A jump in the registration of Class 3-8 used trucks over the last two quarters indicates a sense of cautious optimism may be taking hold in trucking, according to analysis by R. L. Polk & Co. The firm also said these numbers suggest that many midsize and smaller carriers are forgoing the purchase of pricier new trucks in favor of older less expensive equipment.
Polk noted that the combined registrations of new and used commercial vehicles in the first half of 2010 topped 524,700 units, representing an 18.9% increase over the same period in 2009.
However, 354,400 of those units were used trucks. That set a new record for used commercial vehicle registrations in a six-month timeframe-- representing an increase of 28.8% over the same period last year.
By contrast, new commercial vehicle registrations made a slight gain of 3.1% over the last six months compared to the same timeframe in 2009, noted Gary Meteer, Polk’s director of sales and client services.
“Used Class 8 sleeper tractors in particular were in high demand over the first half of 2010, and that tells me the sticker price increases for new trucks pushed a lot of mid- and small-sized carriers into the used market,” he told FleetOwner.
“The significant increase in used vehicle registrations so far this year is indicative of an uptick in the industry with the changeover of the commercial fleet,” he added. “Large fleet owners and operators are upgrading to new vehicles, and therefore the smaller fleet companies and independent owner- operators have great opportunities to find available clean used equipment.”
Data tracked by ACT Research indicates sales of used Class 3-8 trucks were off 20% in July compared to June of this year. However, unit sales are still up year-over-year – running 43% above 2009 on a year-to-date basis.
“The average mileage of used Class 8 trucks sold in July rose above trend due to a higher than average number of older trucks being wholesaled,” said Steve Tam, ACT vp-commercial vehicle sector. “Anecdotal evidence suggests a shortage of late model, low mileage equipment. This trend will likely continue for several more months until new truck purchases increase and bring in equipment that sat idle during the economic slowdown.”
“I agree the used truck sales numbers have picked up for each month of 2010 vs. 2009, placing 2010 very near 2008 in sales,” Terry Williams, editor of Penton’s Truck & Trailer Blue Books, told FleetOwner. “Of course these improved numbers are over an exceedingly bad couple of years – and the ‘reality pill’ is that 2010 remains at about 36% of the sales of 2007, the beginning of the downturn.”
Polk’s Meteer noted, however, that the heavy numbers of used truck registrations seems to indicate that many carriers feel enough confidence in freight volumes to buy equipment – even if only to replace aging units in their operations.
“Fleets are seeing an increase in business, enough at least to generate money to buy trucks,” he explained. “This buying activity definitely forebodes a continued uptick in the freight market, but one that may be gradual and small.”
Meteer stressed, however, that the watchword remains “cautious” among fleets – something also illustrated by these buying patterns.
Bigger fleets are replacing capacity with newer equipment, not necessarily expanding, which is why new vehicle registrations only increased 3.1% over the first half of 2010, he noted. “What they are doing is contracting out excess volume to smaller carriers; that way they don’t have to expand their operations,” Meteer said. “That volume, though, is generating enough cash for smaller operators to replace current equipment.”
While this used-truck spike isn’t necessarily good news for OEMs trying to sell new trucks, he pointed out, it does offer other opportunities.
“These used trucks will need parts and maintenance, and many are being dropped into geographic areas where the fleet doesn’t have a relationship with a dealer specific to that [given]brand,” Meteer said. “This offers great opportunities for dealers and independent shop owners alike.”