A bump in sales volumes led to a softening in auction used truck prices last month, J.D. Power announced Tuesday in its June 2022 Commercial Truck Guidelines industry report.
A substantial volume of auction trucks with higher-than-average mileage sold in May, which J.D. Power attributes to fleets no longer retaining all of their older iron as new trucks trickle in and, to an extent, from owner-operators leaving the industry or going to work for a fleet. This led to a stark change in pricing, which the company states are "reflective of actual market movement."
But new, low-mileage trucks continue to bring strong money and after cresting in April it was logical to expect a slight reduction in prices in May.
In the auction sector, May’s average pricing for J.D. Power's benchmark model was as follows:
- Model Year (MY) 2021: No trucks sold in May
- MY 2020: $136,732; $16,848 (11.0 percent) lower than April
- MY 2019: $95,653; $17,132 (15.2 percent) lower than April
- MY 2018: $88,452; $9,736 (9.9 percent) lower than April
- MY 2017: $59,854; $552 (0.9 percent) higher than April
For 3- to 5-year-old trucks, these prices were down 12 percent from April but 57.5 percent stronger than May 2021. Year over year, late-model trucks sold in the first five months of 2022 have averaged 82.6 percent more money than the same period of 2021, J.D. Power reports.
Prices also were down in the retail space but the drop was not as precipitous. J.D. Power states retail selling prices usually take a few months to adjust to market shifts, so May’s results "were still generally at record levels." The company did note, however, increased differentiation between individual makes and models, which it says is typically an early sign of a maturing market.
J.D. Power says the average sleeper tractor retailed in May was 71 months old, had 443,909 miles and brought $119,230. This figure was a an increase over April and marked a return to record-breaking territory. Compared with April 2022, J.D. Power says this average sleeper was two months newer, had 4,773 (1.1 percent) fewer miles, and brought $5,927 (5.2 percent) more money. Compared the same period last year, the average sleeper was identical in age, had 10,760 (2.4 percent) fewer miles, and brought $55,632 (87.5 percent) more money.
In the 2- to 6-year-old cohort, May’s average pricing was as follows:
- MY 2021: $187,438; $10,125 (5.1 percent) lower than April
- MY 2020: $151,777; $13,883 (8.4 percent) lower than April
- MY 2019: $142,106; $5,013 (3.7 percent) higher than April
- MY 2018: $112,902; $1,845 (1.7 percent) higher than April
- MY 2017: $88,963; $2,332 (2.7 percent) higher than April
In the most popular 3- to 5-year-old truck segment, J.D. Power states units brought an average of 1.7 percent less money in May than April. Trucks in this age group brought 82.6 percent more money in the first five months of 2022 than the same period of 2021. Additionally, the company says late-model sleepers have increased an average of 1.7 percent per month to date in value — though this figure has decreased since March and will eventually flip to depreciation.
Dealers sales also slipped in May to 2.8 sales per rooftop. J.D. Powers notes this was the second month in a row showing a pullback in sales volume. "Foot traffic in May was probably more selective, with fewer customers actually writing checks," the company states.
"The relationship between the freight environment and truck supply is looking different in the second half of the year," J.D. Power says.
A more balanced group of trucks for sale led to more expected pricing in the medium-duty space.
J.D. Power says Class 3-4 cabovers averaged $35,219 in May. This figure is $2,983 (9.3 percent) higher than April, and $16,085 (84.1 percent) higher than an unusually-low May 2021. Class 4 conventionals averaged $39,652 in May, $8,045 (16.9 percent) lower than April and $10,208 (34.7 percent) higher than May 2021. Class 6 conventionals averaged $50,468 in May, $11,232 (18.2 percent) lower than April and $10,208 (64.5 percent) higher than May 2021.
As the year enters into its second half, J.D. Power states "Class 8 auctions are starting to feel more like pre-pandemic times. Volume is up somewhat, with a substantial number of higher-mileage trucks selling for unimpressive money.
"That said, pricing for the typical sleeper tractor is still more than 50 percent ahead of 2021, and the newest units — as well as those with lower-than-average mileage — are still commanding very strong money. We’ve said the biggest hits to pricing will come early in a correction, and we are currently in that phase."
J.D. Power also states market data seems to indicate the truck driver population is undergoing an employment change, which will continue to impact used truck demand and value in the months ahead.
"As we’ve said before, market shifts don’t require a major change in used truck supply. For example, in the pricing downturn of 2019, the volume of trucks in our auction benchmark group increased by only about 1,000 units during the entire peak-to-trough period. Remember, it’s not just the number of trucks available, it’s the number of trucks available for the freight economy we’re in."
For more information, and to read the entirety of this month’s report, please CLICK HERE.