March Used Truck Sales: A Tale Of Two Extremes

The Class 8 used truck market started March in decent shape but lapsed as freight loads began cratering late in the month because of the coronavirus pandemic.

Month-over-month comparisons tracked the onset of COVID-19 impacts to the economy. More secondhand trucks were sold as freight capacity tightened in early March before tender rejections fell later in the month amid rising coronavirus infections and deaths.

Same dealer sales fell 8% in March compared with February but were 5% higher compared to March 2019, ACT Research reported. For the January-to-March quarter, sales rose 15% against easy comparisons a year ago.

"Freight was relatively strong for a good portion of March, as retailers and grocers scrambled to restock empty shelves," ACT Vice President Steve Tam said. "With that work largely complete, freight is falling and used truck sales and prices are expected to do the same." 

Auction and retail trends converge

The volume of 4- to 7-year-old trucks sold at auction was healthier than expected in March as most auctions moved online to adhere to social distancing guidelines. Compared to February, pricing in March was flat to slightly lower, according to J.D. Power Valuation Services.

Prices for Power's benchmark group of 4- to 6-year-old trucks averaged 26.3% less in the first three months of the year compared to the same period of 2019.

"With consumers stockpiling certain items in March, the environment for dry van and reefer haulers was healthy," said Chris Visser, Power senior analyst and commercial vehicles product manager.

"This activity kept used truck replacement demand stable. In April, the freight environment has pulled back from the surge, making our short-term outlook bearish."

Retail pricing trends typically lag auction prices by three to five months, but Visser said in the current environment, trucks in both channels are losing value fairly rapidly though retail pricing is holding up better.

Retail dealers sold an average of 3.7 trucks per store in March, identical to February. Most purchasers are replacing older trucks as the pullback in freight volumes puts downward pressure on demand.

Bucking the trend

Still, exceptions exist.

Kevin Daugherty, used truck territory manager at Kriete Truck Center in Racine, Wisconsin, told FreightWaves he had his most profitable month ever in March, selling five used units despite taking a week off.

"I'm kind of mind-boggled," Daugherty said. "I haven't had such big commissions in my life."

One fleet customer contracted to FedEx upgraded two Class 8 day cabs. One trade was a 2005 Volvo with 850,000 miles for a 2019 Mack Anthem demo unit with 25,000 miles. Daughtery earned a $6,500 commission on the $103,000 sale.

Across Kriete's eight stores, 40 trucks from an inventory of 183 sold in March. For the first half of April, the number is 16, suggesting the falloff analysts predict.

"The economy is expected to descend into recession, if it has not already done so, and with uncertainty about virtually everything high, the well prepared will plan for the worst while hoping for the best," Tam said.