By Dian Kohoutek, CPPA

May 31, 2023

The State of the Industry report on U.S. Classes 3-8 Used Trucks published by ACT Research provides valuable insights into the trends and indicators of the used truck market. Additionally, data from Ibis World on Truck & Bus Manufacturing in Canada sheds light on the challenges faced by the industry. This article aims to analyze the information from these reports, as well as data from Ritchie Bros, to gain a deeper understanding of the current state of the used truck market.

According to the ACT Research report, the used Class 8 retail truck market experienced a decline of 23% in sales in April. Average mileage decreased by 1%, average prices dropped by 8%, and the average age of vehicles increased by 3%. These statistics suggest a softening demand and challenging market conditions.

The Ibis World report on Truck & Bus Manufacturing in Canada reveals a decline in revenue and profit within the industry. The pandemic-related restrictions resulted in reduced transportation needs, affecting downstream industries such as construction, manufacturing, and retail markets. This slowdown in demand for freight trucking has impacted the truck and bus manufacturing sector.

Data from Ritchie Bros, a leading industrial auctioneer, further complements the understanding of the used truck market. Their estimation indicates that truck tractor prices decreased by 1% for the three months ending in April, while vocational truck prices increased by 1% during the same period compared to the previous year. These contrasting trends highlight the complexity of the used truck market, where different segments may experience varying price dynamics.

When combining the findings from the ACT Research, Ibis World, and Ritchie Bros reports, a more comprehensive picture of the used truck market emerges. The decline in demand and sales volumes reported by ACT Research aligns with the overall economic conditions and waning freight volumes, contributing to the drop in average prices and the increase in the average age of vehicles.

The Ibis World report provides a broader perspective on the industry, showcasing the impact of the pandemic on truck and bus manufacturing. Reduced transportation needs across various sectors have resulted in decreased revenue and profit for manufacturers.

The insights from Ritchie Bros offer a market perspective, with truck tractor prices experiencing a slight decline while vocational truck prices see a modest increase. This indicates that different segments of the used truck market may exhibit varying trends and dynamics.

By combining the findings from ACT Research, Ibis World, and Ritchie Bros, a more comprehensive understanding of the current state of the used truck market and the challenges faced by the truck and bus manufacturing industry emerges. The data suggests a decline in demand and sales volumes, along with the impact of pandemic-related restrictions on the industry.

The insights provided by the ACT Research, Ibis World, and Ritchie Bros reports have significant implications for sellers, buyers, and financial companies involved in the used truck market. Understanding these implications can help guide decisions regarding the timing of selling or purchasing used trucks, as well as the type of financing or refinancing options that financial companies may consider.

While day-to-day observations of the market may vary and anecdotal evidence may suggest a shortage of available units and high prices, it is important to consider the broader trends and indicators provided by reputable industry reports. By analyzing a range of data sources, stakeholders can gain a more comprehensive understanding of the complexities and dynamics of the used truck market and make informed decisions accordingly.

What are the implications for Sellers, Buyers, and Financial Companies in the Used Truck Market

For Sellers:

Timing of Selling: Given the softening demand and declining sales volumes reported by ACT Research, sellers should carefully consider the timing of their sales. Monitoring market conditions, such as freight volumes and economic indicators, can provide valuable insights into the potential demand for used trucks. Sellers may want to prioritize selling during periods of higher demand or when market conditions are more favorable.

Pricing Strategy: The decrease in average prices observed in the ACT Research report suggests a competitive market. Sellers should be mindful of pricing their used trucks appropriately to attract potential buyers while also considering factors such as mileage and age. Conducting market research and utilizing pricing tools can help sellers set competitive prices and maximize their chances of a successful sale.

For Buyers:

Timing of Purchasing: Buyers can take advantage of the declining prices and softening demand reported by ACT Research. However, it is crucial to assess their specific needs and consider the potential future demand for used trucks. Monitoring economic conditions, freight volumes, and industry projections can assist buyers in identifying the most opportune time to make a purchase.

Vehicle Condition and Maintenance: As the market experiences a slight increase in the average age of vehicles, buyers should pay close attention to the condition and maintenance history of the used trucks they intend to purchase. Conducting thorough inspections and obtaining comprehensive vehicle histories can mitigate potential risks and ensure a sound investment.

For Financial Companies:

Financing and Refinancing Considerations: Financial companies involved in providing financing or refinancing options for used trucks should closely monitor market trends and indicators. They should assess the risk associated with the softening demand and declining sales volumes, as well as the potential impact on the collateral value of used trucks. Evaluating creditworthiness, collateral conditions, and market forecasts can help financial companies make informed decisions regarding financing approvals and terms.

Flexibility and Diversification: Financial companies should maintain flexibility and consider diversifying their portfolios to mitigate risks associated with market fluctuations. This could involve offering a range of financing options, including lease-to-own, balloon payments, or flexible repayment structures. Diversifying the portfolio by financing different types of trucks and serving various segments of the market can help mitigate the impact of any specific downturns.

In summary, sellers should carefully consider the timing and pricing strategy for selling used trucks, while buyers can take advantage of declining prices and prioritize vehicle condition and maintenance. Financial companies should closely monitor market trends and exercise flexibility in their financing and refinancing options, considering risk factors and diversification. By staying informed and adapting to changing market conditions, stakeholders in the used truck market can optimize their decision-making processes and navigate the complexities of the industry more effectively.

Sourced:

• “Trucking Industry Forecast for 2023”- ACT Research

• “Truck & Bus Manufacturing in Canada industry trends (2018-2023)” – Ibis World

• “Market Trend Report – Used Equipment & Trucks-North America Edition May 2023”- Ritchie Bros Asset Solutions