From the monthly archives: August, 2013

We are pleased to present below all posts archived in 'August, 2013'. If you still can't find what you are looking for, try using the search box.

Movement in the Construction Market?

As we stated earlier this month, the construction market when viewed from a treetop level continues to turn in a mixed performance. Strength in the 2007 model year has been countered by downward movement in newer model years. 

Diving deeper into our sales data, it is apparent that certain makes and models have been outperforming the competition recently, particularly in the retail channel. NADA values have been adjusted to reflect these observations.

Stay tuned for further analysis. In the meantime, here’s a look at the construction market as a whole.

Model vs. Model Competitive Comparison – August

The graphs below trace average retail selling price for 3-6 year-old aerodynamic sleeper tractors, as reported to NADA by dealers and OEM’s. As always, average prices have been adjusted for mileage, and only large-bore and/or OEM-branded engines are included.

 
 
 
There was some minor positional movement this month, mainly the 730/780 performing a bit better than the 386 and T660, and the Century Class ticking up a bit. The ProStar looks to have leveled out its depreciation. We will examine this model in more depth early next month.
 
As always, questions and comments are welcome.

July Wholesale Pricing Similar to June’s

Sleeper tractors wholesaled in July saw a 3.3% increase over June to come in at an average of $25,595. Mileage was comparable to last month, at 687,987 – a 3288 (or 0.5%) increase. Age was one month older, at 86 months. Pricing in the first half of 2013 has been lower than the same period in 2012, as you can see from the graph below. However, what is also evident is that this lower average pricing is due mainly to a higher average mileage mix of trucks sold in 2013. There is still a strong correlation between price and mileage, which means that pricing for trucks at a given mileage level has not changed appreciably in this period. The “Average Wholesale Selling Price by Mileage Range”graph below traces this performance. Note that while the 600-699K cohort appears to be underperforming, those results are actually primarily due to a large group of identically-spec’ed, higher-mileage trucks impacting the averages for this period. Excluding these trucks returns that cohort to the trend. Bottom line: The ma ...

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Record Pricing Streak Comes to an End

Retail sleeper tractor pricing has been on a tear in 2013, with each month since March setting a new record. That streak came to an end in July - by a mere $121. Retail sales data submitted to NADA by dealers and OEM’s shows that the average sleeper tractor sold in July for $52,552, had 537,343 miles, and was 77 months old. See graph for detail.

Month-over-month, July’s result was $121 (or 0.2%) lower than June’s, with mileage 29,149 (or 5.1%) lower, and age 2 months older. Year-over-year, July, 2013 was $2485 (or 4.7%) higher on price, 20,021 (or 3.6%) lower on mileage, and 2 months older.

 
The reasons for continued high pricing have been covered extensively in NADA’s GuideLines and blogs, so we won’t rehash those factors at this time. Nothing has changed in the retail environment – July was simply the second-highest month in at least five years instead of the first. 
 
Stay tuned for wholesale numbers later this week.

Sales Volume Bounces Back

As predicted, retail sales volume recovered in July after dropping dramatically in June. With about 95% of July data collected, NADA estimates that dealerships sold an average of 6.3 trucks per rooftop in July. This result means dealerships recovered nearly 100% of the volume lost in June.
 
Based on recent history, NADA maintains that used truck sales typically take a one-month “pause” in late spring/early summer, as operators focus on first quarter earnings and transition into the busy freight season. See graph below for detail.
 
 
Stay tuned for retail pricing data and wholesale figures next week.

Will Used Truck Pricing Really Fall if New Truck Purchasing Ramps Up?

A recent study by Frost & Sullivan (summarized here – subscription required) forecasts increased new truck sales in upcoming years, potentially resulting in increased trade-ins and lower used truck pricing. One comment in the study caught my attention. Specifically, the study states that 2007-2009 emissions engines were “…tougher sells to fleets due to higher prices and proliferation of EPA-compliant, OEM-branded engines that are yet to prove themselves in the used truck market.”  That sentiment may have been true when the engines were first introduced to the new truck market, but in the 6 years since these engines were introduced, a large number of trucks so equipped have cycled through the secondary market. Selling prices are well-established. NADA data shows 62% of sleeper tractors reported sold retail and 33% of trucks sold wholesale since January have been EPA 2007-spec. To us, EPA 2007 is old news. We’ve already been making valuation judgments on EPA 2010 trucks for well over a year.  &# ...

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August's Edition of Commercial Truck Guidelines is Now Available for Download!

The latest edition of August Guidelines is now available! Read on for details on retail sales volume dramatically dropping, wholesale volume recovering and the construction market remaining flat with housing recovery not up enough to move the bar. Download today! 

Repossessions Remain Low Despite Bankruptcies

A recent report (subscription required) indicates that trucking bankruptcies are on the rise due to rising costs and stiffer competition from intermodal. We would expect the rate of repossessions to increase in step with bankruptcies, but through June we have not noted any appreciable movement.

The graph below shows the percentage of trucks reported sold at auction as repossession. As you can see, this figure has been below 1% since December of 2011.

The message here is trucking failures are still rare enough to keep repos at a negligible rate. With a continually-expanding economy plus upcoming hours of service regulations - both of which point to higher freight rates - we do not expect the number of bankruptcy-related repossessions to increase.

Construction Market Still not Clearly in Recovery

With multiple quarters of a housing recovery under our belts, we would expect the market for construction trucks to strengthen. Surprisingly, this has generally not been the case. The graph below shows average retail and wholesale selling price by model year for construction models. Prices have been adjusted for mileage. We do not usually combine retail and wholesale data, but in this case we’re looking for directional movement rather than absolute numbers, so combining the two sources is valid. At first glance, the market appears flat, with no clear up or down movement for any model year. Deeper analysis uncovers two items of interest.    First, note how pricing for the 2007, 2008, and 2009 model years has converged in the low-$70K range in recent months. Mileage is a primary reason for this concentration. Since January, MY2008 and MY2009 trucks have averaged 182,619 and 185,221, respectively – only a 2602 difference. Since mileage is the primary driver of any used truck’s value, it is logica ...

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