Fleet operators are taking advantage of attractive deals for high-mileage trucks due to restricted credit, economic unpredictability, and increasing new truck prices, resulting in a change in purchasing patterns.
According to Equipment Finance News’ Inventory Index, the figure for used commercial vehicles fell to 56 in June, a drop of 19 points from May and 62 points lower than in April. This index, part of EFN’s new Inventory Insights dataset, tracks the monthly variations in truck stocks at dealerships compared to historical averages.
Inventory Insights
The data also indicates that trucks from the 2019 model year represent the largest segment of used truck sales at 31%, with 2020 models at 24% and 2018 models at 17%.
Pricing Sweet Spots
As new truck sales are hindered by rising expenses, tariff uncertainties, surcharges, and stringent lending practices, older trucks with over 500,000 miles are becoming popular as fleet operators identify “sweet spots” in pricing. According to ACT Research Vice President Steve Tam, this trend is observable.
The typical price for a used truck aged between 5 and 10 years is around $44,000, while trucks aged 10 to 15 years average about $24,000, based on Equipment Finance News’ Truck Inventory and Pricing Dashboard.
Lenders Still Scarred from Recession
Lower-priced vehicles that don’t need financing could entice buyers, as many lenders are still “scarred” from the prolonged repercussions of a recession, despite some improvements like stabilized used truck prices, as noted by Sandhills Global Equipment Lease and Finance Manager Jim Ryan.
“It’s a good time for lenders to re-enter the market, but many are hesitant because of the past experiences.”
— Jim Ryan, Sandhills Global
Financing high-mileage trucks carries several risks despite the lower initial costs, explained Chris Grivas, president of Chadds Ford, Pa.-based CAG Truck Capital. He cautioned against the misconception that purchasing high-mileage trucks is always economical.
“Some believe they can simply buy a truck with 700,000 or 800,000 miles for $25,000 and finance it. However, high-mileage equipment is not cheap in the long term due to potential issues that could arise,” he stated.
