Why Does This Trailer Cost So Much?

One of the most common things we hear as a trailer dealership is, “Why is that trailer so expensive?”  In all reality, the true answer is very complicated as there are many factors that contribute to the price of a trailer and its components. 

The foundational principle of supply and demand is one of the first things that economic students are taught.  The law of supply and demand’s basic concept is that as supply decreases and demand increases, then prices will rise.  Conversely, if supply increases and demand decreases, then the prices will fall.  Now, you may be thinking to yourself, “Why am I getting an economics lesson and what does this have to do with why trailer prices are going up?”  Very simply put, this concept is tied into every aspect of the economy and is truly what is driving the prices of trailers.

Over the past year, we have seen trailer prices rise dramatically due to various market influences, but none more so than raw material costs and transportation costs.  These costs have been influenced heavily by politics at both the State and Federal levels.  Don’t worry…This is not going to be a political post, but it is important to understanding what is driving the increased prices.  At the beginning of this year, new laws went into effect to help regulate truck drivers.  Two of the main regulations are the requirement of an E-log to verify the actual amount of time that drivers are on the road and specific to California was a new gas tax that took effect that increased gas prices substantially.  While the E-log is truly a way to ensure that truck drivers are following the Department of Transportation’s rules for safe driving, the implementation of it created a shortage of available trucks to transport the products we buy.  Couple that with some additional state of California specific requirements and our truck supply went down.  Since the overall economy has been in a recovery from the recession in 2009, demand for products have gone up.  This led to increase in shipping costs.  At Vacaville Trailer Sales, we have seen a rise in our per load costs go from under $4000 per load to over $5100 per load.  This averages out to an increase in cost of the trailers from $100-$400 per trailer, depending on the size and weight of the trailer.  That might not sound like that much, but when you pair that with the steel price increases, you can see how dramatically they can go up. 

China is one of the world’s largest steel producers and the US historically has imported a lot of it.  When President Trump first announced that he would enact some tariffs on imports from China, specifically steel and aluminum (two of the main components in trailers), we saw domestic steel prices surge up.  Why would domestic steel go up if the price of foreign steel is the one being affected?  It all has to do with supply and demand again.  Since it was going to be more expensive to purchase steel from china and ship it to the US, companies started turning to steel made in the US.  This increased demand.  Since it takes a while to produce steel, the supply couldn’t just increase overnight.  This led to increased prices for all manufacturers.  This was all due to talks about tariffs.  As President Trump confirmed that trade talks didn’t go anywhere with China and that he would for sure put the tariffs in place, the costs surged again.  Each of these surges in costs naturally led to increases in trailer prices.  Due to the increase in steel costs, on average, we have seen an increase in prices between $250-$600 depending on how much steel that trailer uses. 

Put these two things together and you are looking at increased trailer prices between $300-$1000! Now, hopefully, you can understand why the prices of trailers are going through the roof.  Each component of a trailer is made by different manufacturers which in turn are dealing with increased costs.  All of these increases add up to create a big increase in the price of a trailer over last year.

So, what does this mean for you? If you have been thinking about getting a trailer, the time to do it is now and there will not be a better time to do it.  All trailer prices will be increasing for 2019.  The trade tariffs are set to go into effect on January 1, 2019 and sure enough, we just received word of another price increase on all trailers that we receive after Dec. 3, 2018.  This new round of cost increases could push the overall trailer prices up by an average of 10%.  Right now, here at Vacaville Trailer Sales, we are trying to ease the pain as much as possible by offering you our trailers at absolute lowest prices we can.  Whether you are going to purchase now or are just thinking about it and starting to price trailers out, come on down and let us help you out.