Not Dead Yet II: Pickup in Used Pickups

Last Updated Aug 22, 2008 4:49 PM EDT

2005_Ford_F150In another sign that trucks are "not quite dead yet," to quote Monty Python, auction prices for some used-truck segments improved from June to July.

That's important, because used-vehicle demand and new-vehicle demand usually move in tandem. It's also important because falling used-truck vales have cost the car companies a ton of money on the value of trucks that come back from leases, like a $2 billion write-off for Ford in the second quarter.

Auction prices for used, full-size pickups rebounded 3.7 percent from June to July, to an average of $8,829, according to ADESA Inc., Carmel, Ind. That was the first time full-size pickups improved all year, said Tom Kontos, executive vice president, customer strategies and analytics.

The bad news is, full-size pickups were still 22.9 percent below the year-ago month, when they averaged $11,455. Full-size SUVs, the other poster child for the drop in used-truck values, fell another 6.9 percent in July from June. At least, that was less of a decline than the comparison with the year-ago month, which was down 24.4 percent.

In written comments (which he calls, "Kontos Kommentary," you gotta love that), Kontos cited these reasons why pickups are faring better than SUVs:

  1. Compared with SUVs, which got a lot of first-time buyers in the late 1990s, pickup owners are more likely to be loyal, repeat pickup buyers.
  2. There are fewer pickups than SUVs at wholesale auctions, because unlike SUVs, there are few pickups in daily rental fleets.
  3. Demand for pickups was hurt as much by the drop in housing construction, as by gas prices. So if construction recovers, pickups should, too.
  4. Other vehicles just can't handle heavy-duty hauling and towing like pickups.
Kontos has also been making the point for a couple of months now that used-truck prices would fall so far, that sooner or later, the market would recover as buyers went bargain-shopping.

Gas prices have also moderated somewhat. I also reported here recently that according to Edmunds.com, since gas prices peaked, truck buyers are somewhat less likely to consider other vehicles.

Besides full-size pickups, auction values for used minivans, small SUVs and luxury SUVs also improved from June to July. Full-size vans, mid-size SUVs, and compact pickups were all down from June to July -- but not as much as they were compared with the year-ago month.

Kontos also indicated that one month of improvement does not constitute a trend. Nor did new-vehicle sales improve. "We will thus curtail our enthusiasm for an improvement in the wholesale market until we see evidence of improvement in the retail (new-vehicle) market, which was again down in July," he said.