Truckers who dream about becoming owner-operators could feel the sting of rising inflation. The logjams in supply chains and shortage of semiconductor chips are now causing even the price of used heavy-duty vehicles to skyrocket. Truckers who saved up the down payment to buy their own rig face a difficult decision. Should you buy now before inflation puts used semis out of reach, or have faith the economy will return to normal?
J.D. Power reports that used Class 8 trucks saw a price spike upwards of 22 percent at auction and nearly 5 percent in retail settings. Sleepers are reportedly garnering the highest bids at auction since J.D. Power began tracking data in 2015. For example, a 2018 sleeper tractor saw a cost hike of nearly 40 percent in February and sold at an average cost of close to $70,000. The average sleeper during March was 68 months used with just over 458,000 miles. This class of heavy-duty vehicle is routinely sold for more than $57,000.
“I don’t think there’s any question late-model, low-mileage used trucks are benefiting from this new truck shortage. Auction and retail pricing for those trucks is through the roof,” J.D. Power Senior Analyst Chris Visser reportedly said.
Slowed production due to a semiconductor shortage, coupled with across-the-board inflation, may not be curbed quickly. The federal government is keenly aware the U.S. remains reliant on foreign chipmakers. The federal government continues to talk about intervening in this economic issue but has yet to act. U.S. Commerce Secretary Gina Raimondo recently floated the idea the White House could impose the Defense Production Act to force American companies to start making semiconductor chips.
“What I told them is, ‘I don’t want to have to do anything compulsory, but if they don’t comply, then they’ll leave me no choice,’” Raimondo reportedly said. “I said today we’re evaluating all of our options right now, all the tools. I hope not to go there, but we need to see some progress, and we definitely need compliance.”
The current administration has yet to signal they’re all-in on reducing America’s reliance on foreign parts. Even if the Defense Production Act was brought to bear by year’s end, it’s unlikely U.S. plants could produce many of the sensitive chips required and adequate volume could be years away. That leaves wheels-on-the-pavement truckers weighing their options.
“Fleets on a three-year trade cycle are probably holding on to their iron longer because new trucks and one- and two-year-old used trucks are simply unavailable. Fleets on a four- or five-year trade cycle to a lesser degree,” Visser reportedly said. “This market dynamic should stay in place into the summer, and probably longer assuming consumer spending on goods continues to ramp its way back up to the pre-COVID trend.”
That appears to indicate the cost of buying a used tractor will remain high or even rise in the coming months unless something unexpected occurs. Entrepreneurial-minded truckers can either bite the bullet on seemingly over-priced models now or cross their fingers inflation wanes.
Sources: ccjdigital.com, freightwaves.com, foxbusiness.com
Leave a Comment