From the category archives: Market Analysis and Forecasts

Market Analysis and Forecasts

Truck Industry Ignores Economic Chatter

A recent Transport Topics article sheds some light on general sentiment about the health of the economy from those who actually have an impact on it. My takeaway is that the industry is starting to get used to the presence of vague economic “threats” in the form of stock market swings, and has decided that these threats are not great enough to prevent investing in new equipment. In a larger sense, the decisionmakers who drive our economy are tired of sitting on their hands. They’ve watched the stock markets swing up and down, and noted that those swings have had little effect on industrial output data. As I stated in the latest Guidelines, “There are constant challenges to the world’s stock markets based on real and existential factors, but the nuts and bolts of the US economy as measured by Industrial Production continue to soldier onward more or less steadily in the face of this turmoil.” Domestic industry has ignored the “fear and doom” style of reporting popular with mainstream news source ...

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Final August Results

We’ve closed out our August database, and used truck stats continue to surprise.

Just when I thought late-model sleepers were hitting a ceiling, August’s numbers come in showing a nearly $3000 increase in the average price of a 4-year-old sleeper tractor (vs. July). And this is with almost identical mileage.

The sleeper market overall was up almost exactly $1000 on mileage up 8K over July.

Dealers sold more trucks per rooftop than anytime in the last 4 months, which makes August the second-best month of the year for volume. Please refer to the graphs below.

Stay tuned for a complete, expanded analysis in our October edition of GuideLines in the next couple of days.

Trucking Unfazed by the Global Financial Crisis

Most economists agree that trucking-focused measures are leading indicators for domestic economic performance. As such, trucking data shows that turmoil in the stock market is not synonymous with overall economic health. Consider the following: • Freight tonnage returned to a pre-recession level in early 2011, where it remains • New truck orders took off in late 2010, moderated in mid-2011, and remain at a 3-year high • Deliveries (sales) of these new trucks are at levels not seen since before the recession As for the larger economy, US Industrial Production stats for 2011 have painted a picture of business investment, demand for raw materials, pent-up demand for automobiles after the Japanese disaster, and even some surprises in durable goods. Of course, the global financial crisis is creating enough uncertainty to keep employers from hiring, and consumers are holding on to more of their disposable income. But keep in mind “uncertainty” in the stock markets is currently driven more ...

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Preliminary August Sales Data

Looks like August’s used truck prices are going to surprise on the upside. As we wait for the last of our sales reports to trickle in, data currently in our database indicates that Class 8 sleeper trucks overall rose just under $1000, with average mileage ticking up about 8K. The benchmark 4-year-old sleeper market woke up from its malaise to rise an estimated $3000, with mileage up about 7K. Even dealer sales volume was healthy, with August results similar to July’s.

August’s data just confirms what we should all know by now – buyers continue to pay elevated prices for trucks with historically high mileage.

Stay tuned for a complete analysis of August sales data in our October Guidelines late next week.


New Truck Orders vs. Used Truck Pricing

To follow up on my previous blog that compared used truck pricing to new truck sales, here is a comparison of that same pricing data vs. new truck orders. Average prices reference all Class 8 sleeper tractors with under 1,000,000 miles as reported to NADA. The results of this study are a bit more notable than the last one. Looking at the Retail graph, new truck orders appear to predict the late-‘09/early-‘10 rise and fall in used truck prices almost perfectly. Approximately two months after new truck orders rebounded, used truck prices followed suit. And the decline in orders two months later was mirrored closely by a decline in pricing. Then, both orders and prices increased in tandem throughout 2010. Now, here’s where things get interesting. Orders dropped off substantially in Spring 2011 (May, to be precise). As of July, used truck prices had not yet followed suit, and preliminary August data suggests prices rose even more. Should we assume there is now a disconnect between orders and prices, or are ...

