Used Class 8 trucks sold at the fastest rate in two years in February as depressed prices and seasonality combined to juice an otherwise quiet equipment market.
"Relatively solid February numbers were a reflection of where the market may have been headed before the coronavirus flipped the economy upside down," Chris Visser, senior analyst and product manager for commercial vehicles for J.D. Power Valuation Services, told FreightWaves.
According to ACT Research, preliminary used Class 8 volumes increased 21% over January, 24% year-over-year and 12% for the first two months of 2020.
Average prices, miles and age of equipment dropped 3%, 2%, and 4%, respectively, ACT said.
"It is important to keep in mind that most of February's activity was likely unaffected by COVID-19," said Steve Tam, ACT Research vice president. "Seasonality accounts for about half of the sequential increase, and the catalyst for the remainder of the gain may be the result of the continued drop in prices."
ACT's Classes 3-8 Used Truck Report provides average selling price, miles and age data based on a sample of industry data. It covers top-selling Class 8 models for the major truck manufacturers — Freightliner (Daimler Trucks North America); Kenworth and Peterbilt (PACCAR)(NASDAQ: PCAR); International (Navistar International Corp.) (NYSE: NAV); and Volvo and Mack (Volvo Group).
"The recent cancellation of events, ranging from public school and university classes to college and professional sporting events to industry trade shows, is expected to have a chilling effect on the economy and, by extension, the truck industry," Tam said.
Visser is less pessimistic.
"I think demand for used trucks right now is helped by the temporary bump in freight volume driven by consumer stockpiling," he said. "Thanks to shutdowns and quarantines, people will be ordering more items online, which means more shipping. The nation's truck drivers could end up being the stars of this show."
Power said the volume of Class 8 sales was the highest in more than two years and retail pricing was stronger than expected, likely due to consumers stocking up on items like paper goods.
Still, pricing averaged 28.2% lower In the first two months of 2020 than the same two months of 2019, according to Power.
A mild winter and the temporary surge in freight demand awakened the slumbering used truck market in February, and negative month-over-month averages had more to do with a mix of higher-mileage trucks than declining value of individual units, Visser said.
Prices Still Dropping
The average sleeper tractor sold at retail in February was 70 months old, had 464,568 miles and brought $45,393. Compared to February 2019, this average sleeper was one month older, had 5,960 (1.3%) more miles and brought $10,424 (18.7%) less.
Until the infection rate of the COVID-19 outbreak is known, the best assumption is that widespread shutdowns and quarantines contributing to the broad economic pullback will continue through the next couple of months. Some catch-up sales could come in the third quarter but even that is a guess without seeing March data, Visser said.
Image Sourced from Pixabay