A positive picture of the resale market is being painted by rising prices last month for used medium- and heavy-duty trucks.
A positive picture of the resale market is being painted by rising prices last month for used medium- and heavy-duty trucks, according to the Commercial Truck Monthly Report for February just released by The Truck Blue Book (TBB).
“Entering 2014, prices were falling as companies removed older inventory to take advantage of tax regulatory changes,” explained report author Jessica Carr, TBB’s associate analyst— commercial trucks. “January volume and prices increased in the resale market but fell at auction.”
However, she pointed out, February prices continued to climb compared to those seen in both December and January— and that “bodes well for a positive first quarter and 2014.”
Carr advised FleetOwner of these key findings of the February report:
- In the medium- and heavy-duty arenas, used truck prices have risen since January on both auction and private markets
- All five U.S. regions saw price increases for used trucks, with the Southwest “leading the pack” after a 13% hike on the private market
- Overall volume fell specifically for medium-duty trucks after the increases seen throughout December and January
“Prices in February followed January’s upward trend, which reversed December’s decline and increased optimism for 2014,” Carr elaborated. “February brought on increases in price for both asking and auction markets for heavy- and medium-duty trucks.”
What’s more, she related that “auction prices increased substantially due to minimal January activity and a monumental increase in volume-- which drove prices up.”
Although heavy-duty trucks suffered “sharp declines in December, they have rallied and are “contributing strongly to average resale prices increasing in 2014.
Zeroing in on commercial trucks of model years 2004-14 having less than one-million miles, Carr reported that the average asking prices increased above the December and January averages for both medium- and heavy-duty trucks.
In addition, there was an uptick in volume on the auction market in February due to so few auctions having been held in January. However, the asking price volume fell last month.
“After December’s inventory cleared, current year prices have been rising,” reported Carr. “Q4 of 2013 saw declining prices of 2%, which was driven primarily by the December price decreases, and Q1 of 2014 is showing a promising start to the truck market for both heavy- and medium-duty trucks.”
In comparing Q4 to Q1 so far, Carr found that heavy-duty asking prices are up 8% and medium-duty ones are up 4%-- “showing a positive change to the resale market.” She added that “December’s record volumes resulted in decreases in volume sold so far in 2014 and have contributed to increased demand.”
Looking at the market regionally, Carr said that the West continues to have the highest prices in Q1 while the Midwest saw the highest price increase from Q4 2013 to Q1 of 2014.
However, each region’s prices have risen in 2014 compared to December 2013. “Several factors— such as reduced demand and persistent economic worries— contribute to reduced volume,” Carr pointed out.
“At the front of the pack,” she continued, “the Southeast saw prices rise 13%, while the Northeast lagged with an average asking price increase of 2%. Winter auctions and milder temperatures contributed to the Southeast’s marked price increases, which we expect to stabilize throughout the remainder of 2014.
“Overall,” Carr observed, “regional prices have not changed in dollar figures compared to last quarter— the West still has the highest asking prices and the Northeast still has the lowest."
Trucks of model year 2013 and 2014 experienced the largest decline in average price during Q1 so far, which Carr attributed to more models entering the used market. “As the trucks get older, the quarter-to-quarter depreciation begins to level out before reversing to an upward trend in price,” she added, “beginning at MY 2008 and back.”
Carr also pointed out that, on the whole, Q1 2014 values are on par with Q4 2013 prices for most model years. “Not surprisingly, 2013 models demonstrated the largest decrease from January to February at 9%,” she related. “And 2004 model years had the highest price increase, 10%, compensating for late 2013 declines. In general, prices fluctuated less than 2% in either direction between January and February.”
Turning specifically to heavy-duty trucks, Carr said Q1 2014 prices “continue to increase after December declines, showing a 6% increase between January and February for Class 7 and Class 8 trucks. This increase is moderate compared to December’s drop of 11% and January’s response of a 14% increase.
On the other hand, per Carr, medium-duty pricing decreased 0.4% during February in comparison to January in terms of overall resale asking and auction price markets.
To view TBB's complete February report, click here.