Medium Duty Cabover Market Still Mixed

My last blog examined the medium duty conventional market. We were able to establish that 135,000 miles is roughly the point at which a truck in that segment hits price resistance. The cabover segment is more volatile (see graph). Since early 2011, average pricing has fluctuated from a high of $11,468 to a low of $8089. From that low to high point, mileage has only fluctuated by about 7300 – from 126,247 to 133,541. One factor at work here is the relatively low sales volume of these trucks. Most months are under 200 units, which doesn’t provide a lot of smoothing out of month-to-month variation in age or condition. Another factor is the occasional large influx of trade-ins from rental companies hitting the auction lanes at the same time. Those trucks could have an outsized impact on a monthly average. The volume graph below shows that volume has ticked upwards since January, and price has fallen since February. We are not yet ready to relate these two measures too closely. Until a price/mileage rela ...

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Medium Duty Conventionals Still Finding their Footing

The first graph below shows average price and mileage of Class 4-7 conventionals reported sold to NADA through the auction and dealer-to-dealer channels. The second graph shows number of trucks reported sold. Period is January, 2010 to May, 2012. The pool of available medium duty conventionals appears to be in the same situation as Class 8 trucks – namely, low-mileage trucks are increasingly difficult to find. The average mileage of trucks sold has trended upwards since early 2011, and that trend accelerated in early 2012. Since January of this year, there has been a near-perfect negative correlation between price and mileage. This means that the market has established a ceiling on what trucks of a given mileage are worth. We currently estimate that pricing meets resistance at roughly the 135,000 mile level. Trucks with mileage under that level should trend higher than average on price, and the opposite should be true for trucks with mileage over that level. As for number of trucks sold, there was a ...

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May Sleeper Market Essentially Unchanged from April

With about 90% of our May data in the database, we are projecting that the average used sleeper tractor retailed for $48,900 and had 550,000 miles. These figures are nearly identical to April’s $48,809/554,402 result, and $4364 ahead of last May despite mileage 34,755 higher.

The 550,000-mile price ceiling now seems to have some additional headroom.



Stay tuned for a complete analysis of all current data in the July edition of Guidelines, available the second week of July.


 

Shakeup in the Commercial Van Market

After Chrysler discontinued the Ram Van, Ford and General Motors owned the commercial van market until 2002, when Freightliner introduced its Sprinter line of commercial vans to the North American market. Then, in 2009, Ford’s Transit Connect went on sale, providing cargo van buyers with a compact, fuel-efficient alternative. And then, in 2011, Nissan started selling the NV-series cargo van – a vehicle about the size of the traditional domestic vans, but with enhanced comfort and a factory high-roof option. With multiple months of sales data in our database, we are in a position to gauge the relative performance of these vehicles in the used market. The graph below shows performance of key versions of each vehicle through the auction channel. We will look strictly at the most recent three model years, since the NV-series and Transit Connect were not available before then. To clarify, we have included both cube van (cab & chassis van with a separate box mounted on the frame) and cargo van versions of the ...

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Used Truck Sales Volume Set to Dip in May

Preliminary May data suggests that month may have seen a minor dip in retail sales volume per dealership. NADA is projecting that reporting dealers sold an average of 6.1 used trucks in May. That number would be off April’s average by 0.5 trucks, but ahead of last May by 0.7. As the graph illustrates below, May was a comparatively slow month in both 2010 and 2011. Seasonality may be one reason for this behavior – the traditional explanation is that truckers get their acquisitions out of the way early in the year so they can concentrate on hauling as Spring arrives. That rationale is typically used to explain new truck purchasing trends, but could apply to the used truck market as well. However, we are not generally strong believers in this explanation, since external factors such as EPA-driven pre-buys and economic conditions have overshadowed seasonal factors for most of the past decade. We suspect that the continued tight supply of trucks with under half a million miles is a more likely cause ...

