Not only are more used trucks flooding auction sites and dealerships, but highly desired late-model iron is getting less money because pandemic freight demand dramatically increased the miles driven.
“Most 3-year-old trucks sold [in May] had extremely high mileage — 170,000 per year of service — which affected their selling price,” said Chris Visser, director of specialty vehicles at J.D. Power Valuation Services (JDPA). “Trucks with more typical mileage brought somewhat stronger money, although pricing across the board continues to decline.”
The number of trucks sold in May was similar to April, but auction prices were lower across the board, Power reported in its latest Guidelines newsletter.
- Model year 2021: $79,800, $22,200 (21.8%) lower than April.
- Model year 2020: $59,024, $705 (1.2%) lower than April.
- Model year 2019: $42,492, $4,489 (9.6%) lower than April.
- Model year 2018: $29,584, $2,787 (8.6%) lower than April.
- Model year 2017: $21,844, $3,080 (12.4%) lower than April.
The high-mileage phenomenon for model year 2022 and 2021 trucks put them in the same bucket as older models. Higher depreciation means less money on the auction block and from retailers. It is a continuing reversion to the mean after used truck prices reached unimaginable heights during the pandemic when new trucks were hard to get.
New truck availability, while not plentiful, is improving. Manufacturers are catching up on orders placed during the pandemic while keeping a lid on new orders.
Newer used model pricing close to pre-pandemic levels
“The newest model years available in the marketplace are bringing just under 20% more money than the strong pre-pandemic period of 2018 in nominal figures, or roughly comparable money if adjusted for inflation,” Visser said.
Trade-ins of trucks with 400,000 to 700,000 miles are flooding the market. They still have useful life for long haul but finding takers in a market where spot and contract rates have fallen is tough even at lower prices.
“Fleets definitely aren’t buying high-mileage iron. In fact, they’re the main source of it,” Visser told FreightWaves. “Typically, high-mileage sleepers go to regional or local haulers or export markets.”
JDPA found the typical 2021 model Class 8 truck accumulated 170,000 miles per year and 2022 models racked up 180,000 per year. Even 2020 models, which were a year old when the pandemic began, averaged 185,000 miles per year compared to the American Trucking Association’s pre-pandemic estimate of about 90,000 miles per year.
“This dynamic represents a headwind to selling prices going forward,” Visser said.
Used truck prices continue to fall overall
Late-model trucks averaged 5.7% less money in May than in April, and 46.3% less money than May 2022. In the first five months of 2023, late-model sleepers brought 46.9% less money than the same period of 2022. Monthly depreciation in 2023 is currently averaging 6.5%.
At retail, the average sleeper tractor May was 72 months old, had 471,232 miles and brought $72,064. Compared with April, the average sleeper was four months older, had 29,828 (6.8%) more miles and sold for $2,503 (3.4%) less. Year over year, the average sleeper was one month older, had 26,971 (6.1%) more miles and brought $47,166 (40%) less.
While miles on wholesale trucks continue to tick higher, Steve Tam, ACT Research vice president, told FreightWaves that mileage is beginning to creep lower in year-over-year auction and retail data the company analyzes.
“In general, it looks like the issue might be starting to be a rearview mirror problem,” Tam said. “When only higher-mileage trucks are available, then that is what the market has to choose from. Thankfully buyers are getting relief on both the mileage and price front in today’s market.”
One of the consequences of fleets holding onto trucks longer than the typical three- to four-year trade-in cycle is rising maintenance costs. But those were subtler, Tam said.
“Had we seen a bigger delta, the incremental cost could have been much greater,” he said. “Another bullet potentially dodged.”
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