Let’s start with the good news. In the used truck market, good news has been hard to come by over the last few years.
But during the Used Truck Association’s (UTA) used truck market review and outlook webinar Thursday, J.D. Power’s Chris Visser says a few positive traits are beginning to become visible in the used truck market.
The used truck market hasn’t turned over yet; it continues to navigate a trough in the business cycle. But Visser says depreciation finally is normalizing. Prices are stabilizing. The auction channel has experienced consistent depreciation in line with historical norms (around 3%) over the last quarter, and Visser says the retail market began showing similar signs in June.
Stable yet low prices are hardly a victory, Visser admits, but after the freefall the used truck space experienced throughout most of 2022 and 2023, consistency shouldn’t go unnoticed.
[RELATED: ATD: Softening Class 8 market impacting new truck sales to date]
“Trends in the retail channel generally follow trends in the auction channel by about three months. That’s traditionally how it’s been and last quarter that’s been what’s happening,” Visser says. “The auction market stabilized in late March and April and retail could be stabilizing as we speak — I hope that’s the case.”
What does stabilization mean?
Visser says J.D. Power’s data indicates prices at or above what the industry saw during its last downturn in 2019 (once adjusted for inflation). The market’s pricing crash from its early 2022 peak has been painful for everyone in the space, Visser says, but it hasn’t created a new floor beyond what the industry has previously experienced. What’s really hurting the industry today isn’t just price, it’s volume.
Visser says from 2010 to the onset of the pandemic, the retail used truck space averaged 5.3 sales per rooftop per month. Over the last two years the market has rarely exceeded three units — in June the number was under two. Visser adds there are fewer 3- to 5-year-old trucks on the market now than historical averages, which helps, but even lower supply totals have not been able to bring the market into capacity equilibrium.
And he doesn’t imagine that will occur for a while.
“The freight economy could start to improve, which could set the stage for an improvement,” he says. “But I’m not too confident in putting any data on an increase. Stability sure, but we could bounce around the bottom for a while.”
[RELATED: The high cost to electrify commercial vehicles will impact consumers]
Visser says late-model, low-mileage sleepers are the most lucrative trucks on the market today and he sees no reason for that not to continue — particularly in California and other CARB-compliant states where carriers who can want to get their hands on the best used trucks available. Low-mileage trucks are the jewels of the daycab sector too, though Visser acknowledges that segment is holding prices better than their sleeper counterparts. “Sleepers have little value after five years old,” he says.
When asked Thursday about a timeline for a market turnaround, Visser was uncertain. He says recent freight metrics are improving but supply still continues to outpace demand quite a bit. Interest rates and the impending election are stunted business investment too, and an emissions pre-buy looms. He says there’s reason to believe 2025 will be better, but for now, the market should prepare for a stagnant second half.
“I think we are at or near market bottom with historically normal depreciation for now,” he says.
