Used Class 8 market ‘pointing to a maturing boom cycle,’ J.D. Power reports

The auction market maintained a steady track to close 2018 as conditions point to a maturing boom cycle, J.D. Power wrote in its Commercial Truck Guidelines market report this month.

In auction sleeper market, J.D. Power says auction volume and pricing in its benchmark model were lower in December than November as the market appears to have less tolerance for high-mileage units. Average pricing in the benchmark model were as follows:

• Model year (MY) 2015: $43,550 average, $1,950 (4.3 percent) lower than November.
• Model year (MY) 2014: $32,000 average, $750 (2.3 percent) lower than November.
• Model year (MY) 2013: $30,250 average, $1,400 (4.4 percent) lower than November.
• Model year (MY) 2012: $25000 average, $345 (1.4 percent) lower than November.
• Model year (MY) 2011: $21,850 average, $1,225 (5.9 percent) lower than November.

J.D. Power writes strong pricing through the third quarter resulted in almost no depreciation (estimated at 0.2 percent) for the year. On average, 4- to 6-year-old trucks brought 21.5 percent more money in 2018 compared to 2017.

This month’s report shows the retail market as steady to close out the year, “with trucks with average and lower mileage bringing very strong money,” J.D. Power writes. A large group of identically equipped MY 2016 trucks impacted that cohort last month, but otherwise depreciation was minimal to non-existent.

J.D. Power says the average sleeper tractor retailed in December was 69 months old, had 459,967 miles, and brought $57,235. Compared to November, the sleeper was identical in age, had 4,417 (1.0 percent) fewer miles and brought $409 (0.7 percent) more money. This same sleeper also was four months newer, had 28,042 (6.5 percent) more miles and brought $9,905 (20.9 percent) more money than the average sleeper in December 2017.

Among the popular 3- to 5-year-old truck cohort, J.D. Power states prices were as follows

• Model year (MY) 2016: $73,147 average, $2,317 (9.6 percent) lower than November.
• Model year (MY) 2015: $62,591 average, $450 (0.9 percent) higher than November.
• Model year (MY) 2014: $53,087 average, $4,125 (10.7 percent) higher than November.

“On a year-over-year basis, late-model trucks sold in calendar year 2018 brought 10.7 percent more money than in the same period of 2017,” J.D. Power writes. “Depreciation in 2018 averaged 0.3 percent per month, compared to 1.6 percent last year.”

Dealer sales, however, were down substantially in November and December to 4.1 and 4.5 units per rooftop.

In the medium-duty space, the market was generally weak. Only Class 4 trucks performed well month-over-month, rising $734 (4.0 percent) month-over-month to $19,131. Class 6 trucks fell to $16,271, down $2,354 (12.6 percent) from November. Class 3-4 cabovers averaged $10,598, a slip of $4,108 (28.4 percent) lower than November. J.D. Power writes Class 6 tractors were up 11.0 percent year-over-year while Class 4 trucks and cabovers lost money.

Overall, J.D. Power states: “Two months of notably lower new truck orders is pretty close to a trend. Buyers are satisfied with the trucks they have in the pipeline, and delivers will be strong into the second half of 2019. Economic growth will moderate as businesses stop pulling ahead inventories and the 2019 tax breaks become the new normal.

“Section 179 tax incentives and bonus depreciation remain in place for 2019, which will cushion maturing demand. Expect conditions in the first half to look similar to recent months, with an increasingly supply of used trucks causing mildly higher depreciation.”

To read the full report, please CLICK HERE.