37.5% below capacity-limited prices in October 2022, Power said in its November guidance bulletin. In the first 10 months of 2023, late-model sleepers sold 41.7% below historically inflated hammer prices for the same period in 2022.
Prices are approaching the strong pre-pandemic period
The monthly amortization in 2023 averages 4.4%. Prices for the newest available used model models are just below 2018’s strong pre-pandemic period, or just over 20% lower when adjusted for inflation.
“The global average was pulled down this month by low selling prices for trucks over four years old,” said Chris Visser, Power director of specialty vehicles.
In October, the average tractor sold at retail was 71 months old, had 437,227 miles and sold for $67,441. A month earlier, the average sleeper was four months older, had 20,547, or 4.9%, more miles and sold for $4,240, or 5.9%, less.
Retail prices for individual makes and models showed that prices for newer trucks were essentially flat month over month. Older trucks with high mileage for their age experienced more depreciation.
“One month is not a trend, but any relaxation of devaluation would logically show up in the newer trucks first, so cautious optimism is not out of the question,” Visser said.
“Too Many Trucks Chasing Too Little Cargo”
Used truck prices soared as the lingering effects of supply chain disruptions slowed new truck production. Fleets kept their equipment longer, starving the aftermarket for all but the heaviest, older trucks.
Newer used equipment sold at record high prices as the number of Department of Transportation trucking authorities increased to match record per-mile and per-mile prices. The slowdown in freight transport has reversed both situations. Used trucks are in plentiful supply. Many younger or returning drivers have given up their powers and signed contracts with for-hire carriers or taken other jobs.
“They still exist too many trucks chasing too little cargo,,” said Tam of ACT. “Until the economy can strike a balance between these two factors, the downward pressure on prices will continue. Once the excess capacity is absorbed, the freight environment and trucker profits will correct, restarting the cycle that is the commercial vehicle industry.”
Power reported slow demand before the holidays, but firmer prices for newer rotary tractors provide some optimism begins in December.
“We’re still looking at the second quarter of 2024 for the post-pandemic correction to end, although we could be mostly there by February or March 2024,” Visser said.
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