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.

Start off the New Year with January 2012 Commercial Truck Guidelines!

The NADA Used Car Guide Commercial Truck January 2012 Guidelines are available to kick off the New Year! While the close of 2011 brought a lull in Sales volume at the dealer level, the decrease was most likely seasonable and pricing forecast is likely to steady and increase in 2012. Retail sleeper pricing has been flat since September, although wholesale pricing is showing strength. Download the full Guidelines to read more! 

November Sales Data

With about 95% of our November retail data collected (the holiday season generally results in some late reporting), both four-year-old sleepers and the sleeper market overall look to have trended slightly downward from October. We have collected all of our expected data from the dealer channel, and can report that sales volume from that source was down substantially from October. Four-year-old sleepers are down about $3700 from their previous peak in August on a mileage-adjusted basis. Compared to last month, the segment is down $1000. These trucks have been essentially flat since the beginning of the year, but they have also seen a steep increase in average mileage each month. Specifically, November’s mileage was almost a full 100,000 higher than January’s (although it was only about 25,000 higher than August’s). Given the mileage increases, we consider the price decreases minor. Buyers continue to establish a comfort level with what they will pay for trucks of a given mileage. On a historical basis, late ...

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Aerodynamic vs. Owner/Operator Pricing Comparison

In our market reports, we’ve focused heavily on the performance of the used sleeper tractor market overall. We have not yet broken this data down into sub-segments to any great extent. Today, we’re going to take a look at how the owner/operator market has fared in comparison to the aerodynamic market. For this analysis, “owner/operator” means traditionally-styled extended-hood, and “aerodynamic” means aerodynamically-styled 120” BBC (or equivalent). We’re looking strictly at highway sleeper tractors in both segments. The first graph outlines the performance of four-year-old trucks, adjusted for mileage. The next three graphs outline average price, average mileage, and average age for all model years of trucks under 1,000,000 miles. Looking at four-year-old trucks, we see that from January-September, there was a consistent price gap of about $17,000 between the two segments. That gap closed considerably for October, but we’re going to call that an anomaly caused by the limited amount of data we have for ...

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November Breather

New truck orders, used truck sales volume, used truck prices, and industrial production all stopped increasing in November. We consider the trucking data to represent a seasonal slowdown as buyers have completed the bulk of their new and used purchasing for the year, locking in tax benefits. Industrial production is probably also exhibiting some seasonality, with an impact from reduced automotive manufacturing. We expect the truck market and general economic factors to regain upward momentum in early 2012. As has been reported in trucking media, new truck orders were down roughly 6000 units in November vs. October, about a 30% decrease. This decrease follows multiple months of increases. There is a relatively substantial tax incentive for buyers to complete orders before the 2012 fiscal year, namely the Section 179 benefit that allows for generous depreciation of equipment. This benefit will be reduced in 2012. Combine this factor with the relatively long lead times for trucks ordered now, and there does a ...

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December 2011 Commercial Truck Guidelines

The ATD/NADA Official Commercial Truck Guidelines for December 2011 is now available, with the class 8 sleeper market cooling down after 2 full years of growth and with evidence of a price ceiling in the retail market for late-model trucks. 2011 average pricing is still crushing the previous three years; the NADA outlook is still strong. To read the full Guidelines, download them here.

Medium Duty Price and Volume

To follow up on our look at medium duty prices from a few weeks ago, here are those graphs with sales volume added. Again, data reflects trucks that were 3-6 years old at time of sale, so we’re looking at the 2009-2006 model years. Data is auction (AuctionNet) and wholesale (dealer sales reports). As mentioned previously, there aren’t too many conclusions to draw from price. Both segments have been essentially flat all year, reflecting the limited change in performance of their respective markets. On the volume side, we see a minor uptick starting in late spring for the cabover segment. Increased volume along with steady selling prices is mildly encouraging. Looking at conventionals, we see a lot more volatility in volume. This volatility is likely caused by timing of rental fleet lease returns. There was some mildly inverse pricing behavior in those months with big swings in volume, but in general it appears that there is a comfort level with conventional pricing regardless of the number of trucks ava ...

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Sales Volume by Model Year

Occasionally we’ll post a look at our raw data just for transparency’s sake. The first graph below gives you a look at where the bulk of our sleeper data lies. Specifically, the graph illustrates the number of sleeper tractors reported sold (retail) for each model year from 2011-2000. The second graph traces average selling price and mileage for those model years. For both graphs, data is from January-September 2011. Keep in mind we’ve pruned out trucks with over 1,000,000 miles, so average mileage for older model years may “seem” low. Also, to clarify, this is just a portion of the total Class 8 data we receive – daycabs, construction/vocational trucks, trucks with over 1,000,000 miles, and auction/wholesale sales are not included here. Again, this is just a look at our raw data. No real observations to be drawn here other than the fact that the sweet spot in our sleeper data is 4-7 model-year-old trucks, and that there is a near-perfect negative correlation between mileage and price. As always, comments ...

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Mileage and Age Revisited

The market has seen an interesting shift since the rebound in used truck prices began in late 2009. The average age of sleeper tractors sold in the wholesale channel has trended closer to that of trucks sold retail, while the mileage gap between the two channels has remained consistent.

Basically, older trucks that had sat dormant during the downturn are increasingly rare. Trucks now cycling through the wholesale market have been in more consistent use. Owners will continue to replace this iron with new (or newer) trucks as their financial position improves.

For reference, trucks sold retail brought an average of 74% more money than those sold wholesale during the period referenced in the graphs. If we look only at 2011, however, that gap drops to 56%. As I’ve outlined in previous blogs, price in the wholesale market has plateaued due to high mileage. So that retail to wholesale price gap shouldn’t shrink much more.

Stay tuned for further analysis of these dynamics in future blogs.

Pipelines and Oil Prices

I’ve mentioned the glut of oil at the Cushing, OK oil reserve a few times in the past. This glut is a main reason why the price gap between West Texas Intermediate (the domestic benchmark used to set oil futures prices at the Chicago Mercantile Exchange) and Brent (the European benchmark used to set prices at the InterContinental Exchange) began to increase in late 2010. As you may have heard, the new owner of a major pipeline running from the Gulf to Cushing is about to reverse the flow of crude in the pipeline. Imported oil that had been running from the Gulf to Cushing will be replaced with domestic oil running from Cushing to refineries in the Gulf. This is a major development for the following reasons: - The supply at Cushing will be greatly reduced, which would theoretically apply upward pressure to WTI prices. - US refineries will need to purchase less foreign oil, which would theoretically apply downward pressure to refined products (gas, diesel, etc). - The Keystone XL pipelin ...

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