Used Commercial Truck Market Hitched to Volume and Price Trends in the 4th Quarter
Throughout recent years, the commercial truck market has shown a shift in both volume and prices during the fourth quarter. Looking specifically at Q4 of 2013-2015, November has been consistently slower in terms of activity for the auction market than either of the other two months within the quarter.
In 2012, the auction market volume for commercial trucks dropped 19.9% between October and November. This was the smallest percentage drop among the past four years.
In 2013, the month over month decrease was 58.7%.
The drop in 2014 was 46.3%, and at the largest was 2015 down 67.7% between October and November. This was due to the auction market showing a much higher number of sales in both October and November 2015 than the previous years.
These drops were followed by significantly large increases, which more than doubled the sales volume in December.
These drastic changes in auction activity impacted FLV for the auction channel as well. The highest average FLV for a truck at auction peaked every December over the last 3 years. In 2015 and 2014, there was a gradual increase in FLV throughout the quarter, but in 2013 FLV dropped 12.2% between October and November before increasing back up by 21.9%.
Two of the factors that impacted this difference for 2013 were that the average age increased from 8.4 years to 9.3 years, and the market activity was lower in 2013 than 2014 or 2015. FMV and FLV differences between years were also heavily impacted by a change in asset mix with a larger number of light duty trucks in the past, shifting to a larger percentage of medium and heavy duty trucks. In 2013, 45.5% of the sales were Ford and 12.4% were Chevrolet trucks, which impacted the overall average pricing as well.
Compare this to November 2015, when 16.7% were Peterbilt, 11.8% International, and 12.4% Freightliner trucks. Not only were the type of trucks shifted, but average age dropped to 7.3 years (a 3-year minimum) in November 2015.
These auction channel trends in turn impact the private retail channel, specifically through pricing. In three of the past four years, there have been gradual decreases in FMV throughout Q4. The exception to this was 2013, in which FMV increased month over month as both volume and average age dropped that year.
As previously stated, on the auction channel in November 2013 the majority of market share resided in Chevrolet and Ford, whereas on resale it was within Freightliner and International. International and Freightliner remained dominant in November 2014 on resale, but in 2015 Kenworth and Volvo grew in market share – both have higher FMV than Freightliner and International. This is primarily due to Freightliner and International covering both medium and heavy duty trucks on the resale channel, while Volvo fleets consisted of 85.5% sleeper tractors.
Three of the past four years showed drops in resale volume between November and December while both 2013 and 2015 dropped between October and November as well. While December volume increases significantly for the auction channel, resale volume is expected to drop for the month.
Expect a slow November on the auction channel before a booming December to round out the year. Overall, there is a slowing down on the commercial truck market in November before being ramped up in December, especially at auction, to end the year.