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

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Pinnacle AB 70 Inch High Rise Sleeper
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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Lyndon Finney’s publishing career spans over 55 years beginning with a reporter position with the Southwest Times Record in Fort Smith, Arkansas, in 1965. Since then he’s been a newspaper editor at the Southwest Times Record, served five years as assistant managing editor of the Arkansas Democrat-Gazette in Little Rock and from November 2004 through December 2019 served as editor of The Trucker. Between newspaper jobs he spent 14 years as director of communications at Baptist Health, Arkansas’ largest healthcare system. In addition to his publishing career he served for 46 years as organist at Little Rock’s largest Baptist church.
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