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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US Industry Continues Upward Trend

Industrial Production figures released yesterday show continued upward movement in all the segments relevant to trucking. October IP overall was up 0.7% vs. September. This figure represents a level 5.3% below the pre-recession 2007 average, but is up 3.9% from October, 2010. The critical automotive industry posted a 3.1% increase vs. last month. Unfortunately, just as the Japanese manufacturers returned to 100% production, flooding in Taiwan may have a slight to moderate negative impact on output for November. Consumer products were up overall, with durables (automotive products, furniture, appliances, etc.) up 2.1%. Nondurables (food, clothing, paper products, etc.) were flat. Looking at larger trends, specifically capacity utilization for the three stage-of-process groups, we see that output at the crude stage is 3.5% above its historical average. The primary and semifinished stage is 7.3% below the historic average, and the finished stage is 0.1% below. The increase at the crude level is encou ...

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Medium Duty Auction Performance

The first graph below traces performance of the Class 3-4 Cabover and Class 6 Conventional segments in the auction environment for each month of 2011. Data is adjusted for mileage. The second graph compares auction price of 3-6 year old trucks for the third quarter of 2011 vs. the third quarter of 2010. Trucks included are 2009-2006 model year for calendar year 2011, and 2008-2005 model year for calendar year 2010. Average mileage for each group is listed above its column. The graphs paint a mixed picture of each segment. We don’t see much movement in 2011, but year-over-year comparisons look favorable. Considering the higher mileage for both segments in the 2011 period, the higher selling prices are encouraging. The Class 3-4 Cabover segment plays mainly in the urban delivery market, which is heavily dependent on retail consumer activity. That activity has been flat to slightly improving, which could partially explain a price increase. The Class 6 Conventional segment is exposed to a much m ...

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November 2011 Commercial Truck Guidelines!

With the complete third quarter of 2011 in the database, now is a good time for a year-over-year review.

3rd Quarter 2011 vs. 3rd Quarter 2010 comparisons show retail and wholesale selling prices up dramatically and Dealer sales volume was the highest of the year in September.

Download the November 2011 Guidelines now to read on!

September Data Results

We have finalized our September retail database, and the results are below. The graphs should be self-explanatory.

Cliff’s Notes:
- The sleeper market overall continued its upward climb despite another hefty increase in average mileage.
- The age of the average sleeper tractor sold was 71 months.
- Four-year-old sleeper tractors continue to fluctuate in the mid-$60’s, this time down by about $900 as average mileage nears 500K.
- Sales per dealership hit their best month of the year.

Stay tuned for the complete analysis in the November GuideLines to be published late this week.