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J.D. Power says new truck boom cycle almost certainly in rear-view mirror

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In January, a 3-year-old truck retailed for $93,883, $3,238 (3.6 percent) higher than January 2018. Pictured is a 3-year-old Mack Pinnacle. (Courtesy: MACK TRUCKS)

TYSONS, Va. — The year opened as expected in the commercial vehicle auction and retail channels with no real changes in pricing, but the new truck boom cycle is almost certainly in the rear-view mirror.

So says the February Commercial Truck Guidelines Industry Review released Thursday by J.D. Power Valuation Services (formerly the National Automobile Dealers Association).

The takeaway is that truckers are satisfied with the units they have in the production pipeline, the report said.

Trucks sold in January continue to bring strong money, with depreciation essentially nonexistent month-over-month, the report’s Class 8 retail update said.

“There appear to have been fewer buyers in January, but those who did write a check were paying similar money to last month,” the report said.

The average sleeper tractor retailed in January was 70 months old, had 467,599 miles, and brought $56,379. Compared to December 2018, the average sleeper was one month older, had 7,632 (1.7cent) more miles, and brought $856 (1.5 more) more money. Compared to January 2018, this average sleeper was one month older, had 8,410 (1.8 percent) more miles, and brought $5,181 (10.1 percent) more money.

Each January, J.D. Power considers each model year one year older.

For example, a truck of model year 2015 would be five years old as opposed to four years old in December.

With that in mind, January’s average pricing was as follows:

  • 3-Year-Old Truck: $93,883; $3,238 (3.6 percent) higher than January 2018
  • 4-Year-Old Truck: $77,560; $10,956 (16.4 percent) higher than January 2018
  • 5-Year-Old Truck: $61,540; $5,975 (10.8 percent) higher than January 2018

On a year-over-year basis, late-model trucks sold in calendar-year 2018 brought 10.7 percent more money than in the same period of 2017.

Class 8 sales per dealership came in substantially lower than expected in late 2018 and January of 2019, dropping in January to 3.9. This is the lowest volume recorded since the Great Recession.

January is more often than not a slow month for used truck sales, so we are not overly concerned about the result, the report said, noting that in looking forward over the long term, Class 8 orders dropped dramatically in late 2018 and January 2019.

“Orders have now been below deliveries for two months, which is an inflection point that should be noted,” the report said. “The new truck boom is behind us, as the ‘beat-the-tariffs’ business inventory buildup has ended and the ‘juice’ from the 2018 tax breaks has played out. Deliveries of new trucks will remain strong into the second half of 2019, but it looks like demand is on the downward slope as supply heads in the other direction.”

The Class 8 auction update said with the seasonal lull in auction activity in place, there were very few units of the benchmark model sold in January.

“Low volume can create anomalies in our averages, but this month’s figures looked stable,” the report said. “The exception was trucks of model-year 2015, which showed a dip that can be explained by a high-mileage and low-spec mix of trucks sold.

Here is date for model years 2011-2016:

  • Model year 2016: $51,895 average; $2,520 (4.9 percent) higher than December
  • Model year 2015: $39,125 average; $4,425 (10.2 percent) lower than December
  • Model year 2014: $31,500 average; $500 (1.6 percent) lower than December
  • Model year 2013: $29,700 average; $550 (1.8 percent) lower than December
  • Model year 2012: $24,175 average; $825 (3.3 percent) lower than December
  • Model year 2011: No sales in January

“There was essentially no depreciation in 2018 for 4-6 year-old examples of our benchmark model. On average, this group brought 21.5 percent more money year-over-year,” the report said. “We expect the supply and demand relationship to look more historically typical as 2019 progresses, resulting in more noticeable depreciation.”

 

 

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ATA For-Hire Truck Tonnage Index surges 7.4% in April

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Compared with April 2018, the SA index increased 7.7%, the largest year-over-year gain since July. (The Trucker file photo)

ARLINGTON, Va. — American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index surged 7.4% in April after decreasing 2% in March. In April, the index equaled 121.8 (2015=100) compared with 113.4 in March.

