Fleet operators are capitalizing on favorable deals for high-mileage trucks as tightened credit, economic uncertainty and rising new truck prices create a shift in buyer behavior.
Equipment Finance News’ Inventory Index for used commercial vehicles hit 56 in June, down 19 points from May and down 62 points from April. The index, part of EFN’s new Inventory Insights dataset, measures monthly changes in truck inventory at dealerships as compared with historical baselines.
Inventory Insights
The data also shows that 2019 model-year trucks account for the largest share of used-truck sales at 31%, followed by 24% for 2020 trucks and 17% for 2018 models.
Pricing sweet spots
While rising costs, tariff uncertainty, surcharges and tight lending standards stymie new truck sales, older vehicles with at least 500,000 miles are gaining favor as fleet operators find pricing “sweet spots,” ACT Research Vice President Steve Tam told EFN.
The average price of a used truck between 5 and 10 years old is about $44,000, and the average price of a truck that’s 10 to 15 years old is roughly $24,000, according to Equipment Finance News’ Truck Inventory and Pricing Dashboard.
“There’s definitely a buyer for those trucks,” Tam said. “The other key customer for some of the older equipment are new entrants into the space. You can buy one of those trucks for $20,000 or $30,000, and you can literally come in with cash and walk away with a truck the same day.”
Long-haul truck drivers typically travel at least 100,000 miles annually, according to transportation firm Quality Carriers. The average lifespan of a semitruck is about 750,000 miles, with some able to reach 1 million, according to dealership Tri-State Truck Center.
Thus, buyers of 500,0000- or 600,000-mile trucks will likely be back in the market after a few years, Tam said.
Lenders still scarred from recession
Low-priced vehicles that don’t require financing could attract buyers because many lenders are still “scarred” by the lingering effects of a yearslong recession, despite some improvements, including stabilized used-truck prices, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told EFN.
“I think it’s an opportune time for lenders to get back in if they want to. But a lot of them are scarred, and they just don’t want to touch it. They don’t want to mess with it at this point.”
— Jim Ryan, Sandhills Global
Financing high-mileage trucks presents several risks despite lower upfront costs, Chris Grivas, president of Chadds Ford, Pa.-based CAG Truck Capital, told EFN.
“Some guys think they can go buy a 700,000 or 800,000-mile truck for $25,000 and finance it,” he said. “Well, there’s no shortcut. High-mileage equipment is actually not cheap because of what it’s going to cost you in the long run. … All the problems you might have are going to be far greater than you would buying good quality equipment.”
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