Preliminary Class 8 April Auction Results
April is the first full month in which sales activity took place entirely during the economic shutdown, so we’re eager to look at how the market is performing under these conditions. We now have 3 weeks of auction data to examine, so we’ll start with that channel. Next week, we’ll look at preliminary retail data.
In the first 3 weeks of the month, auction volume was behind March by a mild to moderate amount. There are still multiple upcoming auctions before the month closes out, and we do not expect volume to decline dramatically. Freight data is now fairly weak thanks to the end of the initial stockpiling phase, but demand was already depressed due to massive uncertainty and caution on the part of buyers. Sales are mainly limited to replacement trucks at the moment.
Looking at pricing, we noted a few weeks ago that values declined notably in the second half of March. That environment is obviously still in place. Anything with mileage above 400,000 continues to take a hit, especially in newer model years. The worst of the devaluation appears limited to 3 year-old trucks – that group is currently running over 20% behind last month. Keep in mind this comparison is based on a very small volume of data, so we may revise our assessment after the last few auctions are complete. On the bright side, 4 and 5 year-old trucks look to have fared considerably better, with pricing off only a few percent compared to March. Older trucks are not doing particularly well since newer iron has depreciated so much.
We’ll hold off on “official” figures until all April sales data has been collected. In the meantime, we still see some pricing recovery beginning with the gradual reopening of the economy. The early stages of the recovery will look and feel like a serious recession, since businesses will reopen in stages, customers will be hesitant to shop at patronize in person, many small and medium businesses will have gone out of business entirely, and even many of the largest corporations will have reduced staff and cut pay. There could certainly be a short-term rebound once the re-opening gathers steam later this quarter or in the summer, but the more ingrained fundamental factors will take longer to dig out from.