The used truck market in the first half of this year has started to cool off from the white hot levels seen dating back to early 2021, when prices set their sights on six figures for models that were upwards of four years old.
Carriers that took on used trucks in 2020 at the height of the pandemic could have disposed of those same assets two years later for a rate of return that might have outpaced every financial index on the planet, and was on par with the Dow Jones Industrial Average.
Three- to five-year-old trucks retailed for an average of 1.7% less money in May than April, according to J.D. Power, but this age group brought 82.6% more money in the first five months of 2022 than the same period 2021. Year-to-date, late-model sleepers have increased an average of 1.7% per month in value.
CCJ recently obtained and analyzed truck retail figures from Price Digest, a company owned by CCJ parent Randall Reilly, to determine depreciation rates from when the truck would have been bought new, and how much that same model has grown in value from June 1, 2020, to June 1, 2022. For each model, Price Digest pulled what would be considered a common fleet spec with minimum factory options.
A 2018 Mack Pinnacle axle-back configuration originally retailed for $177,000 but could be had on the used market for just less than $76,000 two years later. By 2022, that some truck fetched just less than $100,000 retail.
A brand new 2018 International LT could be had for about $136,000 and, on the used lot just two model years later, found for less than $85,000. As of June 2022, that same truck cost more than $104,000.
Fleets in the market for a new Freightliner Cascadia in 2018 could get one for about $176,000. By June 2020 that model was retailing used at a discount of more than $100,000 – $74,000. However, as of June 2022 that same 2018 model year Cascadia is commanding $101,000.
Kenworth's T680, new, retailed for about $179,000 in 2018 and by June 2020 was worth $100,000 less – $77,000. That same Kenworth rode a substantial supply shortage to retail used for more than $103,000 as of June this year.
Peterbilt's Model 579 for the 2018 model year could be had for about $182,000 right off the assembly line, but just two years later shed 61% of its value to just less than $70,000. For 2022, that same model saw a bounce to just more than $100,000 – a 37% price improvement over two years prior for the same truck.
Volvo checked in with the highest MSRP – $221,000 for a model year 2018 VNL – but just two years later, as of June 1, 2020, saw a 60% drop in resell value to just less than $87,000. A shortage of new and used equipment by mid-2022 put the VNL comfortably back into six figures and as of June 1 Volvo's on-highway flagship was retailing used for more than $136,000.
The average appreciation of all six models over the two year period from June 1, 2020 to June 1, 2022 was 28.2% – an average of 1.17% per month. Over this same time frame, the Dow Jones climbed 30%.
"Class 8 auctions are starting to feel more like pre-pandemic times. Volume is up somewhat, with a substantial number of higher-mileage trucks selling for unimpressive money," said Chris Visser, senior analyst and product manager of commercial vehicles at J.D. Power. "That said, pricing for the typical sleeper tractor is still more than 50% ahead of 2021, and the newest units – as well as those with lower-than-average mileage – are still commanding very strong money."
Recent data reflects a rising number of operating authority terminations among owner-operators, but a corresponding climb in overall truck transportation employment (May was actually the highest month in recorded history for that sector) suggests many of these new owner-operators could be going to work for fleets, or that fleets are hiring drivers at a rate roughly equal to owner-operators leaving the industry. Combined with the precipitous drop in freight rates, Visser said transportation current paints a picture in two parts.
"If truckers aren’t leaving the industry in droves, why are truck prices dropping? As we’ve said before, market shifts don’t require a major change in used truck supply. For example, in the pricing downturn of 2019, the volume of trucks in our auction benchmark group increased by only about 1,000 units during the entire peak-to-trough period. Remember, it’s not just the number of trucks available, it’s the number of trucks available for the freight economy we’re in," he said. "If your customers are mainly small fleets and owner-operators who operate in the spot market, you’re hearing the sky is falling. If your customers are mainly larger fleets who operate in the contract market, you’re hearing conditions are still strong. Used truck supply and pricing will continue to reflect the reduced demand for spot freight as well as more typical expectations for capacity needs in upcoming quarters."
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