X

Truck values hold strong as demand for used trucks exceeds supply

Jason Cannon January 28, 2014

Truck dealers who have shied away from used truck sales over the potential to take a loss are missing a major sales opportunity, according to Chris Visser, Senior Analyst and Product Manager, ATD/NADA Official Commercial Truck Guide.

“Used trucks are an important area of the market to focus on because they’re actually a larger portion of the overall truck market than the new Class 8 market – by about 30 percent,” he says. “If you’re not focusing on used trucks, you’re potentially missing out on a large portion of a potential client base.”

visserThe net margin on a used truck is also generally larger than on a new one. Even though the sticker price is lower, the percentage on the gross is much greater as it relates to the sale price and those figures continue to swell.

Dating back to early stages of recession, prices dropped across all classes but recovered near the end of 2009.

“We saw a nice increase in the pricing for a good two years,” he says. “That was concurrent with a large increase in mileage as well, which is unusual. Usually we see pricing and mileage divergent.”

Visser attributes that to a narrow supply of used Class 8 sleepers, a trend that has been persistent over the years.

“Buyers pay more and more markup for trucks with higher and higher mileage,” he says. ”As you deal with customers (looking to buy used trucks), if they’ve been out of the market for three years or more, there’s going to be some sticker shock there. The average price of a truck is 25 percent higher now than it was three years ago.”

As the calendar turned to 2012, Visser says the market saw a spike in mileage driven by 2007 model year trucks.

“The reason those were popular were…at the time they were about four to five years old, which put them in the sweet spot for mileage and at a reasonable price. Second, they were the last of the big-build model years before the recession hit; ’08 through ’11 saw a big drop in production. And they are also the last pre-DPF trucks. That’s attractive to some customers.”

In line with trends, 2013 brought with it another increase in pricing.

“That’s driven by an influx of newer model year trucks into the market, which brings up the average,” he says, adding the average age of a used truck sold today is a full year younger than it was this time last year.

“That’s because there’s some ’10s, ’11s and even some ’12s in the market in greater numbers,” he says.

View this article on one page

Poll

Do you actively capture and use customer data?

Latest

Registration now open for CVOC

Rush Enterprises quarterly income soars

M&K Truck Centers breaks ground on new location

Popular

Caterpillar engine lawsuits consolidated, new suits continue to be filed

Rush Enterprises quarterly income soars

Successful Dealer Award finalist: Truck Centers, Inc.

Successful Dealer Award

Click here to read about the award and see the nominees for this year's award.