Used Trucks
Bargains abound, if you're in shape to buy.
These are tough times, but they can be good times if you need equipment. The economy is down, and the tumble of new truck sales has depressed prices of both new and used trucks.
That's bad for lots of people, but a boost to anyone who's in a buying mood, and mode.
"There is no better time to update fleets, if you've got the money, than right now, and I've been doing this for 25 years," says Steve (Bear) Nadolson, manager of Arrow Truck Sales' branch in Columbus, Ohio, and president of the Used Truck Assn.
Inventories of used medium and heavy trucks total 150,000 to 200,000, according to industry estimates. If it's 170,000, it would be about 75% above normal levels, Nadolson says. Such high supply with limited demand has hammered down prices.
A look at ads for used trucks shows late-model low-mileage tractors selling for well under $40,000, far less than half their cost when new.
1997, '98 and some '99 sleeper-cab tractors with 400,000 to 500,000 miles typically sell for $25,000 to $35,000, he says. Of course, make and model matter, as does condition. And such tractors continue to come in.
Freightliner, which sold almost a third of all road tractors in those boom years, says it is trying to renegotiate the guaranteed buybacks that were part of the original deals, with hopes of convincing fleets to keep the trucks another year or so. This is part of the company's multi-pronged survival strategy, and its outcome won't be known for some time.
Nadolson says he's starting to see a scarcity of very late-model tractors — '99 and '00 models with under 200,000 miles. And models like Kenworth's W900L have risen in value because they are desirable to buyers and comparatively scarce. Peterbilt's 379EX, the stereotypical "large car" that all truckers supposedly lust after, has fallen some in value because Peterbilt sold many to fleets in recent years and now many are being traded in and offered on dealers' lots, he says.
Overall, "the toilet won't flush for two years," meaning the oversupply of all used trucks won't be exhausted until then.
Meanwhile, "if you've got trucks to trade, you're not going to get what you got before, but if your book value [on a truck] is zero, then what does it matter what you get?" Nadolson argues. "Can you get another thousand or two [dollars] out of it if you sell it retail yourself? Maybe. But most of the fleets don't want the aggravation," so they trade.
The deflated prices have actually resulted in a "real-value market," he contends, because previous prices were inflated by factory deals from some builders, whereas they now reflect trucks' true worth.
But the low prices don't make buying simple. Finance companies once willing to do no-money-down deals now want 10% down, and many buyers won't believe it.
"We have created this problem in the industry and everybody got used to the idea that you don't need credit," Nadolson says. "Suddenly the rules have changed."
Price, down payments and loan terms are only part of the buying equation. Nadolson advises buyers to deal only with reputable dealers who will be around to assist with any future problems. And get all warranties that may be available.
Warranties can be from original equipment manufacturers, usually covering engines, transmissions and axles, that are transferable to new owners within certain mileage limits, usually 500,000 to 750,000 miles. Some third-party warranties from National Truck Protection and Harco can be bought for other trucks, subject to inspections. Lenders will finance the purchase of such warranties so their costs can be spread over monthly payments.
Condition is probably the most important consideration, and it has to be determined through careful inspections. Maintenance records can be hard to get; some former owners don't want new owners blaming them for any problems.
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