Retail sales volume leaps forward in unusual May for used truck space

Used truck volumes grew substantially in the retail space but slipped in the auction markets during an unorthodox May, J.D. Power reported this week in its June 2020 Commercial Truck Guidelines industry report.

In the auction market, J.D. Power says volume slipped considerably, “which made analysis difficult and resulted in averages that are not necessarily representative of market conditions.” The company also reported a more complete analysis suggests depreciation is relaxing and the market appears to be firming.

Average auction pricing last month was as follows:

• Model year 2017: $37,180 average; $2,180 (6.2 percent) higher than April
• Model year 2016: $25,545 average; $545 (2.2 percent) higher than April
• Model year 2015: $22,345 average; $5,348 (24.2 percent) higher than April
• Model year 2014: $15,940 average; $215 (1.4 percent) higher than April
• Model year 2013: $12,097 average; $1,653 (12.0 percent) higher than April

On a month-over-month basis, J.D. Power reports its benchmark group of 4- to 6 year-old trucks brought 9.1 percent more money, but that during the first five months of the year pricing has averaged 26.4 percent lower than the same period in 2019. Depreciation also is now averaging 0.9 percent per month this year, which the company says is “more of a mathematical anomaly due to low volume than a representation of actual market conditions.”

Pricing was stronger overall, but weaker month over month, in the retail space, which J.D. Power attributes to dealers “managing inventory by sending less-desirable trucks to auction and holding somewhat firm on pricing for cleaner, lower-mileage iron.”

The average Class 8 sleeper tractor retailed last month was 67 months old, had 462,238 miles, and brought $40,206. Compared to April, this truck was months older, had 4,328 (0.9 percent) more miles, and brought $2,103 (5.0 percent) less money. Compared last May, this average sleeper was two months newer, had 6,111 (1.3 percent) more miles, and brought $17,367 (30.2 percent) less money, the company says.

Within the 2- to 5-year-old cohort, J.D. Power says pricing was as follows:

• Model year 2019: $98,536; $8,214 (7.7 percent) lower than April
• Model year 2018: $85,027; $1,058 (1.3 percent) higher than April
• Model year 2017: $51,675; $6,076 (10.5 percent) lower than April
• Model year 2016: $39,099; $5,496 (12.3 percent) lower than April

Compared to the first five months of 2019, J.D. Power says retail used truck prices have fallen by 13.7 percent. Depreciation also has averaged 2.5 percent thus far this year, which the company says falls within historical norms.

Sales per rooftop climbed by 0.5 trucks from April to 3.9 last month, equal to the same period last year. J.D. Power states this increase perhaps indicates slightly more demand commensurate with the economic reopening, adding gradual reopening will likely drive the retail and auction markets for months to come.

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The medium-duty market was mixed, with larger trucks performing stronger.

The average May price for Class 3-4 cabovers was $13,908, $1,236 (8.2 percent) lower than April, and $4,030 (22.5 percent) below May 2019. Class 4 conventionals was $17,107, $3,156 (15.6 percent) lower than April, and $6,389 (27.2 percent) lower than May 2019. Class 6 conventional pricing averaged $24,714 in May, $2,916 (13.4 percent) higher than April, and $3,812 (18.2 percent) higher than May 2019. Looking at the medium-duty space as a whole, J.D. Power notes “stable pricing combined with low volume suggests a market operating at some degree of equilibrium, neither expanding nor contracting. There will be more positive than negative pressures in the marketplace as long as the economic reopening continues.”

Looking at the larger market, J.D. Power’s outlook for the second half of the year is cautiously optimistic.

“Dry van and reefer freight metrics are now back to pre-pandemic levels. Other segments are steadily trending upward. Used truck supply is decreasing, albeit from a high level, and not at a rate that will impact pricing in the short term,” the company says. “However, keep in mind when used truck market dynamics change, they usually change drastically and over a short period of time, not slightly and over a period of months. So it is entirely possible at some point in an upcoming month used truck demand will reach critical mass just as supply is looking more attractive, and presto, we’re suddenly in a stronger market.”

The company notes COVID-19 remains a 600-lb. gorilla lingering over the market, particularly as nationwide infection rates are leveling off and spiking in some areas. Yet despite that volatility, J.D. Power says “we do not expect a return to widespread shutdowns unless infections explode and conditions become unmanageable. This scenario is very unlikely.”

For more information, and to read the entirety of this month’s report, please CLICK HERE.