Market Overview: Used medium-duty truck values saw a decline in October, while heavy-duty truck values experienced a minor increase.
Inventory and Demand Concerns: The truck market faces challenges due to an oversupply of 5- to 10-year-old inventory, which is prevalent in listings. This outdated stock lacks financed buyers, resulting in lower than anticipated values despite the fact that newer truck prices remain stable. Jim Ryan, Equipment Lease and Finance Manager at Sandhills Global, highlighted this issue in an interview with Equipment Finance News.
Ryan noted, “This situation is detrimental to the trucking market. Financing for older trucks is scarce, leading to exceedingly low values.”
Medium-Duty Inventory Trends: While there has been a slight improvement in medium-duty box truck inventory, significant backlogs—particularly in Canada and major fleets like Ryder and Penske—indicate that recovery is slow. Ryan stated, “Although we manage to clear much of the older inventory, a considerable amount remains, and we may not see this inventory hit the market for some time.”
Funding Challenges: The truck market is currently under pressure as buyers find it difficult to secure financing amidst high depreciation on costly new models. This scenario creates a resale atmosphere inundated with depreciated late-model units. As a result, some lenders are hesitant to finance, according to Ryan, amidst a correction in the specialty finance market.
“A company must establish stability in the trucking market before lenders are willing to engage,” Ryan indicated. “Furthermore, there is a pronounced gap between asking prices and auction values.”
Shifts in Lender Activity: Due to ongoing funding issues, certain lenders have withdrawn from the truck finance sector amidst general stress in both trucking and truck broker finance channels, despite consistent deal flow. Kit West, Business Development Director at C.H. Brown, shared that while fewer deals are coming from each vendor, his extensive broker network is still generating significant deal volume.
Despite the overall market strain, recent deal activity suggests positive developments in the heavy-duty sector, resulting in fewer loan denials and healthier submissions. West stated, “Credit quality appears sound, but we’re observing unusual variability in deal flow from brokers, something we’ve not encountered before.”
