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Friday, August 1, 2014

Increased Pressures for Fleet Profits Escalate Used Truck Sales

The Class 8 used-truck sales numbers continued to climb in June, compared to May and most of 2013, according to ACT Research's latest used-truck report. The report, which provides data on the average selling price, miles, and age based on a sample of trucking industry data, provides the average selling price for top-selling Class 8 models for each of the major truck OEMs.

The volume of used Class 8 trucks sold in June rose 10% above May's volume, according to the latest release of the State of the Industry: U.S. Classes 3-8 Used Trucks. This is a key report coming out more than halfway through 2014, and the numbers have been forecast to be some of the best in the last decade.

ACT estimates that 2,376 used Class 8 trucks sold, based on a sample of the activity that takes place in the total used truck industry, compared to 2,055 in June last year, a difference of 15.6%. This reinforces a steady year-long pattern in used truck sales that are being linked to increasing stress on bottom-line profits for fleets and the increasing cost of new Class 8 vehicles.

"June's performance was a little counterintuitive, given that sales usually slow in the summer months," said Steve Tam, vice president-Commercial Vehicle Sector with ACT. "While one month does not make a trend, it is a confirmation that demand in the used truck market remains strong," he added.

Capitalizing on the forecasted used truck growth, Navistar announced it has launched a new used truck refurbishment program dubbed "Diamond Renewed" for 2010 model or newer International units equipped with the company's MaxxForce exhaust gas recirculation (EGR) engines.

David Gerrard, Navistar Senior VP of distribution, explained that the "Diamond Renewed" program seeks to capitalize on demand for late model, low mileage used trucks that is expected to only increase as freight distribution patterns are expected to undergo a major shift over the next two years.

"Our customers are operating on very tight lines," Gerrard said. "It used to be that the standard used [Class 8] truck model was 7 to 8 years old and cost between $25,000 and $40,000," he pointed out. "Now that [Class 8] truck is 3 to 4 years old and costs $45,000 to $65,000. Yet that is still significantly cheaper than a brand new one."

The Class 8 new truck market has also flourished in 2014 with volumes up double digits several months so far this year. Aging fleets that were hanging onto older vehicles to try to get the most from them before transferring them into the used market have made the leap to new Class 8 purchases.

Meanwhile, many mid-level fleets are seeing opportunity to pickup those used trucks and operate on a more focused preventative maintenance (PM) program in order to keep those older trucks on the road. Older fleets require extra attention to PM in order to stay ahead of age-related parts replacement and wear.