The emissions regulations set to go into effect in 2007 are already having a positive impact on the used truck market by helping to stabilize values and keep inventories in check.
Over the past few years, it's been a challenge for dealers to acquire inventory. For example, early last month I drove by a SelecTruck Center outside of St. Louis that's usually quite rich in inventory and noticed that it had only about 15 pieces of equipment for sale. Fleets are not only holding onto equipment longer, but are foregoing the manufacturers' residual and instead opting to sell equipment on the open market where they can get a better return on their investment.
The competition for inventory has heated up between franchised and independent dealers more so than I can recall in recent memory. If you can find a tractor that's no more than two years old and has less than 200,000 miles on it, you can all but name your price.
But there is inventory to be had. A review of dealer sales reports from 2005 shows that on average they sold about 15 vehicles a month. However, closer analysis shows that rather than an even distribution of used truck sales, there are really two subgroups: those selling about 12 units a month and those selling about 31 a month. Used truck sales figures for January 2006 indicated that this trend is holding.
The used truck inventory out there is most likely made up of units that are older and have more miles on them. Therefore, it's especially important to get an aftermarket used warranty when you buy this equipment.
Locating inventory will become even more difficult if fleets decide to keep their current equipment longer because of uncertainty over the performance and reliability of '07-compliant units. Used-truck values will also strengthen, particularly for tractors without the '07 engines.
The increase in prices can be seen by comparing the January 2005 and January 2006 Truck Blue Book values of three-year-old highway tractors spec'd for fleets.
In January 2005, a 2002 aerodynamic highway tractor with a 14-liter, 450-hp. engine, 9- or-10 sp. transmission, 58- to 64-in. midroof sleeper, 350,000-400,000 miles, full aerodynamics and standard Truck Blue Book options had an average value of $45,812.
Model-year 2003 tractors with similar specs are listed in the January 2006 Truck Blue Book at an average value of $53,496. That's an increase of $7,684 for a three-year-old tractor! (Specific make and model valuations can be obtained by using the Truck Blue Book.)
What a difference six years can make. At the beginning of the decade you could find almost anything you wanted by making a couple of phone calls. And once you found it, you had to wrap up the deal within 45 days or the value would drop again.
Today, used truck dealers have to spend a great deal of time looking for equipment. And much to their dismay, what used to be a retail price is now a wholesale price. Thank you, new emission standards.
