Diesel Prices and Used Truck Values

With the average nationwide price of diesel officially over $4/gal., discussion inevitably turns to whether this development will impact the new and used truck market in the short term. Currently, we do not foresee fuel prices fundamentally altering the factors governing new and used truck demand. The trucking industry has gone through two major “cleansing periods” in the past decade – the first in the early 2000’s thanks to the combination of an economic downturn, rise in insurance prices, higher fuel costs, tightened credit, and a glut of used trucks – and the second over the past 3-4 years thanks to the Great Recession. Fleets and owner-operators who survived these challenges likely have enough headroom to absorb continued moderate increases in the price of fuel. In addition, fuel surcharges will be activated, alleviating some of the cost pressure. So don’t expect any shakeouts in the transportation industry. As for fuel pricing itself, most analysts do not foresee diesel prices rising much past the ...

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What Effect Does Engine Type Have on Selling Price?

To follow up on my last post, below are four graphs that trace retail selling prices for 2008 model year aerodynamic sleeper tractors. Results reflect all retail sales we collected in calendar year 2011. The data set includes the same trucks as last time, except now we have added engine as a variable. A few points jump out. First, Volvo’s proprietary D13 and D16 engines held up well against the ISX in most applications. Starting at the top, the 780/D16 brought $1374 more than the 780/ISX. Similarly, the 670/D13 brought $1424 more than the 670/ISX. The 630/D13 was a bit closer to the 630/ISX, carrying a $477 premium. The exception to this rule was the 730, which brought $2438 more when equipped with an ISX. One important variable with Volvos is the transmission. Volvo’s iShift automated manual generally commands a premium. That transmission is mated only to Volvo engines. Since we have not adjusted for transmission in this data set, that factor may be skewing results. A future study ...

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Competitive Pricing Comparison

The graphs below compare average retail selling prices for four-year-old (2008 model year) sleeper tractors. The first graph outlines aerodynamic sleeper tractors. The second outlines traditionally-styled owner-operator sleeper tractors. Data is an average of all retail sales that we collected in calendar year 2011. We have adjusted the figures for mileage. We have NOT adjusted the figures for engine type.

The graphs suggest that the higher-volume trucks generally bring less money than the lower-volume trucks, as you would expect. However, there are exceptions – notably the Freightliner Century Class on the high end and the Kenworth T2000 on the low end.

We’ll see how these comparisons hold up when we dive deeper into this data and investigate the variable of engine make/size in an upcoming blog post. In the meantime, let us know how these results match up with your market experience by commenting below.




 

In February Guidelines: Flattening Out of the Class 8 Market in 2012 Forecasted

In our February 2012 edition of Commercial Truck Guidelines, NADA forecasts a flattening out of the Class 8 market this year. Retail prices for sleeper tractors were up 17.3% in 2011 vs. 2010 on mileage 10% higher, Wholesale prices for sleeper tractors were up 36% on mileage 4.3% higher. The Price gap between aerodynamic and owner-operator trucks is increasing with construction trucks up 7.4% on mileage 19% higher. Class 3-4 Cabovers are up slightly, but Class 6 Conventionals remain flat. Price ceilings are likely in place in retail and wholesale markets. For in-depth analysis and details, download the February 2012 Commercial Truck Guidelines here.
 

ATD in Las Vegas!

If you're heading to the ATD/NADA Convention in Las Vegas this weekend, look for me at the ATD Booth! I'll be available to discuss all the data posted in this blog, as well as our commercial vehicle valuation products.

Be sure to check out our VIN scanning functionality for NADA Online - all you have to do is point your smartphone camera at a VIN barcode, and our service will automatically pull up year, make, and model. It's part pf our suite of commercial vehicle valuation products, which help you ensure profitable trade-ins, new sales, and loyal customers! Come by and see a free demo!

And of course, be sure to follow us on Twitter and Facebook - we'll be posting from the convention floor. Be sure to attend the ATD Super Workshop with Eric Starks of FTR Associates, the Industry Message from Martin Daum of Daimler Trucks, and the Keynote Speaker, Captain Gerald Coffee.


