Used truck prices are down. Way down. According to J.D. Power and Associates, last year the retail value of used trucks was 13% lower than in 2015. Trucks sold at auction fared even worse. Predictions are for the supply of used trucks to stay high, which translates into lower prices for this year as well.
While there is not much you can do about the supply of used trucks, the way you spec your vehicles on the front end can have an impact on their value — either positive or negative — at resale time.
Dale Tower, vice president of remarketing for AmeriQuest Used Truck Services, says the market and equipment have become more specialized in recent years. “Fleets are buying for their specific needs and the value that provides on the front side. The assumption is they will still be able to get out of the trucks when they have served their useful life.”
He adds, “Some fleets are being surprised quite a bit as the used truck market has done a 180 in the past one to two years, and is now a solid buyers’ market.”
We talked to industry experts to get their input on the role certain specs play in the resale value of a truck.
While some fleets have been spec’ing smaller engines on new trucks to save weight and cost, Chris Visser, senior analyst and product manager, commercial vehicles, NADA Used Truck Guide, a division of J.D. Power, says there is still a preference for big-bore engines in the highway segment.
Claude Ricciardi, director of purchasing at New York-based Transervice Logistics, agrees that smaller engines, those 13L and under, “have a definite negative effect on resale.” Visser explains that “for those OEMs with 15L and 13L engines, we see a roughly $3,000 deduction for the smaller engine in a sleeper.”
“Having more aerodynamics does diminish demand from the off-highway market,” says Danny Mirts, director of remarketing assets for Volvo Trucks North America.
According to Visser, “Traditionally styled trucks still bring a premium over aerodynamic trucks across the board, mainly due to a much smaller supply out there.” He says his data suggests that 3% to 5% of the market wants traditionally styled trucks and they’re generally looking for square-nose trucks.
However, he says for second owners that are running long-haul operations, fuel economy is still critical. “Those buyers are looking for aerodynamic trucks.”
Alex Stucky, product strategy manager for heavy-duty linehaul transmissions at Eaton, says there is a trend toward the adoption of automated transmissions on new trucks. “There are number of key drivers behind this,” he says, “many of them centered around driver retention and the skilled driver pool.” Plus there is the fuel economy improvement of AMTs.
According to Visser, “The most recent OEM-branded AMTs bring roughly a $1,500 to $2,000 premium over a manual 10-speed.” Mirts says the Volvo I-Shift, which has been on the market the longest, adds 8% to 10% more to the value of a four-year old truck with 500,000 miles.
However, Visser says, older non-OEM AMTs don’t do as well on the secondary market and are a wash or a deduct. “Reliability was an issue with older units, and the market is still gaining comfort with newer offerings.” He adds that 18-speed manuals are still “a clear premium” over AMTs because the extra ratios give the truck additional flexibility for a wider variety of uses.
Air disc brakes
“Since the National Highway Traffic Administration’s amendment of FMVSS No. 121 effectively reducing the stopping distance of a vehicle rated at 56,000 lbs. GVW to 250 ft. from 60MPH, I have been a strong proponent of disc brakes,” Ricciardi says.
He believes the consistent torque output, significantly reduced brake fade and potentially longer life “would not decrease the resale value of a used truck.” However, he adds that it might “be difficult to put a hard dollar value to the truck equipped with air disc brakes.” Ultimately he believes the more efficient braking from air disc brakes along with lower maintenance and operating costs would make them attractive to used truck buyers.
Visser says the market has not yet spoken on how it sees air disc brakes, which are standard on some trucks and optional on others. “There might be some minor aversion to discs just because not all dealers or fleets are willing to invest in the parts necessary to run two different types of front brakes. I doubt that there is any fundamental concern about the technology.”
Tower says wide-base tires on a truck “still generally hurt the resale value.” He adds that most customers want them swapped out for duals unless they are weight-conscious.
According to Visser, there is a $2,000 to $3,000 deduction for them depending on the model year. “Perception of serviceability on the road is the main issue.” One thing he has noticed is that some fleets spec new trucks with eight rear wheels, then immediately swap them for wide-base wheels. At resale, they reinstall the duals to avoid the hit to the price.
Given the “extremely limited market” for these types of trucks, Ricciardi says the negative effect on resale value will be drastic with alternative-fueled trucks.
Visser says there is essentially no market for used alternative-fueled trucks in the highway segment. “The limited use of natural gas in regional and municipal capacities has not made a demand for that fuel in the secondary market. The price of diesel would need to increase dramatically for interest in alternative fuels to improve, and we don’t see that happening over the long term.”
Fleets that spec 6x2 axles are being hurt at resale, according to Steve Slesinski, director of product planning for the commercial vehicle market at Dana Holding Corp. “If a fleet owner keeps their vehicle for four or five years, at the time of resale they are basically giving up everything they saved in fuel efficiency.” He believes it may also take them longer to sell the vehicle. Visser says the deduct can be as high as $6,500 to $7,500 for trucks equipped with 6x2 axles.
While Slesinski does not think fleets should stop spec’ing 6x2s, he does say they “need to go into it with their eyes wide open. They should expect to have a more difficult time selling the used truck if it is a 6x2.”
However, he says, “I would not say they should not [spec] 6x2s. You can actually haul more goods if you are maxing out loads because [a 6x2] is significantly lighter in weight than a 6x4. If your fleet is weight sensitive, 6x2s are still a viable option.” He believes that as more people start to accept 6x2s and as the products develop, the resale problem will diminish.
Does paint color matter? Mirts believes that “obscure or undesirable colors generally decrease used truck values by about 4%. “This essentially equates to the cost of a new paint job,” he says.
Ricciardi believes white is the color most often preferred. Visser says they have not done enough research to have figures available, but says, “unique colors associated with specific carriers can be a determent.” He also advises fleets to de-identify their trucks before resale.
Resale doesn’t rule
Tower says that although fleets are paying closer attention to spec’ing, they are not changing their specs just because of concerns about resale value.
Bryan Howard, director, sales and distribution, Daimler Trucks Remarketing, says fleets are spec’ing for optimal performance and field-tested reliability “even if it leads to questions of how the truck will be used in its second life — which typically is unknown.”
He adds, “The specs the secondary market values at a premium are those that make the unit attractive to a variety of applications.”
For specs that don’t do that, each fleet will need to determine its own balance of return on investment vs. resale value.