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There is another reason not cited for the dropping prices of used trucks. Many smaller companies and individual owner operators, which are the natural market for such trucks are shunning them completely and rebuilding or glidering. The used trucks in the time frame cited are very expensive maintenance time bombs. Until rates and business improves, new and used prices are headed south. A friend of mine owns and runs 4 trucks(average age 16 + years). The local International dealer just called him and offered him new 2016 IH Prostars with Cummins power, 500 HP, sleepers 10 speeds for $106,000 including FET. That truck should be selling for $130k

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The unknown question about the current drop in freight levels is how much of that decline is being driven by the upcoming elections. It is not unusual to see a slow down just prior to the elections. Uncertainty makes us more cautious. Especially for corporate spending. Most businesses want to wait and see the outcome of the elections before committing to purchases as different candidates could influence how the business sees itself moving forward under different political leaderships. The more uncertainty, the more reluctant the business is to spend and invest. With the vast differences between the two candidates this election cycle, the uncertainty is much higher then businesses have seen in a very long time. Right now the only thing business are confident about is that the political gridlock will continue and escalate, regardless of which party is in political control.

 

The real indicator is going to be 180 days or so after the election. I think it will pick back up by this time as business will have their game plan about moving forward with the new occupant in the White House. Hiring is still strong. A sign that the businesses do not see a pull back in the near future. It is capital investments that have stalled and declined. Even the stock market has been pretty quiet and stable over the past 90 days.

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A comment about the maintenance time bomb. Smog systems and DEF are just $$#$$$ waiting to be spent. New trucks, under warranty, are having smog system problems. Appears to be in the 5-10% range based on mechanics experience. Then comes the major overhaul of the exhaust system. Mechanics estimate up to $20K based on engine.

 

I saw one truck downed for 8 days, a Sunday included with no work done, because of three bad sensors. Warranty required adherence to a checklist. Four regens done for a cost of 1/2 tank of fuel. That did not include the $4000 tow bill for truck and load of about 250 miles.

 

Bill

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