Used truck demand is stable but supply is exploding. Last year’s new truck order boom has hit the used truck space, and Thursday’s panelists say there’s not much the industry can do about it. The next 12 to 24 months are going to be tough, but panelists say if used truck dealers keep their focus on their customers and solving their problems, they should be able to make it out of the market’s current downturn safe and sound.
Frustrating as 2019 has been, it’s not the worst year the industry has had, or even the worst year this decade. It only feels like it because 2018 was so spectacular.
“Last year was a great year for used truck and new truck sales and what we’re seeing now is a correction in the market,” says Justina Morosin, Navistar vice president of sales, used trucks. “Inventories are growing and putting pressure on pricing, but I think those [pricing] declines will level out around 2017 price levels.”
Other panelists agree, noting at least the market had time to prepare for its current skid.
“We’ve all been kind of waiting for this to happen for a while,” says Michael McMahon with Ritchie Brothers Auctioneers. “Pricing is going to be stressed for through the end of the year and into next year.”
While last year’s order new boom is an obvious reason for this year’s volume spike, Doug Carmichael, president, Transport Equipment Leasing, adds the previous new order spike in 2016 also came home to roost in the used truck market this summer. Carmichael says any year the used truck market is expected to absorb a large influx of units at one time due to a swell of new truck deliveries it will strain the market, but adds because 2016 purchase totals were nearly 70,000 trucks more than average, the used market is now adding more units than it has ever accepted before. All things considered; the panelists say the market is handling the overwhelming inventory totals fairly well.
President of Daimler Trucks Remarketing Mary Audfemberg says used truck demand has been surprisingly stable throughout 2019 and has fallen only slightly since last year’s market peak. She says that demand could shift downward in the coming months — and is likely the single most important indicator for the industry entering 2020 — but thus far remains solid.
Yet, to some degree, demand is contingent on vehicle specs and product availability, Carmichael says. He says dealers trying to move three-year-old tractors with 550,000 miles and no factory warranty remaining are in for rough sledding in 2020 but adds if those same dealers can get their hands on newer models or tractors with fewer miles and/or any available warranty left, they’ll be able to turn them quickly and for a decent price.
As for how to sell them, Thursday’s panelists say it’s never been more important for used truck dealers to invest in their marketing and sales training. Audfemberg says today’s used truck buyers expect to be able to use the internet to learn as much information as possible about the tractor they want to buy before they ever contact a dealer. And when they do contact a dealer, they expect a “white-glove experience,” she says.
After two years of sitting and “waiting for the phone to ring” because demand was so strong, The Larson Group’s Mike Thurston says it’s time for used truck salespeople to start hitting the pavement again. He says The Larson Group’s used truck sales department has prioritizing contacting potential buyers through one medium (call, text, email, meeting) every day, working to create and cultivate relationships with buyers that will bring them in to one of the company’s 20-plus stores when it’s time to buy.
Carmichael agrees, noting the importance of showcasing one’s value to a customer as a recruitment and retention tool.
“If you can add value to your customers lives, they’ll beat a path to your door,” he says.
