Overview
Truck – The struggling economy, spiraling fuel costs, and stiffening emission standards all contributed to sales of Class 8 Truck/Tractors declining by almost 50% in 2007. Forecasts suggest these conditions will be exacerbated by the oversupply of units produced in 2007 and continued weakness in demand in 2008. February sales of Class 8 trucks were up 6.6% over January, but gains and losses on a month-to-month basis have been routine. February sales represented a 37.9% decline over the same period in 2007. Several indicators are predicting new sales should recover somewhat in 2009 as transportation companies purgeantares new units exempt from stricter emissions standards proposed for 2010.
Trailer – New trailer sales also dropped sharply in 2007. Forecasts for new trailer sales in 2008 are optimistic. However, it is difficult to find a basis for this exuberance with the large volume of used trailers expected to enter the market this year as a result of deteriorating economic conditions.
Industry Condition – Fair to Poor
Key Industry Indicators
- New Truck Sales
The market downturn in the sale of Class 8 trucks continued. In March 2008, sales of Class 8 trucks fell 30.3% from 2007.
Commodity Tracker
- Diesel Fuel Prices
As of May 5, 2008, diesel fuel prices stood at $4.149 per gallon. This is a nearly 50% increase from one year earlier.
Leading Manufacturers
- Freightliner – 24.8%
- International – 19.7
- Peterbilt – 13.2%
- Kenworth – 12.8%
- Volvo – 10.7%
- Sterling – 8.9%
- Mack – 6.8%
- Western Star – 1.6%
Overview
The volume of Class 8 trucks and van trailers entering the secondary market in the fourth quarter of 2007 and first quarter of 2008 has increased sharply. Transportation companies are suffering and have no option other than shrink their fleets because of reduced freight volumes, increasing fuel costs that often must be absorbed and high fixed costs. Even companies that once managed their own transportation are seeking other options amidst spiraling costs. Sometimes shrinking capacity means parking trucks and trailers for the short-term in hopes that the market will return, but inventories of idle equipment are growing and there are no indications of recovery in the near term.
Major leasing companies are seeing large quantities of trucks and trailers returned early. Auction volume both in number of sales and number of units sold are increasing; and few dealers are willing to buy on speculation with prices dropping quickly. With diesel prices projected to continue to increase, it is only going to get tougher for this segment of the transportation industry. This will add to the volume of trucks and trailers being sold due to business failures and likely cause companies to sell the increasing number of units currently parked. If this occurs, the sharp increase in supply amidst diminishing demand will create a devastating set of market conditions not seen since the late 1970's and early 1980's.
Used Equipment Values – Fair to Poor
- Supply of used equipment – Increasing
- Demand for used equipment – Decreasing
- Trends in used values
- Trucks – Market depreciation up between 6% and 8% to 28%+ per year
- Trailers – Market depreciation up between 4% and 8% to 12% to 18% per year
Liquidation Monitor
- Recent bankruptcy filings
- Summit Global Logistics, Inc. filed on January 30, 2008
Factors Influencing Value & Marketability
- Age and condition
- Mileage to major overhaul
- Engine, transmission and wheelbase
- Cab configuration
Valuation Monitor
AccuVal routinely provides appraisal, consulting, and asset management services to the
Transportation industry, including trucking companies, truck and trailer leasing companies, and to companies operating fleets of trucks and trailers supporting their operations.
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Representative Clients Our Associates Have Served
Success Stories
- Lender Concurs With Appraisal, Company Emerges from Chapter 11
- Hundreds of Fleet Valuations Used as Collateral for Secured Lending Totaling 100's of Millions of Dollars
- Routine Valuations of Specialized Fleets of Trucks and Trailers Performing Special Services and Supporting Manufacturing Operations
- Landmark Valuations Used to Set Industry Standards in the Residual Value of Transportation Equipment
- Valuations and Dispositions of Truck and Trailer Original Equipment Manufacturers
- View all Success Stories
Allied Holdings, Inc.
Foremost Farms USA