The market for used pickup trucks is experiencing a perfect storm, as demand continues to rise and the supply of new vehicles is low. The combination of a semiconductor chip shortage and an increase in the number of used vehicles on the market has driven prices skyward. The most drastic price increase is seen in pickup trucks. Below we’ve listed the reasons why used truck prices are up. Also check out our helpful article for tips on how to make your next truck purchase more affordable.
The used truck market has hit a new high, and it does not look like this trend will slow anytime soon. According to Technavio, the average used Class 8 truck sold for $52,388 in March 2016 compared to $43,791 in March 2015. Last year, the all-time high was over $55,000, and it’s likely to reach a new high this year as well. However, it is still a great time to buy a used pickup truck, and you can save a few thousand dollars by doing so.
Why are Used Truck Prices So High Right Now?
Why are used truck prices so high? There are several reasons. First, demand for new trucks is growing rapidly, resulting in a shortage of vehicles and parts. Second, the virus has caused too many people to drive, leading to increased demand. Third, the economy is doing poorly and there are fewer trade-ins available. In addition to the lack of trade-ins, the shortage in vehicle inventories could also be a factor.
As a result, demand for new pickup trucks has been on the rise. Ford, for instance, sold 900,000 F-150s in 2018. Other manufacturers saw their sales fall. Because there is a shortage of supply, prices are sky-high. For instance, there are fewer trucks for sale in the used car market than there were in the early 2000s. Ford dealers recently said that a fully loaded 2021 F-150 will cost upwards of $80,000.
Finally, the shortage of new trucks has increased the secondary market. Many trucking companies have been unable to keep up with demand, forcing them to hold onto older trucks for longer. Eventually, supply of new trucks will return to normal, but it may be a long time. The shortage of new trucks has led to a decrease in computer chips, which are crucial for the functioning of many trucks. Furthermore, the shortage has resulted in low depreciation rates, with many trucks still retaining 50% or more of their original value after five years.
Are Used Trucks Going up in Value?
According to Manheim’s Chief Economist, used truck prices are likely to go up in the next six to eight weeks. The market is experiencing a massive imbalance between supply and demand, and the combination of factors such as improving consumer sentiment and stimulus checks has led to a spike in used vehicle prices. Currently, the average used pickup truck costs $19,094, up 7% from last year’s average.
While compact cars have suffered in recent years, large pickups have been holding their own. The number of sales for used pickup trucks is still extremely high, despite a chip shortage. And the prices of these vehicles remain high despite the tough market. That’s good news for buyers. As used truck prices rise, it makes more sense to buy a used model. After all, that means that you’re getting the best deal possible.
However, there is a downside to this situation. Because of the pandemic, fewer new vehicles are on the market, and fewer trade-ins are available, prices have increased. These factors could mean that used truck prices have already exceeded their pre-pandemic peak. Despite this, there are still many good reasons to buy used vehicles. Some of the main reasons for this are the same as the ones cited above: the economy, tight inventory, and fewer trade-ins.
How Much Has the Price of Used Trucks Increased?
The number of used trucks on the market is growing. A recent Ritchie Brothers auction sold a Freightliner CA125SLP Cascadia sleeper truck tractor for $112,000, while a 2019 Volvo VNL760 sold for $105,000. The reason behind the price increases is a shortage of trucks and a lack of semiconductors. A recent report from J.D. Power Valuation Services, a truck market research firm, found that the price of used trucks rose almost ninety percent year-over-year and rose 7% month-over-month.
The trucking industry is in a strange situation. Demand for new trucks continues to increase, but supply isn’t keeping up. Manufacturers have responded by decreasing production of less popular models and increasing prices. New truck sales, meanwhile, lagged behind December’s spike. This could translate to strong used truck sales. The end of the trucking shortage is in sight. It’s time to take a look at the market and see how much trucks have increased.
How Much Did Truck Prices Go Up?
Inflation and transportation backlogs have caused truck prices to steadily increase. A new entry-level Silverado sold for $15,655 in 2000, but today, the same vehicle costs as much as half of the median household income in 2021. The price-per-ton is up about four times as much as it was ten years ago. Regardless, truck prices are likely to continue rising.
While the cost of trucks has increased over the years, there are still many advantages to purchasing a new vehicle. Several factors contribute to this rise, including the availability of affordable financing. While many manufacturers are competing to sell trucks to consumers, foreign imports are not able to compete with U.S. manufacturers. For this reason, domestic companies remain the best value. These factors result in a hefty price premium for new trucks, but consumers can still find a truck that is within their price range.
Besides rising labor costs, new technologies have also contributed to higher prices. The first version of a four-wheel steering system, for example, cost $5,600. By 2022, that same model cost $8,750. Eventually, however, this feature was phased out, and only a $1,000 vehicle was sold with it. Adding backup cameras and in-cab touch screens have added to the cost of building a truck.
Are Truck Prices Ever Going to Drop?
A recent study conducted by J.D. Power found that the average price of a four to six-year-old tractor will drop only 1% in the year 2022. However, truck prices have climbed nearly seventy percent in the same period, according to ACT Research. So, can truck prices ever drop? There is no easy answer to this question, but there are some things you can do to get ready for when the prices go back down.
The auto industry is still recovering from last spring’s pandemic. In response to the sever economic crisis, factories shut down and output dipped by 3.3 million vehicles. This caused a temporary dry spell in sales and trade-ins. However, once factory production returned in May, demand for pickup trucks and SUVs spiked. Moreover, the supply of vehicles was short of the demand, which triggered price hikes in many segments.
Will Truck Prices Drop in 2022?
Will truck prices continue to rise? Some experts are concerned about the state of the automotive industry. While they expect new car sales to grow by 20% in 2022, they also think the market will remain weak in the short term. The supply of microchips for new cars and trucks will remain low for an indefinite period. The shortage may eventually ease, but in the meantime, prices will remain high for a while. Nonetheless, there are still a few reasons to be optimistic.
As prices rise and the cost of goods increases, so do truck prices. While used car prices are still cheaper than brand new ones, truck prices have pushed inflation higher in recent years. Economists have hoped that car prices will fall by 2022, so that the CPI will start to moderate. The situation has improved somewhat in recent years, but repeated setbacks could still keep prices high. In addition, the shortage of new vehicles will keep prices high for some time, but that isn’t the case right now.
Are Truck Prices Going up 2022?
Inflation, supply shortages, and transportation backlogs all contribute to rising prices of trucks. In fact, inventory levels remain at historic lows. As a result, truck prices are likely to increase by 2022. Nonetheless, you should not expect these increases to come without warning. For example, the price of the Sierra HD and Silverado HD have both been increased by $1,000. Destination charges are increasing by another $100.
Ford has already announced an increase in prices across several models for 2022. The Raptor version of the F-150 will cost $3,300, while other F-150 trims will get a $1,500 bump. Super Duty models will increase by $1,000. The average price of a truck in 2022 will be $24,730, after destination fees. That’s a 15.1% increase in just four months.
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