The stable pricing observed in the trucking sector towards the end of last year suggests a potentially improved outlook for 2025, following a lackluster 2024.
According to Jim Ryan, equipment lease and finance manager at Sandhills Global, the industry is starting to stabilize after a downward trend, suggesting limited potential for further declines. “There’s some opportunity for positive trends, possibly this year, on the truck side,” he mentioned in conversation with Equipment Finance News.
The restricted truck financing in 2024 hampered growth as the sector struggled to build relationships with regional banks and mid-sized lenders, but Ryan is hopeful that deals may resurface in 2025.
“Lenders are likely to be selective in their deals and start moving in that direction,” he noted.
While credit approvals improved slightly by 0.3 percentage points in December to reach 74.3%, they still fell 0.7 percentage points compared to December 2023, as indicated by the Equipment Leasing and Finance Association’s CapEx Finance Index. Additionally, charge-offs decreased by 5 basis points to 0.52, although they were up by 8 basis points from the previous December.
Despite these challenges, there’s a sense of optimism among banks regarding the equipment finance sector heading into 2025, especially given the record 36.2% increase in bank-related equipment finance activity in December. This increase translates to an 8.1% month-over-month rise and a 17% year-over-year boost.
Concerns About Tariffs
The trucking industry is still recuperating from the economic challenges posed by low freight volumes, decreased rates, and rising operational costs. Tariffs now present an additional hurdle for the sector, cautioned Chris Spear, President and CEO of the American Trucking Association. He expressed worry that tariffs could negatively impact freight volumes and raise costs for motor carriers just as the industry begins its recovery.
Positive Outlook for Truck OEMs
Truck manufacturer Paccar continues to experience price increases despite a decline in profits during the fourth quarter and the full year of 2024, according to CEO Preston Feight during the company’s earnings call. Meanwhile, Volvo saw a decline in net sales but is also optimistic due to stable prices in their truck division.
Increased Class 8 Sales
Same-dealer sales of used Class 8 trucks increased by 16% month-over-month and 4% year-over-year in December. This rise in sales might signal potential price growth for these trucks in 2025, according to Steve Tam from ACT Research.
Future Pricing Trends
With higher spot rates, the recovery of the used truck market is likely to gain momentum, providing fleet owners with more opportunities for profit, as noted by Dan McDonough, president of Commercial Credit Group. Recent data showed a significant increase in new and used commercial truck prices, indicating the possibility of a stronger pricing environment ahead.
As we look to the future, experts believe that the regulatory landscape around emissions standards, particularly those set for 2027, will be key drivers for changes in the trucking industry. Although external factors such as interest rates might not significantly affect the market, the impending regulations are expected to stimulate demand for used equipment.
