May 12, 2014
Used Class 8 tractors are selling for record prices and that facts isn’t lost on some of the industry’s largest players.
Recently, Penske and Rush Enterprises each announced plans to construct brick and mortar truck lots for used truck sales.
Rush recently opened its first Rig Tough used truck location in Knoxville, Tenn. and the company is planning to open “a couple more” locations this year.
Penske Used Trucks currently has two locations (Torrance, Calif. and Charlotte, N.C.), and plans to open two more by the end of 2014
Rush says the Rig Tough location gives the company an additional sales outlet to reach customers in markets not currently served by Rush Truck Centers, and Rush Enterprises CEO Rusty Rush says, “(the used lot) will supplement used truck sales at our Rush Truck Center locations.”
Penske’s venture into the brick and mortar business represents a more drastic departure from the norm than Rush. Previously, Penske moved its inventory though wholesale channels and though its website.
With used trucks in great demand and supply thin, Jack Mitchell, Penske’s Vice President of Remarketing, says the time was right for the company to develop a new channel in which to move its used lease and rental equipment.
Chris Visser, senior analyst for NADA, says an increased numbers of used trucks have been entering the secondary market due to the return to normal build rates and shorter trade cycles.
And as OEMs start to pile on incentives for late-model trade-ins, expect more of the “gently used” units to become available.
NADA data showed the average sleeper tractor retailed in March was 77 months old, had 524,564 miles, and sold for $55,840. Compared to March 2013, this truck was identical in age, mostly identical in mileage, but is now worth $5,048 (9 percent) more.
Visser says the year-over-year comparison provides a good example of how the market has shifted over this period, with the average used truck now worth over $5,000 more retail despite identical age and mileage.
“…continued increases in our universal average are due mainly to an increased number of newer, lower-mileage trucks available to the secondary market,” Visser says. “Trucks of 2011 vintage are now the most common sold retail, and 2012’s are slowly but surely coming on-line.”
Fleets are also embracing higher mileage pre-DPF trucks (mostly model year 2006-2007), with many buyers seeing a massive engine overhaul as a wise investment for a truck that is pricing slightly less than $20,000.
Dinosaur diesels aren’t the only ones moving on the secondary market. NADA says trucks model year 2011s are now the most common sold retail, and 2012’s are slowly but surely coming on-line.
If your dealership doesn’t actively engage the used market (and there are many who don’t), you’re missing out on an opportunity that is only getting better. I’m not suggesting you revamp your business plan based on a hot trend. What I’m suggesting is analyzing trend data and, for those on the fence, it’s time to jump off.
Pushing trucks to the wholesale market just to get them off your lot is costing you a lot of money. If two large dealership groups – like Rush and Penske – are willing to invest in developing a new piece to their business to capitalize on it, there’s a good chance it would benefit yours as well.