Coping with a Soft Resale Market

Nearly five years ago, used truck inventory was strained. It served to be problematic because some companies or owner-operators depended on the used truck market for affordable equipment. Today, the industry is facing the opposite issue; too many used trucks are flowing into the market, with few selling, thus forcing prices to drop. The National Automobile Dealers Association reports used truck sales are down over 20 percent in November of 2015. Their value has been steadily falling in the past six months. It’s a great environment for buyers; not so great for sellers. Carriers able to buy completely new trucks many times depend on the income from selling their used inventory to offset the cost of new equipment. A new truck can cost approximately $80K for a single day cab up to $200K for a sleeper cab with higher horsepower. Brand-new equipment is expensive and business plans are frequently built around the expectation of being able to sell vehicles for a certain price after a certain number of years. When that price doesn’t materialize, carriers can be faced with challenging businesses decisions. A fleet can sell its old trucks for less than the budget called for and take a loss, or it can delay replacing the old vehicles. But since older vehicles tend to have higher operating expenses, that, too, represents a loss. Or the fleet can accept over-allowance cost on a new truck when trading the old one to a dealer. That means shifting money from the value of the new truck to the value of the old one, which works out great if used vehicle prices rebound by the time the new truck is due for trade-in. While the market is favoring lower selling prices due to an oversupply of used trucks, carriers interested in selling can take steps to improve the vehicles they have now in order to make them as attractive as possible to a buyer. That means cleaning and repairing the truck before sale so that vehicles look and perform their best. Performance is key; the truck has to be mechanically sound so that the buyer is really comfortable making the purchase. GPS fleet tracking software can help keep maintenance and diagnostics reports, providing key service data that would otherwise go unseen. By planning ahead with organized maintenance schedules, vehicles can stay in good working order for longer periods of time, thus increasing the truck’s value. Lastly, price the vehicle to reflect the current market so that it has a fair chance of being sold. Ultimately, the soft resale market will probably be temporary, butkeeping resale value as high as possible with proper maintenance is always a good idea.

*About the author: Oswaldo Flores is a member of Teletrac's marketing team. He is an expert in product management in the transportation sector for the United States and Mexico.