TORONTO — Truckers shouldn’t expect a huge over-supply like we saw a few years ago, but the used-truck lots may be filling up again.
Trouble is, they’re emptying even faster, at least in some parts of the country. Which could make it a good time to buy — like right now — not a few months down the road when prices are likely to be higher.
“Glut would be an exaggeration, but we are moving from a period of very tight supply to more normal conditions,” says Freightliner LLC president and CEO Chris Patterson says in an interview. “Freight is not so abundant, and a lot of new equipment has entered the customers’ fleets. Plus, the normal three-to-four-year trade cycle is putting us into years when more new trucks were produced.”
The market is summed up in pretty much the same way by Frank Oliveira, who manages Arrow Truck Sales in Canada. Trade-in cycles mean there are quite a few three- and four-year leases that have come up, he says.
Here’s the situation in a nutshell: last year set records for new-truck sales as many fleets rushed to buy trucks with pre-2007 engines. Not surprisingly, they wanted to avoid the $10,000-or-thereabouts price hike commanded by diesel motors that now have to meet the more stringent new emissions regulations.
The last of new trucks with ’06 engines have been delivered by now, so trade-ins have been building up.
Also, as Patterson and Oliveira point out, there were a lot of new trucks sold in and around 2004. Many of those trucks are coming onto the used scene now, or soon will.
However, don’t expect a buyer’s market with a zillion used rigs for sale, says Nevio Turchet, Freightliner’s used truck manager for Canada. There’s been a shortage of good used trucks for the last while and the coming trade-ins won’t fill the gap. That’s because demand is rising sharply as small fleets and owner-operators upgrade but don’t buy new, trying to avoid the perceived difficulty with ’07 engines.
“The market is strong right now and we’re seeing a shortage of trucks,” Turchet told us. “Last year at this time we had 300 trucks in inventory, but we have much less than that now.”
Bob Cook at Glover International Trucks in Red Deer, Alta., agrees that the current hot market in his neck of the woods is used trucks. The new trucks are sitting, he says.
“A lot of guys are coming in looking for newer used equipment — with maybe 200-300,000 km on the clock — rather than buying new. A lot of these guys don’t want to try the 2007 engines yet, especially the long-haul guys.”
As usual, there are distinct regional differences. There’s not much used-truck demand in the east, for example, but nor is the market flooded with used inventory. Atlantic dealers don’t typically hold much on the lot.
At Peterbilt New Brunswick in Moncton, for example, sales manager Phil Witherell says the used-truck market is “kinda soft” right now. That may change when the new models with 2007 engines start coming in, he adds, which is right about now.
“It’s a wait-and-see sort of thing until we know how the new motors work out. It’s always doom and gloom when they first come out, but it’s often never as bad as predicted.
“There’s not a lot of used trucks on the lot right now. We didn’t get a lot of trade-ins last year, plus we try to keep a good handle on the used trucks — it can cripple you.”
Prices on the Rise?
“We’re still getting pretty good dollar on the used,” says Witherell. “I just sold a 2006 for $96,000, which is pretty good, and a 2005 will be sold for $85,000. The Petes are still holding well, though the long-noses aren’t selling as well as the aero trucks.”
Back in Toronto, Selectrucks branch manager Steve Kenny, a former owner-operator himself who only ever bought used trucks, says prices are stable. But don’t bank on it staying that way.
“I think prices are going to start to rise and availability is going to go down,” he says. “Right now there’s a window of opportunity, better than it will be in three or four months.”
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