 

Year-Over-Year Auction Volume by Segment

We’ve crunched most of our 2011 data at this point, and will provide a full 2011 vs. 2010 analysis in our upcoming February GuideLines. In the meantime, here’s a look at year-over-year sales volume in the auction channel for select segments. Data in all graphs has been statistically “cleaned” so as to maintain consistency and eliminate outliers. The first graph shows Class 3-4 cabovers. Interestingly, 2011 saw substantially less volume in all but the newest model years. In percentage terms, 2010 volume was just under 6% higher overall. With supply not an issue in this segment, the logical explanation would be that demand decreased in 2011. However, as we saw in the last blog, pricing increased in 2011. So we have a scenario in which fewer trucks sold for higher prices, even though there were more than enough of these trucks to meet demand. There are a few theories that might explain this behavior – we’ll address these in more detail in the February GuideLines. The next graph shows Class 6 conventio ...

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Medium Duty Year-Over-Year Performance

Class 6 Conventionals and Class 3-4 Cabovers both saw gains in 2011 vs. 2010. The graphs below trace movement of 4-6 year-old Class 6 Conventionals and Class 3-4 Cabovers in the wholesale market in 2011 and 2010.

As you can see, both benchmarks enjoyed an uptick in the Spring, with price gradually falling throughout the year as average mileage increased. Class 6 Conventionals brought 14% more money in 2011 than 2010, despite mileage that was 15% higher. Class 3-4 Cabovers brought 11% more money in 2011, with mileage that was a notable 24% higher.

The various economic sectors that dictate medium duty purchasing behavior generally started to see some gradual improvement in late 2011. If economic trends continue to tick upwards, prices should start a more notable recovery.



Daycabs vs. Sleepers

We’ve been looking at the price difference between highway daycabs and their sleeper counterparts. The graph below shows the average retail selling price of both types of trucks going back two years, adjusted for mileage. We have also provided a graph showing average mileage for reference. We are looking strictly at four-year-old trucks here, so the periods in the graphs include the 2007 model year (1/2010-12/2010) and the 2008 model year (1/2011-12/2011). As you can see, there is a clear premium for daycabs. This premium grew from an average of $6126 in 2010 to $7753 in 2011. Daycabs’ lower mileage is a factor, but the main culprit is lack of supply. As undersupplied as the used sleeper market is, the used daycab market is even more so. For example, there were 76% more sleeper tractors than daycabs in the population used in this study. With OEM’s building more sleepers than daycabs, plus fleets moving towards more regionalized operations (thereby reducing need for large sleeper tractors), supply and de ...

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Do Long-Nose Trucks Still Carry a Premium?

Last month, we took a brief look at the retail price difference between aerodynamic and traditionally-styled highway sleeper tractors. We have now enhanced that data to include both 4 year-old trucks and an average of 3-6 year-old trucks. Also, we have provided a spec-adjusted figure, which paints a clearer picture of the “true” inherent difference between the two types of trucks. To prepare the spec-adjusted figure, we subtracted the NADA Retail value for the following options from the figures in each graph: - 18 Speed Manual Transmission - Dual Chrome Exhaust - Dual Stainless Steel Air Cleaners We did not adjust for higher horsepower engines, because there was a minimal difference in average horsepower between the two types of truck. We have found that newer owner-operator trucks are commonly spec’ed with engines in the 475HP range, which would receive no adjustment in our Guide. Aerodynamic trucks are averaging only 10-15HP lower. Note that we have also included the unad ...

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December Surprise!

By now you may have read that December new truck orders jumped up 31% from November, making that month the second-highest of the year. It looks like used truck sales at the dealership level may have taken an unexpected leap as well. With just under 80% of our December reports received, we’re currently looking at about a 22% increase over November. As you can see from the graph, if this result holds, December will be among the best months of the year.

These results support the theory that new and used purchasing behavior was influenced by the Section 179 tax incentive. November may have suffered because buyers completed their fiscal-year 2011 purchases by then, locking in the tax benefits. But December was a clean slate. As such, the bump in volume indicates confidence in demand for freight in the new year.

As for pricing, we have not yet received enough data to comment. Stay tuned for an early look at that data next week.

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