With the second quarter half over, it’s a good time to review the factors that will influence the used truck market going forward. A “+” indicates a factor that supports higher used truck prices, and a “-“ indicates a factor that supports lower prices.
(+) Many buyers still prefer used trucks over new due to the higher price and new (to North America) technology of “2010 emissions” trucks.
(+) Model years 2008-2011 were built in historically low numbers, which means there will always be comparatively few of these trucks available in the secondary market.
(+) The 2007 model year is in high demand since it is the last of the “pre-2007 emissions” models available.
(+) Some fleets are selling their used trucks direct to customers, keeping these units out of the traditional secondary market.
(+) Most fleets are on trade-in schedules of 3-6 years. This means we won’t see higher-volume 2012MY trucks in the used market until 2014 at the earliest.
(+) A new round of emissions and fuel economy regulations is due in 2014. If new technology is required to meet the standards, expect used truck demand to stay at a high level.
(+) The economic recovery will continue despite headwinds.
(-) The rebound in new truck orders portends a continued increase in trade-ins throughout 2011.
(-) The high prices of late-model, low-mileage trucks may be close enough to new to convince some customers to make the jump.
(-) Inflation (especially gas and food) is all but guaranteed to limit consumer spending.
(-) Manufacturing will be limited to some extent by the Japanese disaster. It is not clear whether the expected make-up later in the year will be adequate to compensate.
My crystal ball says continued high demand for late-model, low-mileage trucks will trump all other factors. We should see an increased supply of used trucks as customers take delivery of more new trucks, but basically this just means the supply will go from “nonexistent” to “low.”
What does your crystal ball say? Feel free to comment below.