While the end of 2017 brought a record decline in weekly depreciation for cars, volume-weighted, overall truck segment (including pickups, SUVs, and vans) values declined by 0.54% the last week of 2017, according to Black Book. This is in line with the average weekly adjustment of 0.57% over the previous four weeks.
The medium-duty wholesale market continues its downward trend as we get ready to open the doors to 2018. This past month, late model units (2015-2016) dropped a weighted average of $296 (0.6%), which is less than the previous five months. This is the smallest decline in December that the vehicle valuation company has seen for this segment in many years.
The older model-year segment dropped an average of $127 (0.6%) in December, which is less than the previous month when this segment dropped an average of $154 (0.8%). Black Book noted that this is the third consecutive month where the depreciation on this segment has eased up a bit.
Wholesale and retail demand remains strong as fewer and fewer units find their way to the auction blocks. This makes for a stable market with less data supporting a large downward adjustment. Some units performed better in December compared to November. The units in these segments are veritable and perform countless daily jobs that Black Book expects the demand for these units to increase. Also, we feel like there is some pent-up demand in these segments. So, even as supply slowly increases over the next few years Black Book does not expect prices to fall drastically.
For the heavy-duty market, according to Black Book, late-model over-the-road units are a group of trucks that stand to lose the most from the original dollar invested. Condition and mileage dominate how this segment performs, and they dropped 0.3% more in December than they dropped in November. Savvy late model buyers continue to pay up for these units while expanding or replacing older equipment. These buyers take advantage of the first and second year "depreciation" plus not having to pay the federal excise tax, which is included in the price when a new truck is purchased. This tax can range between $13,000 to $16,250 based on what most new over-the-road trucks are selling for.
Since this tax is a huge part of the first year drop in value, according to Black Book it assists the late-model used-truck buyer in reducing their investment while updating their equipment. Construction/Vocational trucks continue to bring strong numbers at all levels.
Construction, highway infrastructure, and highway expansion projects are the major factors in maintaining their values. Even the older and much older trucks in this segment continue to sell for record values especially if the buyers are check writers. Even though these trucks must comply with federal engine emission standards they don't have to comply with much of the additional requirements imposed on the over-the-road units. Regional Tractors don't bring the premium that they once did over long-haul road tractors except for a few models but if they are equipped properly they still hold their value well.
- 2015-2016 HD Construction/Vocational segment dropped an average of $492 (0.5%) in December compared to the average decline of $423 (0.5%) in November.
- 2015-2016 HD Over the Road Tractor segment dropped an average of $835 (1.2%) in December compared to the average drop of $653 (0.9%) in November.
- 2015-2016 HD Regional Tractor segment dropped an average of $599 (0.9%) in December compared to the average depreciation of $507 (0.8%) in November.
Originally posted on Trucking Info