Key Takeaways for Decision Makers
BUYER/SELLER: Depreciation rates of trucks is primarily due to age with average utilization influencing the market, but volume does not have a significant impact on overall market depreciation.
As heavy duty trucks depreciate with age, the sleeper trucks depreciate at a faster rate than the day cabs. The sleeper trucks begin at a higher price than day cabs and quickly come to a similar or lower used value than the day cabs due to utilization. On average, the sleeper truck utilization is 1.38 times that of the day cabs. There is a slight jump in values on sleeper trucks between ages 28 and 32, which was highly correlated to the drop in utilization on these commercial trucks. When trucks of this age are available for sale on the used truck market, they are kept in good condition given their much lower mileage as well as less availability of trucks this age, causing pricing to become more competitive. The average sleeper truck sees the largest mileage jump (outside of the first year of use) between ages 1 and 2, followed by ages 24 and 25. The majority of the utilization increase in a sleeper’s lifetime is acquired by age 8 showing varying ups and downs in average mileage after this age. The largest increases in day cab tractor utilization occurs within the first three years of usage increasing up to 306,048 miles on average by 3 years of age. There are only minimal changes in average mileage as day cabs increase in age.
As volume of the day cab trucks on the used market reduces as their age increases, the ones left are generally going to be the better kept and under-utilized trucks. If the day cab trucks continued to increase in mileage as they do within the first 3 years, a 10 year old truck with over a million miles of usage is much less desirable than one with only 345,460 as the average 10 year old day cab being sold stands today.
68.5% of the sleeper cab trucks on the used market fall between ages 2 and 5 while the day cab trucks do not gain traction within the used market until age 3. A noticeable difference between the sleeper and day cab trucks is that the volume for day cabs remains high for a longer period of time than the sleepers. While the sleeper trucks hit their peak in popularity on the used market at ages 3 and 4, the day cabs do not show the highest market presence until age 8. 53% of the used day cab trucks on the market fall between ages 4 and 8 indicating a much wider spread of volume than the sleepers. Both truck types drop significantly in popularity after age 10. There are no spikes on volume after age 15 for sleepers. There is a small spike in market percentage at age 15 after the drop between 11 and 14. Day cabs however show a consistent decrease in volume with only a small spike at age 25 before dropping down to insignificant amounts. There is a strong relationship between the drop off of volume on both the day cab and sleeper cab trucks and the average mileage of those available on the used market. For example, the significant drop in volume on the day cabs aged 24 years showed a large decrease in average mileage as well indicating the few available on the market are under-utilized in comparison to the 23 and 25 year old trucks. In terms of pricing, there was a clear jump for sleeper trucks between 28 and 32, as previously stated, which shows no relationship to volume.