When we look at medium-duty truck models, we always think of the workhorses of the automotive industry. Selection and purchasing of these trucks happen not with a lot of emotion, but rather through smart thinking and objective analysis as to what product and configuration can best do the job at hand.
Jobs today require new or additional trucks, and not just any model, but the right one depending on the task. And, in many cases, the configuration might not be powered by the traditional gasoline or diesel engine, but rather with a focus on fuel economy, lower emissions, and being green and sustainable, on top of having the right suspension, bed, or box.
With an improving economy, much of which is driven by commercial construction, the pipeline of good late-model used medium-duty Class 4-7 trucks is not as filled as the markets for light-duty trucks, utilities, vans, and cars. This medium-duty market was a little slower recovering as commercial financing needed a few more positive economic signs to get sales jump-started.
Taking a Market Snapshot
Black Book's ongoing analysis found that, over the past 12 months, the later model medium-duty trucks, the 2012-2013 model-years, had greater percentage depreciation than the older, 2004-2011 model-years, only four times. Keep in mind that the later models have a wholesale value over twice as high as the older model-year group.
We feel the strength in the later model-year group is related to slow builds on new truck orders, and, thus, the belief and confidence that the later model trucks can adequately fill buyers' needs. With the limited choices in the market, when you do find the right used truck the bidding might be a little more aggressive.
As of press time, over the past year, the older units had an average monthly depreciation of 1.2 percent, while the later model units were at 1 percent, with annual depreciation without rounding coming in at 13.8 percent and 12.6 percent respectively.
Forecasting the Market
With a solid commercial construction industry and continuing signs of economic recovery, the annual depreciation level for medium-duty trucks in 2014 of 13.2 percent is probably a slightly higher level of depreciation than one would expect. Looking back at 2013, the level was even greater than one would expect, coming in at 17.2 percent. The question that lies in front of us is, with more new truck orders filling some of the inventory needs, how will the used vehicle industry react? Taking all the factors into play, we expect 2015 to finish in the more traditional annual depreciation range of 15.5-16.5 percent.
For those of you who focus all of your attention on the Class 4-7 trucks, to quote Work Truck Editor and Associate Publisher Mike Antich, "Let me know what you think."
Ricky Beggs is a senior vice president and editorial director at Black Book.
Originally posted on Work Truck Online