Impact of COVID-19 on Truck Ages and Disposition Decisions

As we come upon the one-year anniversary of the start of the COVID-19 pandemic, many clients have inquired about the impacts the coronavirus economy has had on trucking. Are truck owners waiting longer to sell their trucks? Are they selling their trucks sooner? What are we seeing on the resale market? And what does this mean for 2021?

To begin answering these questions, today we are taking a look at the effects the last year has had on average truck ages, both on the resale market and in terms of vehicles on the road.

The Data

We used two main data sources for our analysis. The first being a sampling of resale listings Price Digests collects to understand pricing, mileage, brand trends, and prevalence of each model year for sale. The second came from crash and inspection reporting published by the Federal Motor Carrier Safety Administration (FMCSA), which we have used as a proxy for the vehicles on the road and, thanks to Price Digests’ robust VIN decoding capabilities, we have been able to break down and isolate to just medium-duty (classes 4 to 6) and heavy-duty (classes 7 and 8) trucks and tractors. For simplicity’s sake, we have referred to these vehicles as Medium Duty Trucks and Heavy Duty Trucks.

Impacts on Vehicle Age

The chart below shows how the average vehicle age changed for both resale listings (solid lines) and vehicles on the road (dashed lines). As we can see, the average age for resale listings decreased from Q1 through Q3 2020. From Q3 to Q4 we see that average ages rebounded a bit for Heavy Duty Trucks but continued downward for Medium Duty Trucks. For Heavy Duty Trucks the average age of resale listings was about one year newer in Q4 compared to Q1, whereas for Medium Duty Trucks they were about one and a half years newer.

Average ages of Medium and Heavy Duty Trucks on the road were virtually identical in the first half of 2020 but we can see that in the second half of the year they diverged, and both ended up slightly higher than their resale listing counterparts. The average age of Heavy Duty Trucks on the road ended in 2020 almost exactly where it started the year, starting at an average age of 7.4 years old and ending at 7.2 years old. Medium Duty Trucks on the road, however, ended the year about one year newer, starting at an average age of 7.2 years old and ending at 6.1 years old.

Average vehicle age

Heavy Duty Trucks

Looking at class 7 and class 8 vehicles more closely, we could see which was impacting the Heavy Duty Truck category more. The chart below breaks out the class 7 and class 8 vehicles, in which we can see that while resale listings for both classes ended up newer than where they began the year, class 8 vehicles experienced a bigger decline.

As expected from reviewing the previous chart for Heavy Duty Trucks overall, the average age of vehicles on the road for both class 7 and class 8 were relatively flat, with class 7 vehicles dropping from 6.2 years old to 5.8 years old, and class 8 vehicles dropping from 7.5 years old to 7.3 years old.

Hevay duty truck average vehicle age

Medium Duty Trucks

Within the category of Medium Duty Trucks, we saw the average age for both resale listings and vehicles on the road drop for each size class. From the chart below we can see that the biggest decrease in average age for resale listings was for class 5 vehicles, dropping to 3.0 years in Q4 after starting 2020 off at an average of 5.2 years. Close behind were class 4 vehicles, which started 2020 off at 5.5 years old but ended up at an average of 3.9 years old.

In terms of the vehicles on the road, the biggest drop in average age was for class 6 vehicles, which started the year off at an average of 8.0 years old but ended it at 6.4 years old.

Medium duty truck average vehicle age

Analyst Observations

The differences observed between Medium Duty Trucks and Heavy Duty Trucks appear to provide a window into the different divestment attitudes between the two-vehicle categories. While at the beginning of 2020 the average age of Medium Duty Trucks and Heavy Duty Trucks on the road were moving in lockstep, indicating similar strategies toward when to divest vehicles, those attitudes appear to have deviated, with Medium Duty Trucks being replaced a bit earlier in their lifecycle.

These two strategies are reflected in the accompanying resale listings. Since a fleet will, of course, sell its oldest vehicles first, the fact that both the age of Medium Duty Trucks on the road and their average resale listing age both declined leads us to conclude that those Medium Duty Trucks sold in the second half of 2020 were sold sooner than they otherwise would have been.

Why this happened may be down to the type of business the individual fleet is involved in, but we do know that Medium Duty Trucks are more closely tied to activities like last-mile delivery and these age declines occurred just as e-commerce was kicking into high gear in the U.S.

For more information on how Price Digests can help your business with VIN decoding, valuations, residual values, divestment decisions, or a host of other information on commercial trucks, commercial trailers, passenger vehicles, boats, powersport, RVs, and grounds maintenance equipment please contact a Price Digests representative at inquiry@pricedigests.com or (888) 488-2062.

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