Used truck sales experienced an increase in volume and another drop in sales last month, causing experts to fear pricing could drop below 2018 market peaks, J.D. Power reported Monday in its April 2023 Commercial Truck Guidelines industry report.
Volume was up notably in the used truck market, accelerating depreciation. Among 3- to 7-year old trucks, J.D. Power says its average pricing was:
- Model year (MY) 2021: $87,000; $35,200 (28.8%) lower than February
- MY 2020: $64,317; $15,783 (19.7%) lower than February
- MY 2019: $50,411; $4,607 (8.4%) lower than February
- MY 2018: $36,368; $4,771 (11.6%) lower than February
- MY 2017: $25,456; $3,759 (12.9%) lower than February
J.D. Power says the extreme drop in average for model year 2021 trucks may be exaggerated due to very low volume. The company says 3-year-old trucks are certainly depreciating, but a more detailed assessment will not be possible until more of these trucks cycle through the used market.
The company adds late-model trucks averaged 14.3% less money in March than February, and 47.4% less money than March 2022. In Q1 2023, late-model sleepers brought in 46.6% less money than the same period of 2022. Monthly depreciation in 2023 is currently averaging 8.1%.
J.D. Power says the newest model years available in the marketplace are bringing about 25% more money than the strong pre-pandemic period of 2018, assuming average mileage per year. If the company adjusts values over time to 2023 dollars, that difference drops to about 5%.
Additionally, the company says the definition of low mileage is narrowing, with a notable price premium only given to trucks with less than 300,000 miles.
"With new trucks more readily available, demand for lower mileage used units has diminished. Also, fleets and owner-operators continue to offload their highest-mileage equipment, as excess capacity is no longer needed," the company says.
In the retail business, the story wasn't much better.
J.D. Power says the average sleeper tractor retailed in March 2023 was 67 months old, had 455,506 miles and brought $76,102. Compared with February, this average sleeper was six months newer, had 15,115 (3.2%) fewer miles and brought $8,022 (3.9%) less money. Compared with March 2022, this average sleeper was one month newer, had 5,869 (1.3%) fewer miles and brought $41,473 (35.3%) less money.
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The company says March’s average pricing for 2- to 6-year-old trucks was as follows:
- MY 2022: $135,771; $26,897 (16.5%) lower than February
- MY 2021: $111,765; $10,051 (8.3%) lower than February
- MY 2020: $86,985; $7,878 (8.3%) lower than February
- MY 2019: $70,137; $12,322 (14.9%) lower than February
- MY 2018: $61,627; $2,120 (3.3%) lower than February
The company says 3- to 5-year-old trucks brought an average of 10.1% less money than February, and 35.5% less than March 2022. The first quarter of 2023 averaged 25.5% less money than the same period of 2022. Monthly depreciation in 2023 is currently averaging 5.0%. Late-model sleepers are bringing about 20% more money than the last strong pre-pandemic period of 2018, assuming average mileage per year. When adjusting values over time to 2023 dollars, that difference is now at parity.
"We focus primarily on sleepers since they are the 800-pound gorilla of the used-truck market, but daycabs are also an important segment, a segment which is performing substantially better than sleepers so far in 2023," J.D. Power states. "Depreciation in the second half of 2022 was comparable — 2.8% per month for daycabs vs. 3.1% per month for sleepers — but in the first quarter of 2023, pricing for the two configurations is essentially at parity. This means the typical late-model sleeper is currently bringing roughly the same money as the typical late-model daycab, all else being equal."
If there's good news from March, retail sales volume was up slightly to 2.6 trucks per rooftop, 0.3 trucks better than February. J.D. Power believes potential buyers continue to contend with the cooler freight environment, declining equity and tougher credit conditions.
Pricing in the medium-duty space was a little better.
J.D. Power says Class 3-4 cabover pricing in March was $27,361. That figure was $4,242 (17.9%) higher than February, and $4,508 (14.1%) lower than March 2022. Class 4 conventionals averaged $38,115 in March, $936 (2.5%) higher than February, and $1,344 (3.6%) higher than March 2022. Class 6 conventionals averaged $41,510 in March, $3,168 (7.1%) lower than February, and $8,261 (16.6%) lower than March 2022.
The company's expectations for the rest of the year are increasingly bearish.
"The freight market continues to cool as an increasing number of trades enters the market. It is now apparent that pricing will dip below 2018 levels, at least on an inflation-adjusted basis. The excess capacity created in 2020-2021 will need to cycle out before pricing will stabilize," the company says.
For more information, and to read the entirety of this month’s report, please CLICK HERE.