Stable pricing in the trucking industry at the end of last year opens the door for a better 2025 after a disappointing 2024.
The industry “may be slow moving, but we’ve kind of hit that bottom tier to where we’re not going to see much more of a substantial dip,” Jim Ryan, equipment lease and finance manager at Sandhills Global, told Equipment Finance News. “There’s some opportunity for some positive trends, possibly this year, on the truck side.”
Constricted truck financing limited growth in 2024, as the industry failed to gain traction with regional banks and mid-sized lenders, but deals could return in 2025, Ryan said.
“They’re going to be cherry-picking some deals and moving toward that way a little bit,” he said of lenders.
While credit approvals improved 0.3 percentage points in the month of December, landing at 74.3%, approvals remained down 0.7 percentage points compared with December 2023, according to the Equipment Leasing and Finance Association (ELFA)’s CapEx Finance Index.
Meanwhile, charge-offs declined 5 basis points to 0.52, although charge-offs still increased by 8 basis points compared with December 2023, according to ELFA.
Still, banks are at least indicating some optimism in the equipment finance sector as a whole headed into 2025 following a record 36.2% spike in bank-related equipment finance activity in December, according to ELFA. The growth in bank-owned equipment finance activity facilitated an 8.1% increase month over month and a 17% increase year over year.
Tariff concerns
The trucking industry continues to recover from economic turmoil caused by low freight volumes, depressed rates and rising operational costs. Now, tariffs represent a potential additional challenge for the trucking and transportation industry, American Trucking Association‘s President and Chief Executive Chris Spear said in a statement on Feb. 1.
“We have concern that tariffs could decrease freight volumes and increase costs for motor carriers at a time when the industry is just beginning to recover,” he said. “A 25% tariff levied on Mexico could see the price of a new tractor increase by as much as $35,000. That is cost-prohibitive for many small carriers, and for larger fleets, it would add tens of millions of dollars in annual operating costs.”
With the trucking industry moving 85% of goods crossing the southern border and 67% of goods crossing the northern border, the long-term impacts of tariffs could affect hundreds of thousands of trucking jobs in the U.S., as well as increased consumer costs, Spear said.
“We firmly support policies that will secure our borders and protect legitimate trade, but we also recognize the unintended consequences that substantial tariffs could have over the long-term, including higher consumer costs on the wide range of goods that cross our borders by truck, including food, automobiles, televisions, computers, furniture and other key manufacturing inputs.”
Truck OEMs positive on price despite declining profits
Truck manufacturer Paccar, for one, continues to see rising prices despite a decline in profits during the fourth quarter and full-year 2024, CEO Preston Feight said during the company’s Jan. 28 earnings call.
Paccar Financial Services earned $104 million in Q4 pretax income, down 8% YoY, and earned $435.6 million in 2024 pretax income, down 19.4% YoY, while parent company Paccar’s Q4 net income totaled $872 million, down 38.5% YoY, and 2024 full-year net income finished at $4.2 billion, down 9.5% YoY.
“As the market moves around and people are experiencing the great performance of the Kenworth, Peterbilt and DAF trucks, we expect that we will see strengthening price position for ourselves as the course of the year progresses,” he said. “We think that trend carries on even beyond 2025.”
Fellow manufacturer Volvo also saw net sales decline 6.4% during Q4 and 4.6% during full-year 2024, while operating income and operating margin for its truck division also fell due to lower volumes and flat prices, Mats Backman, chief financial officer of Volvo Group, said during the company’s Jan. 29 earnings call.
Class 8 sales jump amid stable prices
Same-dealer sales for used Class 8 trucks rose 16% month over month and 4% year over year in December, according to a Jan. 28 report by ACT Research. The increase followed a 1% MoM decrease and a 24% YoY increase in November.
The increase in used Class 8 truck sales in December also signals potential pricing growth in 2025, Steve Tam, vice president at ACT Research, said in the release.
“Prices are expected to remain stable at or around the current level before transitioning to YoY growth in early 2025,” he said.
“Same-dealer used Class 8 retail truck sales rose to their highest monthly tally for 2024 in December. December typically represents the fifth-best sales month of the year, running less than 1% below average.”
Pricing outlook
Higher spot rates should also bolster the used-truck market’s recovery as fleet owners see more opportunities to increase profits, Dan McDonough, president and chief executive at Charlotte, N.C.-based equipment financier Commercial Credit Group, told EFN.
“In the last 90 days, used-truck prices have clearly found their footing, but they’re still too low,” he said. “A four-year truck today is selling for the same price as a four-year-old truck in 2019, and a lot of people view those as the same assets because you really got to look at used-truck prices as a function of what it costs to replace it.”
Still, there was a price spike to end January, according to EFN’s dataset on the Average Pricing of Commercial Trucks and Trailers by Condition. The spike for new and used commercial truck prices could be the start of a strong pricing environment for dealers, lenders and OEMs.
(Chart/Equipment Finance News)
As of Jan. 29, average new commercial truck prices landed at $159,868, up 38.9% month over month, according to the dataset. Used-truck prices rose 53.3% MoM to $69,181.
Meanwhile, EFN’s Index of Commercial Trucks and Trailers Available for Sale and Lease reached 70 on Jan. 29, up 75% month over month.
Looking ahead
Paccar expects the next major driver for the transportation industry to be the 2027 emissions standards, McDonough said.
“Interest rates aren’t going to move it at all, but I do think that the truck market always overcorrects, and this one was a hell of an overcorrection,” he said. “The biggest driver is going to be in about a year from now, and the 2027 emissions standards are now starting to get attention. So, near term, what’s going to drive used equipment prices is going to be a function of freight demand.”
Due to the California Air Resources Board and Environmental Protection Agency’s respective emissions mandates, 2027 forecasts to have the largest truck prebuy ever, Brian Antonellis, senior vice president of fleet operations at Fleet Advantage, told EFN.
While the approach to emissions standards and climate change is likely to change under President Donald Trump, OEMs such as Volvo remain committed to electric vehicles and meeting net-zero emissions goals. As a result, there’s still likely to remain an EV push ahead of 2027.
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