High inventory sinks used-truck values

Used-truck inventories continued to sit on dealer lots in June, highlighting the ongoing freight recession.  

Lenders remain reluctant to provide financing for commercial trucks due to high interest rates and other challenges facing the industry. Aging transportation equipment has become especially difficult to finance, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told Equipment Finance News.  

“A lot of the time, banks will not look at trucks that are 5 years or older, make and model, for financing if you’re an owner-operator,” Ryan said.

Medium- and heavy-duty truck values continued to fall in June amid high inventory, Sandhills Global noted in its monthly report.

Used heavy-duty trucks 

• Heavy-duty truck inventory increased slightly last month, rising 1.2% month over month and 0.7% year over year. 
• Auction values fell by 20.2% YoY, while asking values dropped 17.6% YoY.  

 Used semitrailers 

• Used-semitrailer inventory, which is hovering around pre-pandemic levels, rose 26.8% YoY in June. 
• Inventory was down 0.7% MoM in June, following a MoM increase of 0.9% in May.
• Auction and asking values both fell nearly 20% YoY, adding to consecutive months of decreases.

Used medium-duty trucks 

• Medium-duty truck inventory increased 28.2% YoY and 2.7% MoM. 
• Asking values were up slightly from the previous month but declined 12.9% YoY.
• Auction values dropped 16.4% YoY and 3% MoM.

Little guys hit hard by rising operational costs 

The total marginal cost of operating a commercial truck rose to a record of $2.27 per mile in 2023, up 0.8% from 2022, according to the American Transportation Research Institute. Higher expenses — including lease or purchase payments, maintenance and repair, fuel and insurance premiums — have especially affected smaller trucking companies and owner/operators, which are the backbone of the used-truck market, ATRI Senior Vice President Daniel Murray told EFN.  

“Even a used truck is averaging $70,000, $80,000, $90,000 or more, which instantly ensures that I’m going to need a bank loan,” Murray said. “Very few trucking companies, particularly smaller trucking companies, have $90,000 in their savings account.”

With high interest rates and rising operational costs, many companies won’t consider purchasing new or used, he added.  

Recovery on horizon? 

As the Federal Reserve hints at lowering rates, the freight industry could start to bounce back later this year, with deal volume and freight movement potentially increasing, Murray noted. 

“We saw about a 1.5% increase in freight tonnage in May, so that’s a little bit of a silver lining for us,” Murray said. “If we see June and July at least leveling out in terms of tonnage, I think that’s going to jumpstart enthusiasm in the industry that we’ve turned the corner.”  

Murray expects sales, freight movement and pricing to improve if tonnage numbers for June and July forecast a positive outlook for the industry.  

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