In contrast to last year when used trucks flooded the market, Kenworth used truck dealers are facing a tight market in which demand is strong and many truck models are scarce,
according to some dealers.
"Demand for our product is very high," said John Bender, corporate used truck manager at Kenworth of Tennessee in Nashville. "Since late summer, it's been extremely hard to find enough inventory for our four full-service stores. There isn't a lot of product out there."
According to Ron Lipman, corporate used truck director at Truck Enterprises in Harrisonburg, Va., the market turned abruptly early this year from a glut of used trucks to a market of rising demand and diminishing supply.
"Anything with low miles has sold well," said Lipman, who also serves as chairman of Kenworth's Used Truck Advisory Council. "If you find low miles on a W900, you have a gold mine. It's just hard to find them. It's the same thing with the T600, and you can't find any of them either."
Dealers say a combination of factors has led to the used truck market squeeze. They say lower production in the past two years has reduced the number of available trucks. In addition, many trucking companies have held back buying new trucks and are opting to increase their trade cycles even though this often results in higher maintenance costs.
"We see drivers with two- and three-year-old trucks who would have traded them in this fall holding on to them for another year or two because of uncertainty over the engine situation," said Kenworth of Tennessee's Bender. "Our business plan forecasts that the tight supply will last through the end of the first quarter. It will be driven by drivers getting positive reports about how the new pollution-reducing engines are performing in the field. People will then begin trading up or trading into new units."
Added Lipman, "We are heading into a time when it will be harder to find trucks. As time goes on, we'll be seeing more trucks traded in that will be topping 500,000 miles."
"As a used truck manager, I am paying more to get these trucks and I can sell them for more. As a used truck buyer, you will pay more for them but you will get more when you trade them in," Lipman said.
Mike Davidson, owner of Davidson Trucking in Albuquerque, N.M., said he buys used Kenworths because they offer great value even when he is paying a premium for a Kenworth. With the exception of one new Kenworth, he has bought used Kenworths for the 16 years he has been in business. "When I buy them, they have 300,000 to 400,000 miles on them but are good for a million miles. They hold up real well," Davidson said. "You can't tell if the truck is a year old or four years old. They always look good when our customers see them."
Davidson also said he has no trouble trading in or selling his trucks to a third owner. "There is always value in them. These trucks are easy to sell if we want to," he said.
Joe Ashe, head of J.J. Ashe & Sons in Albuquerque, said he has been buying Kenworths, new and used, since 1969, depending on what is available at the dealer when he is ready to buy a truck. "The used Kenworths hold their value and when I trade them off, I get a good return on them as well," Ashe said. "You pay more when you buy them, but you get more on the back-end when you sell."
Dealers say that to get the best financial return when selling a truck, customers first need to spec the truck with the features most in demand.
"Horsepower and gears sell," said Bender. "There is heavy demand for engines that can be upgraded to 500 horsepower and more. The average premium for 500 to 550 horsepower is $3,200 to $3,400. You also want 13- or 18-speed transmissions. That option adds $2,700 to the value of a 2001 Class 8."
Kenworth Truck Co., a division of Paccar Inc., is a leading manufacturer of heavy and medium-duty trucks.