Dive Brief:
- Peak prices for Ryder System’s used vehicles recently cooled while still remaining higher than previous years, executives said in an earnings call Wednesday.
- Sales proceeds for used tractors dropped 22% in Q3 compared to Q2 as a result of falling prices, according to an investor presentation. Truck sales proceeds saw a similar trend, falling 11% on a quarterly basis.
- The company expects its historically strong used vehicle sales to continue dropping in the near term, though the pace of the decline may slow, Ryder CEO and Chairman Robert Sanchez said on the earnings call.
Dive Insight:
While the spike in Ryder’s used tractors and truck prices in 2021 and 2022 is falling, it’s still historically high.
The average proceeds per used tractor was still 72% higher for the first nine months of 2022, compared to the same period last year, showing a supply and demand mismatch is still having an effect on the equipment market.
As OEMs face demand constraints, aging fleets have led to an order backlog and a push for vehicle replacements. Preliminary Class 8 orders more than doubled from August to September, and market relief remains to be seen.
Penske Automotive Group Chair and CEO Roger Penske reported Wednesday that the company’s entire allocation of Class 8 trucks for 2023 was sold out. In contrast, PACCAR CEO Preston Feight said Tuesday that the company’s order books were open but filling up for the first half of next year.
While economic challenges have raised concerns at Ryder, executives expressed confidence in the company’s financial health. About 90% of the business’ revenue is contractual, suggesting resilience even in an economic slowdown, Sanchez said.
“We're preparing for a slowdown in a recession,” Sanchez said. “And this idea that our core earnings will continue to grow even in a slowing economic environment, I think, will be testament to that.”
