TORONTO — It may feel good to know you will be running the cleanest-burning engines in history, but now is hardly the time to swallow a big increase in costs.

There was roughly a $10,000 premium on the ’07 diesels, and there’ll be a similar bump up in price come 2010. Fortunately, the used-truck market is heading in the opposite direction of its newer, shinier brethren. For fleets as well as owner-operators who do happen to have some capital to spare in this weak freight market, the used-truck market has perhaps never been more attractive.

"The prices, just when I think they’ve hit bottom, they get lower," says Mike Estey, used truck manager with Harper Truck Centres.

On average, used trucks are $7,000 to $10,000 cheaper than they were last year and it’s not a get-’em-while-you-can blowout sale either. Estey expects the used-truck market to retain its current low price range for at least the next couple of years.

"The used-truck market needed a price adjustment," explains Estey. "Prices simply adjusted because they needed to. These are much better prices for people coming in and they’ll be successful because of it."

And we haven’t likely hit bottom yet, adds Nevio Turchet, used truck manager for Daimler’s Canadian remarketing division, SelecTrucks. "We’re holding our own and selling used trucks but there’s no indications of an upswing." 

Get Used to It: The pre-owed truck market
is no get-em-while-you-can blowout sale.

On a side note, the low price point of used trucks might be difficult to sustain if new truck sales don’t increase. After all, a used truck was new at one point, and new truck sales are important to keeping the used truck market replenished.

However, a fair number of bankruptcies and repossessions has crept into the used market — with many more coming — which has increased inventory and partially led to the price adjustment.

Turchet expects trade-in cycles to be stretched, as well, not only because of fleets’ reluctance to buy but also because there’s less wear and tear on trucks that aren’t putting on the miles.

Frank Oliveira is Vice President of Arrow Truck Sales of Canada. He says demand for reliable, fuel-efficient and late-model trucks is good. "As for inventory or supply, there’s much to select from, but unfortunately there are limited numbers of the well spec’d fuel efficient trucks."

However, lenders are skeptical and the faithful truck buyer is under a microscope.

"The financing companies and banks are really determining what we do, and they want warranties and large down payments," says Dave Mack, general manager of Thunder Bay Truck Centres. "You’ll need at least 20 percent down to get financing."
www.tbtc.ca/

So where does that leave you? If you have $10,000 for a down payment, going with the 20-percent rule, you’ll be shopping for a rig valued at about $50,000, which will most likely be five to six years old. The interest rate should be around nine to 10 percent, which will mean making monthly payments of about $1,200.

For a new truck, the interest rate will be lower, probably by about three points. But you’re going to have to come up with more of a down payment to please the lenders. With $20,000 down and a purchase price of $120,000, the monthly payments would be about $2,600.

If you’re counting on your current truck to work as a down payment — or part of a down payment — you might be in for a surprise. With used-truck prices dropping, the trade-in value of trucks has also fallen off.

"Some guys who bought trucks four or five years ago, when the dollar was at $1.35 or $1.40 exchange, come in now with the exchange at $1.18 or $1.20 and expect the truck to depreciate at normal values. It hasn’t," says Mack. "You’re not exactly comparing apples to apples anymore."

There are trucks at prices to serve every budget and every need, ranging anywhere from $15,000 to $100,000.

But you get what you pay for, of course.