Used Class 8 prices continued to decline in July, making it more affordable for truckers to become owner-operators.
The July slide of a modest 1 percent marked the fourth consecutive month that the average price of a used Class 8 vehicle dropped. In July, the national average hovered at $91,928, a modest dip from June’s $92,734. Used truck prices have fallen every month since March, with May to June showing the most significant reduction at 6 percent.
“I don’t think the general tone of the market has changed by any stretch. For sure, we are seeing softer demand for used trucks,” ACT Vice President Steve Tam reportedly said. “But everything is coming off historically high or record levels.”
Increased production ranks among the driving forces tamping down used Class 8 sales. In 2021, manufacturers struggled mightily to secure semiconductors and other materials to complete vehicles. Prior to last year’s supply chain disruption, the pandemic resulted in lower production and some plants shuttered altogether. With new models rolling off assembly lines, back-orders are being filled, and freight carriers are trading in rigs for late model semis. Although the used truck market remains relatively tight, it appears to be trending toward improved affordability.
“Auction volume was lower than June but is trending generally upward as fleets offload their highest-mileage units and owner-operators either leave the industry or go to work for a company,” J.D. Power Valuation Services stated in its Commercial Vehicle Guidelines newsletter. “Pricing will continue to fall closer to historical norms as demand returns to a more rational level.
Sandhills Global indicated that asking prices at auction were far afield from actual sales. The Nebraska-based informational resource pointed out that prices paid were approximately 62 lower than the asking prices.
“While we expect that there might be another 10-15 percent reduction in values over the next few months, we don’t see the market collapsing and reaching pre-COVID levels anytime soon,” Dan Clark, head of BMO Transportation Finance, reportedly said. “The real question is, how much of the inflation we are seeing in new units will carry over to the used market?”
Predictions vary greatly across industry experts. While some see continued cost reductions, others express concerns about a potential boomerang effect that could send used commercial vehicle prices soaring.
“By the end of this year, retail pricing will almost certainly be lower than the end of 2021,” The J.D. Power report indicates. “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.”
In terms of transitioning from an employee to an owner-operator, truckers would be wise to exercise cautious optimism. Used Class 8 prices for July ran around one-third higher than July 2021 at $64,226.
Sources:
https://www.freightwaves.com/news/used-truck-prices-dip-in-july-except-for-lower-mileage-models
https://www.ttnews.com/articles/average-used-class-8-price-weakens-again-july
https://www.ttnews.com/articles/used-class-8-prices-continue-slide-june-remain-high#:~:text=happening%20on%20Twitter-,The%20average%20retail%20price%20for%20a%20used%20Class%208%20in,something%20might%20be%20happening%20here.
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