truckDoctor time risk equity factor; the lowest risk equals the quickest (time) and surest (lowest probibility of failure) path to equity in the truck. equity defined as owing less on the truck loan than the truck will wholesale for (auction or what a dealer will right a check for). Equity rules, along with cash flow in the truck ownership business, lack of equity trumps flexability and can force business failure.
buying a truck is all about the future, it is not the present or near term that will soon be behind us. so it is often best to back off on the emotions and concentrate on the logic of increasing the probability of good future conditions or decreasing the probability of bad future conditions.
see below i am working on a model that should help give the less experienced some insight on improving a trucking future buy limiting the bad and positioning for the good. it is incomplete, always will be but i will keep chipping away, possibly some of you with greater experiance than mine can expand on a subject or offer a differing view. i will link your comments and knowledge to the subjects below. Just go to the discussion area, join and comment. (note you might want to e-mail me a note as i only visit there occasionally)
Probably the worst thing that can happen to a truck owner (and the largest risk) is to owe more on the truck than it is worth ...while the maintenance costs and down time are increasing to the point that loads are missed while truck payment money and more is being spent on repairs that wont increase the value of the truck 1¢ or next weeks reliability. This senario destroys credit, tears up families ...a bad sceen! How to avoid
future conditions goals:
Future Conditions
bad |
Maintenance Costs |
good |
||
| tire costs as high as 3-10¢/mi | running caps in wrong application, maint failure; -pressures, alignment, shocks, excessive speed, weights, loading / unloading conditions (like rail yards) | hold tire costs at 2¢/mi | control speed/weight maintain - pressures, alignment (including trailer), shocks, |
|
| low driver acceptance | age, condition, fit of purpose, wrong make/model/sleeper | paid utilization |
high driver acceptance | |
| inflexible truck | (weight-too heavy, gearing to low or high, age- can't get it signed on) | flexible truck | ||
| unreliable truck | previous maint failure, poor component specifications for the job | quality, proven component specifications, maint records and warranty left on used truck | ||
| working the wrong place | too few available miles, too many company trucks, difficult appointments or customer base | I've got loads | ||
| poor utilization | cash flow |
paid utilization, driver acceptance | ||
| high maint costs | low maint costs | |||
| low fuel costs | ||||
| 0 downs | equity |
3 year and out plan (new) | ||
| poor previous maintenance | 2 year or less plan (used) | |||
| the wrong truck spec and model | ||||
fuel costs |
||||
I've got to assume you are willing to work hard for a couple years. You need to know that the maintenance costs to run a long haul heavy tractor can range from less than 3¢ per mile to over 20¢ per mile. At 3-6¢ or so you can make money. Tires will eat up nearly 2¢ for sure and basic maintenance at least a penny. The wild cards; engine and drive train repairs, fan hub, air compressor, radiator, air conditioning, suspension. Desirability of the truck to the market place (wholesale value).
Yes, the square nosed trucks like the Kenworth W900L and the Pete 379 are worth the most (depreciate the least). It is a supply demand thing. The trade off; you will get somewhere around 1 mile per gallon less in fuel mileage with a proportionate effect on cash flow. The open market place in general places the most value on the perceived premium trucks ...Kenworth and Pete for the long haul market, Kenworth and Mack in the construction market. Specific dealerships and OEM's sometimes support their brands resale value to premium truck levels through guaranteed buyback arrangements or strong marketing. The test is when you ask them to write a check for your truck.
Some trucks (of the same year) are simply worth more than others
...time of ownership required before a truck can be sold at a value greater than the loan payoff amount. The shorter this time period the lower your risk. Additionally, the resulting equity position in valuable equipment will increase your ability to rapidly respond to your future opportunities, transportation or others.
Methods
Shoot for trucks that the market perceives as particularly valuable. Before choosing new, you might, talk to independent used truck dealers about what they see as valuable in a used truck for your application. A second owner will want the potential of Million plus mile economic lives or 20 year lives construction or delivery trucks
Used Truck - . Two year max plan or the until the first of May next plan. (I am assuming over 100,000 mi/yr use. Simply plan for equity and trading for a new truck when the new model year comes out. Your profit potential is far greater with new than used. Unfortunatly few can afford to start with new, or know enough about the industry to have the necessary options planed out )
If you intend to keep the truck a while then make sure the economic life of the truck matches up with your needs. A review of the truck make model and factory options with respect to the following list may help.
Maintenance
Safety
Driver
Your Customer
Equity
Fuel Economy
Efficiency
business man top non sleeper work truck list
1) T800 Kenworth (Kenworth's best truck and the Worlds Best Truck) or W900L as local weight laws dictate.
2) Several Mack models are distant contenders but tend to hold resale value (it's the perception thing).
3) The Sterling ...evolution of a solid Ford design
owner op top truck list
1)W900 Kenworth (Studio or 72"AeroCab)
2) 379 Pete
3)T600 72" AeroCab
4)Freightliner Classic
the KW T2000, Freightliner Century Class, and Volvo VN770 are too new to rate.