“The surge in truck tonnage in April is obviously good for trucking, but it is important to examine it in the context of the broader economy,” said ATA Chief Economist Bob Costello. “February and March were particularly weak months, as evidenced by the 3.5% dip in tonnage due to weather and other factors, so some of the gain was a catch-up effect. In addition, the Easter holiday was later than usual, likely pushing freight that would ordinarily be moved in March into April.

“I do not think the fundamentals underlying truck tonnage are as strong as April’s figure would indicate, but this may signal that any fears of a looming freight recession may have been overblown,” he said.

March’s reading was revised up compared with our April press release.

Compared with April 2018, the SA index increased 7.7%, the largest year-over-year gain since July.

The not seasonally adjusted index, which represents the change in tonnage actually hauled by the fleets before any seasonal adjustment, equaled 117.7 in April, 1% above March level (116.6). In calculating the index, 100 represents 2015.

Trucking serves as a barometer of the U.S. economy, representing 70.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 10.77 billion tons of freight in 2017. Motor carriers collected $700.1 billion, or 79.3% of total revenue earned by all transport modes.

ATA calculates the tonnage index based on surveys from its membership and has been doing so since the 1970s. This is a preliminary figure and subject to change in the final report issued around the 5th day of each month. The report includes month-to-month and year-over-year results, relevant economic comparisons, and key financial indicators.

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ACT says trailer order volume soft in second straight month

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This chart compares trailer order volume for three years. (Courtesy: ACT RESEARCH)

COLUMBUS, Ind. — ACT Research’s preliminary estimate for April 2019 net trailer orders is 14,500 units.

Final volume will be available later this month. ACT’s methodology allows the company to generate a preliminary estimate of the market that should be within +/- 3% of the final order tally.

“Order volume was soft in April for the second straight month. Several factors appear to be in play. OEMs continue to be reticent to fully open 2020 orderboards. This is evident in our measurement of the extent of the industry’s backlog, which has remained in the November or December timeframe throughout the first four months of 2019,” said Frank Maly, ACT’s director of CV transportation analysis and research. “While we hear comments of some fleets anxiously awaiting the chance to snap up 2020 build slots, some also appear to be evaluating their existing commitments. Cancellations in April were the highest since August 2016 on both a unit and percent of backlog basis, and have remained elevated since December. That resulted in an interesting dichotomy in April orders; while new orders were actually up versus March, cancellations were significant enough to pull the net order number into the red month-over-month.”

Maly said while down slightly from March, production continues at a brisk pace, although material/component availability and staffing continue to challenge OEMs. Seasonal patterns actually called for a slight increase for April production, so that small sequential decline likely confirms the impact of the aforementioned headwinds.

“Additionally, our discussions indicate that red-tagged units continue to challenge OEM production efficiency,” he said.

ACT Research is a publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasting services for the North American and China markets.

ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies.

More information can be found at www.actresearch.net.

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Price of diesel inches up three-tenths of a penny

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Overall, the price for the week ending was down 11.4 cents a gallon lower than last year.

WASHINGTON — The average on-highway price of a gallon of diesel increased three-tenths of one cent to $3.163 for the week ending May 20, according to the Energy Information Administration of the Department of Energy.

The increase was precipitated by a 1.1-cent increase in the Rocky Mountain states (Colorado, Utah, Wyoming, Idaho and Montana) and a 1-center increase in the Central Atlantic states (New York, New Jersey, Delaware, Pennsylvania and Maryland).

The largest decrease was five-tenths of a penny in the Lower Atlantic states (Florida, Georgia, South Carolina, North Carolina, Virginia and West Virginia).

Two regions remained the same as last week.

Overall, the price is down 11.4 cents a gallon lower than last year.

For a complete list of prices by region for the past three weeks, click here.

 

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