June 13, 2014
Used Class 8 tractors are selling for record prices – a fact that isn’t lost on some of the industry’s largest players.
Recently, Penske and Rush Enterprises each announced plans to construct brick and mortar truck lots for used truck sales.
Rush recently opened its first Rig Tough used truck location in Knoxville, Tenn., and the company says it plans to open “a couple more” locations this year.
Penske Used Trucks currently has two locations (Torrance, Calif., and Charlotte, N.C.), and plans to open two more by the end of 2014.
Rush says the Rig Tough location gives the company an additional sales outlet to reach customers in markets not currently served by Rush Truck Centers, and Rush Enterprises CEO Rusty Rush says, “(the used truck lots) will supplement used truck sales at our Rush Truck Center locations.”
Penske’s venture into the brick and mortar business represents a more drastic departure from the norm than Rush. Previously, Penske moved its inventory through wholesale channels and through its website and call center.
With used trucks in great demand and the supply thin, Jack Mitchell, Penske’s vice president of remarketing, says the time was right for the company to develop a new avenue for moving its used lease and rental equipment.
Chris Visser, senior analyst for NADA, says more used trucks have been entering the secondary market due to the return to normal build rates and shorter trade cycles, and as OEMs start to pile on incentives for late-model trade-ins, expect more of the “gently used” units to become available.
Out of warranty trucks are the low hanging fruit of the aftermarket and those trucks are hitting the road in record numbers.
NADA data showed the average sleeper tractor retailed in March was 77 months old, had 524,564 miles, and sold for $55,840. Compared to March 2013, this truck was identical in age, mostly identical in mileage, but is now worth $5,048 (9 percent) more.
Visser says the year-over-year comparison provides a good example of how the market has shifted over this period, with the average used truck now worth over $5,000 more despite no meaningful change in age and mileage.
“Continued increases in our universal average are due mainly to an increased number of newer, lower-mileage trucks available to the secondary market,” Visser says. “Trucks of 2011 vintage are now the most common sold retail, and 2012s are slowly but surely coming on-line.”
Fleets are also embracing higher mileage pre-DPF trucks (mostly model year 2006-2007), with many buyers seeing a massive engine overhaul as a wise investment for a truck that costs slightly less than $20,000.
If you haven’t looked at used truck activity in your trade area, grab a laptop and get your hands on some data.
Retail pricing for used trucks has likely topped out, but volumes haven’t. The aftermarket can certainly ride this wave of booming business. With truck values climbing, fleets will be looking to hold on to a used unit far longer than in years past; and with the more reliable 2011 and 2012 units streaming into the market, fleets will be looking for reliable parts and service outlets across all makes to push these trucks over and beyond the million mile mark.
It’s time to evaluate your local trade area as it relates to makes of used trucks, and even inquire with some key customers about their plans to buy used units.
Odds are, they are or will soon be in the market.