The pricing gap between late-model and older equipment expanded in July as prices continued to fall in the auction and retail markets, J.D. Power reported Tuesday in its August 2022 Commercial Truck Guidelines industry report.
Within the auction market, volumes continue to creep forward. J.D. Power says average pricing for its auction benchmark truck was:
- Model year (MY) 2021: $145,278; $8,611 (5.6 percent) lower than June
- MY 2020: $116,840; $5,839 (5.3 percent) higher than June
- MY 2019: $80,347; $380 (0.5 percent) lower than June
- MY 2018: $61,323; $14,318 (18.9 percent) lower than June
- MY 2017: $42,778; $7,329 (14.6 percent) lower than June
In July, 3- to 5-year-old trucks averaged 3.3 percent less money than June, but 9.6 percent more money than July 2021. Year over year, late-model trucks sold in the first seven months of 2022 averaged 68.6 percent more money than the same period of 2021. Year to date, four- to six-year-old sleepers have depreciated 7.1 percent per month on average, J.D. Power says.
Additionally, late-model trucks were still bringing 50.5 percent more money than the last pre-pandemic peak month of January 2019 in July, so values are still extremely high by historical standards. Pricing will continue to fall closer to historical norms as demand returns to a more rational level.
In the retail sector, July saw a smaller month-over-month drop than June, which J.D. Power suggesting buyers are still out there for the most desirable trucks in the marketplace.
The average sleeper tractor retailed in July was 66 months old, had 435,581 miles and brought $108,041. Compared with June, J.D. Power says this average sleeper was three months newer, had 28,774 (6.2 percent) fewer miles, and brought $600 (0.6 percent) less money. Compared with July 2021, this average sleeper was seven months newer, had 17,669 (3.9 percent) fewer miles, and brought $38,436 (55.2 percent) more money.
Among the most popular 2- to 6-old trucks, July’s average pricing was as follows:
- MY 2021: $154,415; $27,888 (15.3 percent) lower than June
- MY 2020: $143,799; $3,962 (2.7 )percent lower than June
- MY 2019: $112,976; $4,867 (4.1 percent) lower than June
- MY 2018: $97,244; $10,655 (9.8 percent) lower than June
- MY 2017: $72,815; $8,487 (10.4 percent) lower than June
"This month’s average for model-year 2021 is misleading due to a mix of trucks with substantially higher mileage in a relatively small sample," J.D. Power reports. "Our mileage adjustment was inadequate to fully smooth the effect. On an individual basis, trucks with average mileage for that year did not change appreciably in value, indicating trucks with under 400,000 miles are still in very high demand."
Taking those outliers out of the equation, J.D. Power says 3- to 5-year-old trucks brought an average of 5.2 percent less money in July than June. Trucks in this age group brought 73.5 percent more money in the first seven months of 2022 than the same period of 2021.
The company says depreciation is averaging 1.0 percent per month in 2022, but looking at only the most recent three months, that number increases to 4.3 percent. Despite downward movement, retail pricing is still roughly 50 percent higher than the last pre-pandemic peak in late 2018.
Unfortunately, sales per rooftop fell dramatically. Dealers retailed an average of 2.5 trucks per rooftop in June, 0.7 fewer than June, and the lowest result since J.D. Power adopted its current methodology in January 2009. The company says the potential pool of buyers continues to recalibrate to a more typical freight environment.
"By the end of this year, retail pricing will almost certainly be lower than the end of 2021.However, the calendar-year 2022 average could still end up higher than the calendar-year 2021 average. August and September results will provide greater insight into retail demand," the company states.
Pricing in the medium-duty sector also was down across the board, J.D. Power reports.
For Class 3-4 cabovers, pricing averaged $25,386 in July. This figure is $4,690 (15.6 percent) lower than June, but $3,806 (17.6 percent) higher than July 2021. Class 4 conventionals average pricing was $36,357 in July, $3,962 (9.8 percent) lower than June and $7,399 (25.6 percent) higher than July 2021. Class 6 conventionals averaged $41,475 in July, $4,483 (10.3 percent) lower than June but $13,809 (49.9 percent) higher than July 2021.
Yet despite the pricing drops, J.D. Power believes the medium-duty market is performing well considering market changes.
"Although July was the second consecutive month of flat to downward average pricing, the medium-duty environment is very strong by historical standards, and it will take notable degradation in macroeconomic conditions to cause any real pullback in pricing in upcoming months," the company states.
In its final analysis of the market, J.D. Power says "As we’ve often said, truck supply needs to be viewed in the context of the freight market. Auction volume is trending upward, but supply is not the reason for the pricing downturn. Demand is returning to a more typical level in a post-bubble freight rate environment."
For more information, and to read the entirety of this month’s report, please CLICK HERE.