Used Trucks May Have Hit Bottom

The absence of worse news was sort-of good news on the used-truck front in August, according to auction firm ADESA Inc. "Average prices for used full-size SUVs and pickups rose in August, indicating prices in these segments may have hit bottom," said Tom Kontos, executive vice president.

Meanwhile, on the new-vehicle side, thanks to big discounts some truck models posted higher sales in August versus the year-ago month. New-vehicle sales and used-vehicle sales tend to move together.

Any recovery in new and used trucks would be a big relief for the automakers. Besides losing revenue to falling new-vehicle sales, they have been booking big losses on the resale value of used trucks that are coming back from leases.

However, prices for both full-size SUVs and pickup are still way below year-ago levels, ADESA said.

Specifically, at an average of $9,908, used full-size SUVs improved an average of $125 or 1.3 percent from July to August, but they were down 22.5 percent from the year-ago month. Used, full-size pickup improved by an average of $763 to $9,592 from July to August, but that was 16.7 percent below the year-ago month.

In contrast, compact cars at an average of $7,654 were up 22.8 percent from a year ago, ADESA said. "Prices for compact cars reflect continued interest among dealers and consumers in obtaining vehicles that get better mileage," Kontos said, in a Sept. 9 newsletter.

That makes it more economical to offer better lease prices on compact cars, because in leasing, the customer in effect borrows the difference between the upfront cost of the vehicle and its predicted resale value, called the residual value, at the end of the lease.

The converse is true for full-size trucks. Falling residual values make it more expensive for the consumer to lease, and generate a loss for the auto lender that takes them back at lease termination.