Class 8 Construction Market Likely Benefiting from Drilling and Fracking

Buyers of Class 8 construction trucks seem to be finding a comfort level with pricing. Looking at the retail graph below, average selling prices became much more consistent in early 2011. Since then, price levels have increased moderately – from an average of $69,046 in the first half of 2011 to $74,760 in the second half. The first quarter of 2012 is steady at $74,573. The wholesale graph paints a somewhat less optimistic picture of the market. The second half of 2011 was actually lower than the first half by about $1000, which we consider essentially no change. We should note that due to the low volume of trucks sold in this segment, it is difficult to make specific judgments about model year and region in either the retail or wholesale channels. However, general trending is valid. It is all but certain that the bottom of this market is behind us. The sectors of construction that would make a major impact on demand for trucks – residential, commercial, and infrastructure - have not yet recovere ...

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Used Truck Prices Unfazed by Economic Uncertainty

Preliminary March data indicates that the Class 8 sleeper market ticked up a bit on slightly lower average mileage. Four-year-old sleeper tractors were also up notably despite higher mileage. Dealer sales volume? Comparable to the best months of 2011. Like last year, selected economic measures have slowed their rate of improvement going in to the 2nd quarter. However, also like last year, the economy on average continues to slowly improve. In the final analysis, the biggest factor limiting growth is “uncertainty.” There are many factors contributing to this uncertainty – some legitimate, some a little ridiculous – but at the end of the day, if a factory continues to receive orders, it’s not going to curtail production because it’s afraid of the European debt crisis. Like everyone else, we have been watching new truck order rate, which to date in 2012 lags the 2011 average by just under 25%. However, keep in mind that there was a degree of artificial inflation to the second half of 2011 due to the impend ...

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1-Ton Cab & Chassis Performance

Construction activity is still essentially flat lined, but consumers have been spending more on residential improvements. Since the 1-Ton cab & chassis market is heavily exposed to these sectors, how has the segment performed over the past two years? I would like to start off first with a clarification. The term “1-Ton” really has no connection to actual payload or hauling capability of a modern truck. The typical 1-Ton truck of today can carry at least 2 tons, even with single rear wheels. And since we’re looking solely at cab & chassis models, the term has even less meaning. To be clear, then, this study includes cab & chassis versions of the Chevy/GMC 3500, Ford F350, Dodge/Ram 3500, and Hino 145. Figures include both gas- and diesel- powered trucks. We will look strictly at wholesale data, since the vast majority of our sales data for this segment is comprised of auction results. Looking at the graphs below, the most obvious trend is the shift in average age and price that occurred in th ...

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Are 2007’s Dominating the Retail Sleeper Market?

Since early 2011, 2007 model year sleeper tractors have been showing up in our retail data in proportionally greater numbers. The graph below illustrates the increasing volume of 2007 sleepers reported sold. Note that the March figures are “in-process,” and represent about 85% of what we ultimately expect to collect by the end of the month.   This outsized 2007 performance is actually fairly easy to explain. First, 2007 was the pre-buy model year prior to the introduction of the “2007” (2008 model year) emissions standards. In addition, the 2007 calendar year marked the start of the Great Recession, which would depress truck production for four years. The new truck build numbers tell the story: 2007 model year (pre-buy):   378,000 2008 model year (start of recession):  212,000 2009 model year:    205,000 2010 model year:    118,000 Based on these build figures, it is logical that the 2007 model year will be present in the marketplace in proporti ...

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April Commercial Truck Guidelines - Sales Are Up!

In the April 2012 issue of Guidelines, Commercial Truck dealerships are seeing strong sales, with retail sales the highest since August of 2010! Read the full report here.

Selling Prices and Sales Volume Rising in Early 2012!

