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.

In The March Edition of Commercial Truck Guidelines...

In this month's edition of Commercial Truck Guidelines, you'll find that late-model sleeper tractors finally level after a record-setting retail high. Demand remains extremely strong for low-mileage sleeper tractors. The spread between low and average mileage iron continues to widen because demand for low-mileage units still greatly exceeds supply. However, as discussed in a previous blog post, buyers still place a premium on traditionally-styled sleeper tractors even in this age when fuel economy is of critical importance. To read the full March edition of Commercial Truck Guidelines, download them here

Late-Model Sleeper Tractor Pricing Sets Record!

In January, 2012, the average retail selling price of four-year-old sleeper tractors was $72,108. This figure is $2589 (or 3.6%) ahead of the previous high point set in January of 2011, and is the highest since NADA began tracking this information. Average mileage was nearly identical in both periods, so this price increase was most likely driven by natural demand. See the graph below for a comparison of the past five years.

Look for an expanded analysis of this and other data in the March edition of GuideLines, available at the end of this week.

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.