In contrast to 2001, 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.
“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.”
Ron Lipman, corporate used-truck director at Truck Enterprises in Harrisonburg VA, says 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 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.”
“We are heading into a time when it will be harder to find trucks,” said Lipman. “As time goes on, we'll be seeing more trucks traded in that will be topping 500,000 miles.”
Mike Davidson, owner of Davidson Trucking in Albuquerque NM, 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.
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 hp 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.”