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New Truck Sales vs. Used Truck Pricing

I’m always looking for the story behind the story when it comes to used truck price trends. Recently, I’ve been looking at new truck demand for clues as to the behavior of used truck pricing. The two graphs below show retail and wholesale average prices compared to new truck sales. Average prices reference all Class 8 sleeper tractors with under 1,000,000 miles as reported to NADA. Keep in mind that there are some caveats to this examination right off the bat. First, used truck pricing has been driven as much by a supply shortage as by increased demand, so pricing is not a perfect proxy for demand. Second, OEM’s and fleets work together to manage the delivery cycle, so the time component is externally manipulated.  Third, there are of course internal business factors influencing the purchasing decision. Finally, artificial manipulators such as a pre-buy introduce further variables into the mix. With all that in mind, what can we take away from the data we do have? Looking at the graphs, used pr ...

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Industrial Production Edges Up Slightly

US manufacturing and production have not yet exhibited the declines one might expect from the gloom and doom reported in the mainstream news. Industrial Production overall was up 0.2% in August vs. July.

If “consumers are scared to spend,” producers of durable goods such as appliances and furniture haven’t yet received that news. That segment was up 1.3%.

The manufacturing sector we have been watching most closely, Motor Vehicles and Parts, edged up 1.7% to build on July’s revised 4.5% gain. Japanese manufacturers had still not returned to 100% production levels in August, so we can expect that segment to point upwards in the next few months, especially since Toyota just this week announced that they have returned to 100%.

The only real laggard this month was Utility output, declining 3.0% due primarily to August’s milder temperatures.

The global financial system is indeed in disarray, but this month’s IP data suggests the US manufacturing economy is shrugging off any impact fairly well.

Evidence of Price Ceilings in Retail and Wholesale Markets

As reported in this month’s Guidelines (to be released shortly), the average retail selling price of 4-year-old sleeper tractors has been flat since the beginning of the year. Average mileage has steadily increased throughout that period, which at least partially explains the lack of upward movement. The other likely explanation is that at $60-$65K for a truck with well over 400,000 miles, buyers are finding it easier to make a business case for moving to a new truck purchase or lease. More evidence of a price ceiling lies in the wholesale market. While 4-year-old trucks were flatlining in the retail market, price and mileage were returning to their traditional inverse relationship in the wholesale market. In statistical terms, the correlation between wholesale price and mileage from January to December 2010 was 0.11, indicating essentially no relationship. From January to July of 2011, however, that figure drops to -0.79, indicating a strong negative relationship. Based on this recent data, we can ...

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July Commercial Truck Sales Results

With the last of our “late reporter” dealer sales data in our database, we can look at complete July results. Looking first at volume, this last group of reports pushed the average retail sales per dealership back up equal to March, in a tie for second-highest volume of the year to date. As we’ve repeatedly said, sales volume will fluctuate depending on number of trucks entering the secondary market in a given month. A sustained upward trend would be nice, and based on increased new truck sales volume it would be logical to assume this will be the case – but with fleets increasingly bypassing the dealer network, that assumption is not a sure thing. On the price side, there was an unexpected leap upwards of $2500 in average retail price of all sleeper tractors under one million miles. Mileage was lower by about 8000, which in this climate probably had no impact on price. The population of trucks reported sold was slightly younger on average, but only by two months. However, this decrease was driven mainly by ...

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Looking at the Construction Market

We haven’t posted any data from the construction segment since June because there hasn’t been much marketplace movement since then. With most of our July sales data received, we can at least look at how that segment performed in the first half of the year. Like last time, I’ve combined retail, wholesale, and auction sales into one graph. This is due to the low volume of sales data for that segment, and is legitimate from a statistical standpoint because we’re looking for a segment-wide trend rather than absolute numbers. Trucks included are all body types, all model years, adjusted for mileage and age. I have gone through the data and eliminated trucks with outlying price, mileage, and specs, so month-to-month mix is comparable. Interestingly, the average age of all construction trucks reported sold has varied by just 16 months from January to July of 2011. This makes it easy to apply a model year adjustment. For reference, the year to date average age of this sample is currently 93 months. Average mi ...

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