Today’s fleets are seeing success with used trucks, both when buying and selling. Remarketing your used units can help recoup expenses, while purchasing used can save on the purchase cost and immediate depreciation and provide additional options when used supply is lower.
“Demand is strong and expected to outpace supply in all segments in the commercial space through the second quarter of 2021. OEMs continue to increase production safely; however, production shutdowns, supply chain issues, and slow production recovery continue to cause a shortage of used inventory. This will keep pricing strong for the next several months. Conversations with OEMs and dealers indicate that supply will not catch up to demand unit Q3 of 2021,” said Josh Giles, principal analyst for Black Book.
Giles expects supply to begin to increase in the second quarter of 2021 slowly.
“This will put some downward pressure on used values causing them to increase in depreciation slowly. In the third quarter, we expect to see a bit more downward pressure as more and more models enter the market. Do not be afraid of the current high prices. We have seen similar increases in both retail and wholesale transactions. Buy what you need now as supply will continue to be tight for the majority of 2021,” Giles said.
Tips for Selling/Remarketing
A few mistakes can leave you short when selling your used units. With a little effort, you can make sure you achieve the highest resale value possible.
How you take care of your vehicles will make a big impact on your potential resale value.
“To maximize your return on investment (ROI), make sure trucks are well-maintained. Most buyers want to buy a truck ready to go to work. Take the time to get your truck detailed, exceed DOT requirements, and repair non-wear-and-tear items before sale, including fixing body damage, broken glass, etc. End-users tend to stay away from ‘projects.’ Make sure your truck stands out,” said Rob Slavin, senior valuation analyst for Ritchie Bros.
Additionally, remember the quality of your used vehicle makes a big difference in its value, but some items make a bigger impact on resale value than others.
“If your truck needs repairs (body repairs, emissions systems, tires, etc.), your truck will be worth less than if these items work correctly. That said, putting a $20,000 engine into a $20,000 truck does not make it a $40,000 truck. Dealers get customers trading and selling trucks to them who say, ‘We just spent a bunch of money on the AC or whatever.’ No offense, the AC or whatever system it is supposed to work. Putting $2,000 into AC repairs does not always add $2,000 in value to the truck,” said Craig Kendall, general manager, Knoxville for The Pete Store, a member of the Used Truck Association (UTA).
If you have recently performed major repairs, such as an engine rebuild, was the repair done by a reputable dealer or shop? Is there a warranty on the repair?
Low-mile and well-maintained equipment bring a premium.
“Buyers of medium-duty and vocational trucks have become quite sophisticated. They know the value of ‘paying up’ for a well-maintained truck,” said Brian Daniels, director, sales and distribution for Daimler Trucks Remarketing.
Also, look at the exteriors of your vehicle. Do you paint on your designs or utilize vinyl graphics?
“Vinyl graphics are much easier to remove without repainting or damaging the paint than painted on graphics are. Are you still painting on your graphics, company name, DOT number, etc.,” Kendall added.
One primary recommendation and tip from Kendall: DO NOT delete or modify the emissions system!
“It is illegal, and it is a bad business practice to modify or delete the emissions system on trucks originally equipped with emissions equipment. Many truck dealers will not and cannot trade for or buy trucks with deleted or modified emissions systems,” Kendall said.
When pricing your units, do your research.
“What is a similarly spec’ed, age, mileage/hours, and condition trucks selling for? Not what you want the truck to sell for, but what is the real market price?” Kendall added. “Are your trucks in good shape or poor condition? Are your trucks clean? A dirty and damaged truck will not sell for as much as a clean truck with reasonable miles will sell for.”
Fleet companies looking to remarket their used trucks should also consider registering with Manheim.
“Fleets should then get their units checked in at their preferred location far enough in advance to have a condition report generated, as well as adequate time to review suggested repairs — and have desired repairs completed — before offering the units for sale. They should also review current market values and Manheim Market Report (MMR) to make sure they are priced according to the market,” said Noel Kitsch, Manheim Detroit General Manager and Manheim Detroit-Flint Market Center Leader.
A good piece of bottom-line advice from Kendall: “Ask yourself, if you needed a truck like your truck, would you buy your truck?”
Tips for Buying Used
When demand outpaces the supply of new trucks, used trucks become a far more popular option. But while used units are a less expensive option helping save dollars on your bottom line, there are a few items to ensure you walk away with a working unit and not a lemon.
“If buyers haven’t been in the market for a while, it is a good idea for them to familiarize themselves with current market values. A buyer should weigh the benefits of paying more for a younger well-maintained truck versus paying less for a high mileage truck — considering the potential downtime and maintenance costs, the higher-priced vehicle may provide more value,” said Daniels of Daimler Trucks Remarketing.
Digital wholesale tools make it easy for fleet buyers to find the inventory they need.
“We recommend that they search all of the available platforms (such as Manheim.com, OVE, Manheim Express, etc.) to find desirable units. If they plan to purchase in a live Simulcast sale, doing pre-work to identify vehicles and search vehicle values in advance will help them make informed bidding decisions during the actual sale. Additionally, they can always work with the local auction or sales team to identify sellers or locations to purchase from,” said Kitsch of Manheim.
Do your research and work with a company that’s honest and transparent.
“We sell tens of thousands of truck tractors every year via multiple sales channels. We provide detailed information with dozens of photos of each item, helping you to inspect and compare them online. Confidence is key prior to bidding. For our site auctions, you can also inspect items in person. Take time to find the right truck for your needs,” said Slavin of Ritchie Bros.
Kendall of The Pete Store recommended asking yourself the following questions:
- What do you need? What will the truck be doing?
- What is your budget? Is your budget realistic?
- What are similar trucks selling for — real prices?
- Will your body work on this truck?
- Does the used truck have a warranty? Do you know how much repairs can cost?
- Can you buy a warranty for the used truck? If you buy a warranty for a used truck, does the warranty provider have a good reputation? How do you file claims? Read the paperwork before you buy the warranty. Understand the warranty.
“You need enough truck to do the job, but you probably don’t need more truck than you need,” Kendall added.
Look for trucks that have been well maintained.
“Choosing a dealership with the ability to offer an Original Equipment Manufacturer (OEM) warranty that is not only issued by the OEM but also backed and administered by the OEM not only saves the customers money but also provides peace of mind that their business is covered. OEM backed warranties are best to protect owners against typical high dollar failures such as engine, driveline and aftertreatment failures,” Daniels added.
Diversity is key. “If we’ve learned anything this year, I hope it’s to expect the unexpected. Diversifying your offering will help you grow your network and customer base. If your business has been primarily vocational units, it would be a good idea to look into some regional tractors or vocational trucks to retail. Having a healthy mix of inventory will reduce the impact your business feels if demand in one industry suddenly shifts,’ said Giles of Black Book.