J.D. Power reports steady prices in used retail segment, price increase in auction channel last month

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Updated Jan 29, 2021

Used Class 8 auction prices were up nearly across the board last month while retail prices remained steady despite upticks in volume in both segments, J.D. Power reported Tuesday in its January 2021 Commercial Truck Guidelines industry report.

The rise in volume in the auction space last month was not unexpected, J.D. Power reports, and the complementary increase in pricing speaks to the strength of the used truck demand at the moment. J.D. Power adds pricing was stable despite a very large volume of 3-year-old sleepers continuing to cycle through the market. The company says December’s results continued the strong run of the second half of 2020, with average pricing better than any time since the first quarter of 2019.

Auction prices December 2020J.D. Power says average auction prices were as follows:

  • Model year 2017: $45,868 average; $306 (0.7 percent) higher than November
  • Model year 2016: $30,485 average; $4,175 (13.7 percent) higher than November
  • Model year 2015: $25,426 average; $547 (2.2 percent) higher than November
  • Model year 2014: $19,661 average; $567 (2.9 percent) higher than November
  • Model year 2013: $16,460 average; $201 (0.8 percent) lower than November

On a month over month basis, J.D. Power’s benchmark group of 4- to 6-year-old trucks brought 5 percent more — the second strongest month of the calendar year behind September. Overall, 2020 pricing was 3.5 percent below 2019, which J.D. Power says is a remarkably strong total considering the factors of the last 12 months.  The second half of 2020 performed even better, the company adds, with late-model trucks bringing 23.9 percent more money than the same period of 2019.

“Our benchmark truck increased in value an average of 3.1 percent per month in 2020,” J.D. Power states. “Incoming supply of trades and demand for freight should support pricing through the 2nd quarter of 2021, barring any major economic event.”

J.D. Power also included a year-end assessment of wholesale market in January’s report. The company says the average used truck wholesaled in 2020 was 65 months old, had 539,449 miles, and brought $24,509. Compared to 2019, the company says trucks sold in 2020 were five months newer, had 0.1 percent more miles, and brought 13.2 percent less money.

Wholesale prices December 2020Looking only at 3- to 5 year-old trucks, pricing in 2020 was 10.2 percent lower than 2019. But J.D. Power adds if one is to look at just the second half of both years, that gap narrowed to 3.4 percent. “Wholesale depreciation in 2020 averaged 0.3 percent per month, but if we look at just the second half of the year, trucks gained an average of 1.2 percent per month,” the company says.

Wholesale sales also slipped in 2020 compared to 2019. Volume last year was 74.1 percent fewer in the wholesale channel compared to the retail space — approximately 1.1 trucks wholesaled per rooftop compared to 4.4 per rooftop in the retail space. In 2019, those totals were 67.6 percent, and 1.3 trucks to 4.1 trucks, respectively.

“Wholesaling was a mildly less popular remarketing option in 2020 than in 2019, which we would expect in a higher-demand environment with more retail customers,” J.D. Power states. “The rule of thumb for a wholesale-to-retail spread for late-model trucks looks to be roughly 25 percent, plus or minus depending on age.”

Over in the retail space, J.D. Power says prices were steady despite the expected end of year uptick in volume.

The average sleeper tractor retailed in December was 67 months old, had 455,420 miles, and brought $48,650. Compared to November, J.D. Power says this average sleeper was identical in age, had 9,042 (2.0 percent) more miles, and brought $57 (0.1 percent) less money. Compared to December 2019, this average sleeper was four months newer, had 25,640 (5.3 percent) fewer miles, and brought $1,339 (2.8 percent) more money.

Retail prices December 2020On a year over year basis, the average sleeper tractor retailed was 68 months old (three months newer than in 2019), had 462,427 miles (0.6 percent fewer than in 2019), and brought $43,321 (19.4 percent less than in 2019), the company adds.

Among the 2- to 5-year-old truck segment, December’s average retail prices were:

  • Model year 2019: $100,156; $4,335 (4.5 percent) higher than November
  • Model year 2018: $73,740; $1,575 (2.2 percent) higher than November
  • Model year 2017: $49,929; $2,808 (5.3 percent) lower than November
  • Model year 2016: $40,050; $121 (0.3 percent) higher than November

J.D. Power notes in calendar year 2020 pricing was down 13.7 percent compared to 2019, though depreciation of 1.9 percent per month was slightly less than 2.0 percent in 2019. Depreciation also was effectively zero during the latter half of the year.

“Price deterioration is now evident for the models most heavily represented in the used market. However, there is a very wide variation in selling prices for those models depending on whether they’re sold as large package deals or individually,” J.D. Power states.

On a per-rooftop basis, dealers retailed an average of 5.0 trucks last month. That was an increase of nearly one truck (0.8) compared to November, the company says.

“Our year-over-year retail price difference forecast was a bit pessimistic for 3-year-old trucks, with the actual figure coming in 3 percent lower than our estimate. Our estimates for 4- and 5-year-old trucks were optimistic, with the 4-year-old actual result 6 percent greater than our forecast and the 5 year-old result 9 percent greater than our forecast,” J.D. Power says. “If we look at just the second half of both years, our estimates were about 50 percent closer. Basically, 4- and 5-year-old trucks held steady to mildly upward in late 2020, while we had anticipated they would gain a bit more value.”

The second-half sales increase seen in the heavy-duty space also found its way into the medium-duty space last year. J.D. Power reports depreciation was mild throughout the year and that while pricing was generally lower year over year, the “second half of 2020 saw strength.”

J.D. Power says the average price for Class 3-4 cabovers last month was $13,914, $664 (5.0 percent) higher than November, and $1,475 (11.9 percent) higher than December 2019. Pricing in calendar-year 2020 averaged 16.7 percent lower than 2019. In the Class 4 conventionals segment, pricing was $17,420, $1,619 (8.5 percent) lower than November, and $253 (1.4 percent) lower than December 2019. Year over year pricing was down 2.3 percent, the company says. And in the Class 6 conventional space, pricing averaged $18,779 in December, $637 (3.3 percent) lower than November, and $2,672 (12.5 percent) lower than December 2019. Pricing from 2020 was down 6 percent from 2019.

Overall, the company says December’s uptick in volume was expected, so the steady pricing was encouraging.

“In terms of the economic data affecting the new and used truck market, freight volume and pricing remain healthy at the time of this writing, while unemployment ticked up in December. We’ve been saying all year that unemployment is the metric to watch, and that observation remains in place,” J.D. Power states. “Also, as we mentioned last month, it’s not yet clear what tax and incentive changes impacting our industry the new administration will enact. Another factor becoming more important is the contentious political environment, which will strain consumer confidence as well as global confidence in the dollar if it gets worse instead of better.

“On the bright side, by summer a large percentage of the population will have received the COVID vaccine, so the service sector — and, more importantly, life in general — should start looking more typical. Stay tuned,” the company says.

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

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