With our first two months of 2012 data locked up, we are predicting a strong quarter vs. quarter comparison vs. 2011. For the first two months of 2012, the overall sleeper market was up $3268 (or 6.9%) vs. the same period of 2011. This increase is despite mileage 33,633 (or 6.1%) higher. Our rule of thumb remains in place – the market is tolerating pricing in the mid to high $40’s for trucks with mileage in the low to mid 500’s. Four-year-old sleeper tractors were up $3114 (or 4.5%) in the same period. The 2009 model year is showing strength despite being the first full year equipped to the 2007 emissions spec. As we examined in a blog we posted recently, 2007 emissions level is not a hindrance to used truck buyers. Retail sales per dealership were their strongest in well over a year, with February’s 7.5 trucks per dealership the highest since August of 2010. After a dip in the 4th Quarter of 2011, a sustained increase would be encouraging since it would indicate healthy organic demand ...

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Has 2007 Emissions Impacted Used Truck Values?

As most readers of this blog know, new emissions regulations went into effect on January 1, 2007. All Class 8 trucks meeting this standard are equipped with Diesel Particulate Filters (DPF’s). In addition, engine hardware and software were revised to varying degrees depending on OEM. Now, here’s the rub. DPF-equipped trucks weren’t actually built to any large degree until well into calendar year 2007 and possibly even into 2008. This is because truckmakers were allowed to use pre-2007 engines that they had stockpiled prior to January, 2007. Thanks to the pre-buy that front-loaded truck orders into 2006, orders and build plummeted in 2007. As such, there were enough stockpiled engines to carry the pre-2007 engine build well into the 2008 model year. From a used truck standpoint, model year 2008 is a challenge because some trucks include DPF technology while others don’t. We have parsed out our sales data as much as possible to differentiate between the two, but due to varying degrees of detail in our s ...

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Sleeper Tractors up 8.4% Year Over Year

The sleeper market looks to be off to a strong start so far this year. Preliminary February data puts the first two months of 2012 up $4052 (or 8.4%) over the same period of 2011, despite a substantial 33,237 (or 6.0%) increase in mileage. February’s preliminary average price of $48,655 is less than $1000 away from the record of $49,539 set in September, 2011.

On a month-over-month basis, the trend established in the second half of 2011 remains in place – namely, the market is tolerating pricing in the high-$40’s for sleeper tractors with mileage up to the mid-500’s. February’s preliminary results are on the high side of that rule of thumb, which paints a favorable picture of used truck demand.

Stay tuned for in-depth analysis of this and other data in the April edition of GuideLines, available around April 9th.

Medium Duty Market Poised for a Comeback

Class 3-4 Cabovers have fared well so far in 2012, with a two-month average wholesale price of $10,442 ahead of 2011’s average by $1082 or 10.4%. Average mileage is similar, so we can eliminate that variable. Increased consumer spending is likely resulting in increased demand for daily rentals and urban deliveries – two of this segment’s main markets. Class 6 Conventionals are still flat, with a 2012 average wholesale price of $12,395 behind 2011’s average by $607 or 4.7%. Average mileage for 2012 is close enough to 2011’s average to keep apples-to-apples comparisons valid. This segment is still exposed to weak sectors of the economy – namely, construction and residential services. Increased consumer confidence could lead to modest increases in spending on landscaping and light construction projects, but the ongoing foreclosure crisis will limit the rate of expansion. In the short term, look for continued improvement in the lighter-duty cabover segment and flat to limited upward movement in the heavier ...

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Demand for Trucks in the Wholesale Market

A recent Transport Topics article (subscription required) states that wholesale truck dealers are seeing a drop-off in sales. As we mentioned in last month’s GuideLines, auction and dealer wholesale sales reported to NADA showed a 30.8% drop in volume from 2010 to 2011 (see graph). However, after a steep drop in the first three quarters of 2010, volume leveled out at a 2400 sales/month average, which is where is has remained up to the current period.

Given the steady volume throughout 2011 combined with the upward trend in wholesale pricing, we do not attribute the shifting volume to lack of demand, but rather the well-known lack of supply of low to average mileage trucks. Just like the retail market, the wholesale market is constrained by a lack of supply of low to average mileage trucks.