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Demand for New vs. Used Sleeper Tractors

The graph below traces new truck sales and average retail used pricing for all sleeper tractors under 1,000,000 miles. We consider used truck pricing a reliable proxy for demand, since other measures such as total sales reported or sales per dealership are subject to external variables which reduce their precision. As you can see, the correlation between new sales and used pricing is generally strong, with sales and pricing largely mirroring each other directionally. For the entire graph, the actual correlation is a relatively strong 0.791. For the post-recovery period (starting in January, 2010), that number jumps up to 0.896. New sales and used pricing both took a dip in late 2011. On the new side, this shift was likely due in part to the December expiration of tax incentives that encouraged purchases of new trucks. On the used side, there was probably increased pushback from buyers reluctant to pay high prices for trucks with historically high mileage. A price ceiling of sorts appears to have fo ...

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LNG Infrastructure Takes Another Big Step towards Critical Mass

Oil companies, engine OEM’s, and truck OEM’s are all betting heavily on natural gas as an alternative to diesel, but one remaining obstacle to widespread adoption is the need for a nationwide end-user supply infrastructure. Transport Topics reports that Shell Oil Company and Travel Centers of America are tackling that challenge by signing a memorandum of understanding to install LNG fuel lanes at 100 TA and Petro locations. The first LNG lanes would open in 2013, assuming a final agreement is reached. Keep in mind 100 locations is less than half of total TA and Petro locations. Also, it is currently not clear whether these locations would be nationwide or clustered in selected regions. However, it would be logical to assume participating stations would be those on the most heavily traveled routes, and/or those closest to refineries. As such, it is realistic to expect this agreement to make LNG viable for regional and inter-regional trucking, bringing the fuel into the mainstream. Over the next ...

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Wholesale Sleeper Market Continues to be Defined by Mileage

Mileage continues to be the determining factor in the wholesale selling price of a sleeper tractor. Specifically, 650,000 miles appears to be the point at which a truck loses value dramatically, as the graph below illustrates. Since January, 2011, trucks with under 650K have averaged $35,220, while those with over 650K have averaged $27,374. For this period, the negative correlation between price and mileage has been a statistically strong -0.88%. Interestingly, our data indicates that trucks with over 650K are making up an increasing share of the wholesale market. As the graph illustrates, the proportion of trucks with over 650K had been decreasing in late 2011, but rebounded steeply in early 2012.   One likely reason for this shift is the influx of trade-ins resulting from the increasing number of new truck sales during this period. Since the overall volume of sleeper tractors sold has remained roughly constant, this trend is further evidence that higher-mileage trucks are becoming the onl ...

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Owner-Operator Trucks Still Bring a Premium

A few months ago, we looked at the price difference in the retail market for aerodynamic vs. traditionally-styled sleeper tractors. We found that owner-operator trucks were still commanding a premium despite the importance of fuel economy. That trend holds true through the current period. The graphs below trace average selling price, average mileage, and average age of the two types of trucks. As the graphs suggest, the typical owner-operator truck found on a dealer’s lot is slightly older with higher mileage than its aerodynamic counterpart. Despite this, for 2012 to date, traditionally-styled sleeper tractors have averaged over $4000 more than aerodynamic trucks after adjusting for specs. The price decline from September, 2011 to March, 2012 is due to corresponding increases in average mileage and age. That trend reversed for April. It is likely that the increased versatility of a traditionally-styled truck (removable sleeper, set-forward axle, etc.) increases its appeal to potential buyers in the use ...

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New Truck Orders Fall Below Sales

FTR Associates reports that April new truck orders fell for the fourth month in a row, to 13,200 units. This result is notable because it is the first month since July, 2010 in which orders were lower than sales.   Due to the varied nature of new truck delivery schedules, as well as fungible dealer inventory levels, the order rate really has no statistical relationship to the sales rate. As such, we cannot make any definitive predictions based on these two factors. However, a multi-month downward trend in orders suggests a decrease in demand. At the same time, keep in mind that the summer months have historically been a slow period for orders (although the recession and multiple pre-buy periods of the past decade have made this observation somewhat unreliable). Also, as stated, dealer inventory could be on the rise, so there’s not much reason to expect sales to drop dramatically. A rise in inventory could mean increased incentives on new trucks, but at this point the gap between new and used pricin ...

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