Preliminary used Class 8 volumes (same dealer sales) slipped for a second consecutive month in December (-7 percent), marking the first time since January 2016 that same dealer sales have fallen below 2,000 units, according to the latest preliminary release of the State of the Industry: U.S. Classes 3-8 Used Trucks published by ACT Research. However, the report indicated this is not particularly concerning, in and of itself.
Other data released in ACT’s preliminary report included year-to-date comparisons for December 2018, which showed that volume was up 8 percent compared to the end of 2017. Average price rose 13 percent, year to date, while average miles were flat and average age, improved but was still 3 percent below year-to-date December 2017.
Steve Tam, Vice President at ACT Research, said, “Stories of a white-hot market abound, with many dealers commenting that they do not have sufficient inventory to meet demand. However, in the context of increasing general economic uncertainty, slowing freight growth and softening new truck demand, lower used truck sales beg the question of whether demand is waning, supply is wanting or the reality lies somewhere between.”
He continued, “If used truck pricing is any indication, and we believe that it is, demand is still easily outpacing supply.”
Commercial Vehicles
According to ACT Research’s latest release of the North American Commercial Vehicle OUTLOOK, yellow lights are flashing for the U.S. economy, and by extension for the North American commercial vehicle industry.
“Over the course of Q4’18, the list of indicators flashing yellow became longer and brighter for the U.S. economy,” said Kenny Vieth, ACT’s President and Senior Analyst. “While there is insufficient evidence to make a recession call, there is enough presently to suggest growing potential for sectoral recessions, à la 2015.”
Regarding the transportation industry, he noted, “After several months of deterioration, the spread between contract and spot rates has been sufficiently wide for a sufficiently long period that ACT’s rate pressure analysis is now calling for negative contract rates, if just, by Q2’19.”
Despite some caution creeping into the outlook, the heavy commercial vehicle market continues to benefit from a still-broad spectrum of supply and demand-side triggers.
Regarding ACT’s medium duty forecasts, Vieth said, “Preliminary December orders were modestly below the current trend, with orders averaging 25,000 units per month in 2018, which continued to exert moderate upward pressure on forecasts.”