Used trucks a valuable commodity

by Harry Rudolfs

The used truck market usually follows the peaks and valleys of new truck sales by the space of a few years, but since fewer Class 8 vehicles were made and sold during the recession years of 2008 to 2010, a bottleneck presently exists in the availability of low-mileage late-model vehicles.

“If we look at the trade cycle,” says Joe Burns, used truck sales manager at Altruck International in Cambridge, Ont., “bigger fleets tend to turn over their equipment every 48 to 60 months. But production was down in 2008 and there was a pre-buy in 2007 and a lot of fleets took advantage of that. So right now there’s a shortage of 2008 and 2009 models.”

Burns thinks that shortage comes at a difficult time for many small fleets and multi-unit owner/operators looking to ramp up their operations as the economy improves.

“For a lot of our clients the outlook is good for 2014, but finding low-mileage used equipment is going to be hard to do,” he says.

Conversely, if you’re looking to sell or trade in a low-mileage tractor, you should be able to get a good buck for it. “I’d say the valuations on used trucks are pretty good right now,” says Burns. “We’re paying a strong dollar on low-mileage trucks.”

Despite the fact that pre-2008 EPA trucks are either miled-out or almost impossible to get, used truck salespeople will tell you that a segment of their clients are still squeamish about getting involved with newer trucks because of the perceived problems with the emissions systems.

“There’s some people that have the inaccurate perception that anything made between 2008 and 2010 is not necessarily a good product, though most buyers are aware that the OEMs have done a pretty good job with the upgrades,” says Burns. “And the technology has improved with each stage.”

Dennis Sheehan, owner of Sheehan Truck Centre of Burlington, Ont., has had the same experience with some customers.

“Honestly some of the trucks from the model years 2008-2010 are not running as bad as people have it in their heads. There was also a bit of a learning curve involved here. Keep in mind this was a new product, people didn’t know how to work on them at first,” Sheehan says.

Truck salespeople agree that there is a segment of used truck buyers that will never be accepting of the generation of trucks manufactured between 2008 and 2010. Those customers may be more comfortable with the new-generation EPA trucks that add diesel exhaust fluid (DEF) to the afterburn, but some buyers may still not be familiar with how the emission system works. According to Burns of Altruck: “There is a misconception in our industry amongst some consumers that DEF has replaced DPFs (diesel particulate filters). Nothing could be further from the truth. With the advent of DEF, we now have both systems on-board trucks produced on or after Jan. 1, 2010 to comply with emission standards.”

Owner/operators are constrained by the fact that carriers want them driving something less than five years old.

“Instead of going with an older truck, we try to get our customers into something more modern,” says Vik Gupta, sales manager for Arrow Truck Sales of Mississauga, Ont. “Instead of going backwards, go forwards, and that way they can be ahead of the game. But I would say that overall confidence is returning to buyers when it comes to the DEF/SCR systems. There’s not an engine made that doesn’t occasionally have problems, but there are some really good products out there.”

Gupta adds there’s no such thing as a typical customer. Someone doing city work will want a different package than someone doing regional pulls and different yet again from a long-distance hauler who stays out for weeks at a time. Thirteen- and 10-speed transmissions remain popular among used buyers, and automated transmissions like the I-Shift are getting more popular.

“Someone looking for a highway tractor will usually want 425-450 horsepower, maybe more depending on what’s being hauled,” says Gupta. “And if you’re going to be running the highway as a team, you’re going to want a 60- or 70-inch bunk as well.”

Highway trucks may get traded up every four or five years, but city drivers who own day cabs usually hold onto them a few more years. Martin Smith, centre manager for SelecTrucks of Mississauga, Ont., acknowledges that day cabs comprise a large portion of his dealership’s sales.

“A potential day cab purchaser might be looking for something between 2005 and 2009. Typically a day cab operator will want something around 400 hp, air ride suspension and 175-inch wheelbase. Those are the usual spec’s,” says Smith. “The biggest problem is trying to find inventory.”

Used dump trucks are always in demand because of their paucity. “We can always use more dumps, tandems and tri-axles,” says Altrucks’ Burns, “but it’s a select market and they’re difficult to acquire. A lot of operators buy the truck and contract from someone they know and these trucks don’t often make it to the market.”

Niche equipment sales are an important segment of the used truck market, but specialization is not every dealer’s cup of tea.

“There is some strength in niche truck sales,” says Sheehan. “Once people know you have them, they will come back to you. I might buy a funny truck, say something with a crane on it, and it might sit on my lot for six months. But once you find the guy that needs that equipment, he will buy it.”

Someone shopping for used big iron should keep in mind that a down payment of 10-15% is usually required by most lending institutions, and that they are reluctant to provide financing on rigs that are much older than five years. Warranty is another important consideration and a variety of different packages are available.

Sheehan advises caution when buying extended warranty packages.

“Everybody wants warranty but they’re expensive and the money’s got to come from somewhere,” he says. “If you’re going to spend $5,000 on a warranty, why not put the $5,000 aside instead, and save it in case something goes wrong down the road?”

But Smith of SelecTrucks is in the unique position of being able to offer a factory-backed warranty to buyers of used Freightliners and Western Stars.

“Considering the money you save when buying a used truck as compared to a new one, why wouldn’t you want a factory warranty?” he counters.

The falling Canadian dollar is a concern to everyone in trucking, and the volatility will eventually ripple into all aspects of truck sales. Sheehan thinks it’s too early to tell how much the devaluation of the Loonie will affect the used market.

“Some dealers were going down to the US to get used trucks and I think that is coming to an end,” he says. “But new truck pricing will eventually affect used truck prices, too.”

Sheehan also expects exports and offshore sales of used truck to “probably pick up slightly because of our dollar being undervalued.”

Gupta thinks that a weak Loonie will be a boon to used truck dealers. “We can see it already in the last few weeks – it just happened. New trucks are going to go up in the following months and it will be good for us. Why should (customers) pay $10,000-$15,000 more for a new truck? On the flip side, for truck (sales) out of Canada, we’re going to see lots of activity on the export market.”

Have your say

This is a moderated forum. Comments will no longer be published unless they are accompanied by a first and last name and a verifiable email address. (Today's Trucking will not publish or share the email address.) Profane language and content deemed to be libelous, racist, or threatening in nature will not be published under any circumstances.