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Black Book: "Very Positive Retention Value" for New Diesel Engines

July 15, 2010

The used-vehicle market is performing well following the Fourth of July holiday, with auction attendance and activity stable, but there is noticeable activity from the truck segment and its improved retention values, according to Ricky Beggs, of "Beggs on the Used Car Market."

Beggs, the managing editor of Black Book, says the truck segment - including pickups, vans, SUVs and crossovers - have had the most activity with 67 percent of the adjustments coming from these type vehicles. Full-size pickups, in particular, are a very vital part of the industry and have improved in retention value.

"With a very large portion of the power plants in this segment being diesel fueled, meeting the latest diesel emission standards has required new technologies. These power plants, at a significant premium cost over the gas engines, from $7,200 to $7,800 when new, have a very positive retention value, currently at $7,400 for a used three-year-old model," Beggs says.

He adds that the extended, super and crew-cab pickups have increased in their retention values, and attracted more potential buyers in the wholesale and retail markets in the used markets.

"Today's three-year-old extended/super cab models will bring an additional $1,500-$2,200 premium over a regular cab model. Taking it to the next level, a crew-cab version with four full doors will require an additional $2,000-$2,500 more over the extended/super cab design," he says. "Sure you are going to pay an extra $2,100 to $2,700 when new over the regular and/or extended versions for the increased cab space and doors, but it opens up many more potential buyers in both the wholesale and retail markets in the used markets."

Beggs also interviewed Kevin Giddens, the Black Book's senior truck editor, to gain some insight on the improvements made in the truck segment.

RB: Kevin, what is the biggest improvement you see for the latest versions of these

KG: Ricky, I would have to say the hauling and towing capabilities of these trucks far exceed even last year's. You look at the improvement that they make every year and you think, "How could this keep getting better?" But they always somehow seem to do so.  Looking at the different models out there a ¾ ton now can haul as much as 4,000 pounds of payload and they can tow close to 22,000 pounds on a 1 ton truck. Not only this, but just the ease it pulls with on these new diesel engines is absolutely wonderful.

RB: You mentioned payload. Other than heavier rails and beefed up springs, what enables the capabilities to tow and control this extra payload?

KG: Well, that was always one of our largest worries in the past, I guess, eight years, with these trucks having the much stronger engines and powertrains they've had in the past, is not only will it pull the weight, but how will it handle it.

On today's trucks, the ones that we've had a chance to have seat time in, they have such options as trailer sway control and hill start assist. They have integrated trailer brakes that are put into place so they're not in the way; you don't hit it with your knee anymore. It's really easy to reach which makes it safer; and they also have built in exhaust brakes which also help handle the load when you're coming down hills.

RB: The cost of fuel has been erratic over the last couple of years and there continues to be uncertainties as to the price of gas and diesel fuel going forward. Is this a concern for this market segment with the emphasis being placed on these new models by the manufacturers?

KG: I'm going to have to say yes and no. And the reason why I say that is everyone is concerned with the fuel cost these days, but with the economy being what it has been the last couple of years the market's a little different.

The people buying these trucks nowadays and the ones that are going to continue to buy them are the ones that need these trucks to make a living with, or to live the lifestyle that they want to live. Also, with technology being as it is, the fuel economy is better than it ever has been. The trucks have six-speed automatic transmissions now and they really do well.

RB: What new communication technologies are now in this segment, whether it be a work truck, or whether it be more for consumer type use?

KG: A big deal is hands free communications, not only in trucks but all automobiles.  Just to be able to carry on conversations without taking your eye off the road. But as far as trucks are concerned these products now offer mobile office solutions. Someone can actually work out of their truck unlike they could in times and years past.

You have technology there to print invoices and receipts. You have technology there to track your vehicles, not only where they are during the day when they are out of the office, but also when it's time to service the vehicles. You can have online diagnostic checkups and you also have special services like tool locks and those types of things.

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