Fuel economy mandates may affect used truck pricing
Trucks designed to meet 2011 emissions standards are just now hitting the streets, but last week President Barack Obama will order the Environmental Protection Agency and the Department of Transportation to produce a rule by March 2015 to once again tighten fuel efficiency standards and greenhouse gas emissions standards.
“Truck and engine OEM’s stated that the initial 2014 economy and emissions levels are relatively easy to meet with minor tweaks to current engine technologies,” says NADA Senior Analyst Chris Visser. “As the mandate progresses towards 2018 with increased efficiency requirements, additional technology involving the truck itself and probably the trailer will be required.”
Any new rule would go into effect March 2016, per the White House announcement, and will build upon the first-ever fuel efficiency standards for heavy-duty trucks implemented for 2014-2018 model trucks.
These technologies don’t come cheap. The price of a new truck has increased dramatically with each recent emissions mandate, and Visser says any upcoming enhancements will likely do the same.
In fact, it is likely that costs will increase to an even greater degree due to the need to develop new body and chassis technologies,” he says.
Used Class 8 pricing is currently at historically-high levels thanks in part to the high retail price of new trucks. Visser says the actual cumulative effect of the 2004-2010 emissions mandates on the price of a new truck was over $20,000.
“In other words, a new truck sold in 2012 cost more than $20,000 more than it did before the requirements were in place (in real dollars),” he says.
The first round, the White House says, is expected to save the trucking industry $50 billion and save 530 million barrels of oil. The next round will save the average truck owner $73,000 in the typical lifetime of a truck, the White House says.
While the implementation of these rules are designed to cut emissions and save fleets money over time, sticker shock has sent more buyers to the used market.
“These price increases have pushed many buyers to late-model, low-mileage used trucks as a substitute for new,” he says. “At roughly $54,000, the average six-year-old sleeper tractor with mileage in the low-500,000’s is about one-third the MSRP of a new truck. Granted, most buyers pay substantially less than MSRP. But even at half the price of new, the difference is compelling.”
Trepidation about the reliability of new engine technologies is sometimes mentioned as a factor behind high prices of selected model years, but Visser says sales data shows that the supply/demand relationship for low-mileage trucks trumps reliability concerns.