Weigh Truck Acquisition Strategies

Buy new or used, or continue to run your existing fleet? These are your options when evaluating current and future heavy-duty truck needs.

There are no easy answers. With current economic uncertainties, many choose to run trucks longer. While upgrading to a new truck can improve fuel economy, thanks to new technology introduced for 2010, it also adds anywhere from $8,000 to $16,000 to the purchase price.

"There is good equipment out there as a result of the economic fallout. Given that the future is still a bit fuzzy, we see some customers consider used if the deal is right and, more importantly, the truck is right," says Curtis Dowart, vocational products marketing manager, Mack Trucks. "It is going to come down to a simple business case to determine what is right for you. For smaller operations and upstart companies, the used route is usually the path first travelled, as well as for customers and businesses that may see a certain amount of temporary or uncertain expansion, like we see now."

Benefits of new

"Work trucks take a lot of abuse before they are resold," says David Hames, general manager of marketing and strategy, Daimler Trucks North America. "This supports buying or leasing a new vehicle vs. a previously owned truck. It comes down to paying a higher initial cost vs. relying on the questionable reliability, durability, application suitability and warranty available on a previously-owned vehicle." The cost and potential downtime involved when replacing parts should also be considered.

New trucks can be tailored for the application. "By purchasing new you get the best chance to spec your truck the way you need it, with the right components and features that fit your business and application," says Dowart. "All of the issues with suspicious repairs and wear and tear go away. Your warranty is going to be much better with a new truck vs. a used truck. You can purchase a warranty for a used truck, but you will be paying a premium and not getting as much warranty as you might think -- read the fine print."

Fuel economy is going to play a more significant role as fuel prices climb. "Today's new trucks, with a few exceptions, get better fuel economy than their predecessors, and at the same time produce near-zero regulated emissions," says Dowart. "There has been what seems like a non-stop increase in cost and complexity of trucks over the course of the last several years, especially starting in 1998. Every emission regulation since then has hit the pocketbook in terms of initial purchase and an increase in operating cost, which clearly includes a good dose of extra fuel burned for no perceived benefit. Some of that has changed for the EPA 2010 emissions."

He explains, "For 2010, the cost has risen again. But this time, the up-front cost is offset by the 5% (or more, in some cases) fuel economy improvement customers are experiencing with Mack's ClearTech SCR technology. In simple terms, as the price of fuel goes up, the business case looks better all the time. With 2010 emissions, you are going to save some fuel, and the power and performance is better than the older engines and trucks."

"Trucks have never been more powerful, more reliable or more controlled by electronics," reports Hames. "With the information coming back from vehicles, maintenance teams will be solving problems as they occur and, better yet, before -- making today's numbers on both the frequency and severity of problems in the field a thing of the past. Uptime will increase and maintenance shop visits will be shorter. Thousands of man-hours will be saved."

Consider local emissions regulations, as well. "Companies working with government entities, and those working in poor air quality districts such as high-density urban settings, will be forced to replace older vehicles with newer, low-emitting vehicles," notes Hames.

Many manufacturers are also moving toward customized solutions for vocations. "Truck equipment manufacturers and chassis OEMs are working together more closely than ever before to increase productivity of the total package," says Hames.

Between the improvements generated by custom-engineered solutions; new engine systems with SCR that produce gains in fuel efficiency and performance; increased opportunity through emissions compliance; and predictive data and warranty reductions that improve operational costs over the lifetime of the vehicle -- new for 2010 and beyond is better, asserts Hames. "The vehicle's resale value will remain higher than previously-owned trucks," he adds, "due to the improvements and to meeting current and future emissions standards."

Used market option

Yet, with the market still shrouded in uncertainty, the used option has become popular. "Most people are definitely searching the used truck market before they order new," says Eddie Walker, owner, Best Used Trucks. "The biggest percentage increase in sales is used.

"The whole industry is seeing a little more movement in used trucks in the last two or three months," he continues. Select models of used trucks are going to be hard to find. "It is going to drive the price up."

It's also redefining what qualifies as a low-mileage truck. Today, Walker considers a truck with 500,000 to 600,000 miles to be a low-mileage unit. "A couple of years ago, a low-mileage truck was 150,000 to 300,000 miles. Now, you don't see that unless it's a repo," he says. People are holding onto their trucks longer.

With the uptick in certain markets, some vocational trucks are going to be easier to locate than others. For instance, in Texas the oilfield market has picked up. This has shrunk the supply of used heavy-haul trucks. "There are definitely some heavy-haul trucks on the market, but you have to look harder for them," says Walker. "They are scarce."

Dump truck configurations are regional due to local weight and axle spacing regulations, so availability will depend on local market conditions. The current construction market can make used dump trucks a real value.

Lee Wittmann, owner of TQM Co., helps to connect buyers and sellers -- whether they are fleets or dealers -- through electronic media. He provides advertising services and appraisal services for trucks and construction equipment.

Wittmann doesn't see a lot of optimism in the construction market right now; however, that does create opportunities. "But everything depends on the right spec and the pricing of it," he adds. "It is strictly a pricing game.

"Recently, the very small town I live in allocated $85,000 to buy a good, used tandem dump truck," he relates. "We were able to find a repossession with around 35,000 miles, with all of the bells and whistles, for $65,000. There are a lot of low-mileage repossession construction trucks around." He also reports there are dealers out there that still have new, pre-2010 emissions trucks on their lots with the appropriate specs for dump truck applications.

To get the best deal, Wittmann advises, "Look in non-traditional truck auctions, and you are going to find a number of banks and finance companies that really don't understand the program. They are putting trucks in car auctions. Trucks in car auctions are not going to get the price they [would] get in truck auctions, because you don't have the buyers there."

Gather information

The more you know about a truck and its history, the better purchasing decision you can make.

First, research the mileage. "You want to make sure the mileage is correct," Walker stresses. "There is so much retrofitting right now where people are taking over-the-road tractors and making day cabs and converting them to dump trucks -- converting this and converting that. You need to examine it and know exactly how the truck was built and why the miles are like they are."

Then, the truck needs a careful inspection. "Make the dealer supply you with a good, clean physical -- it's like going to the doctor," says Walker. "You need to make sure the truck has oil samples run by a reputable company." This includes not only the engine oil, but transmission oil, differential oil and even coolant samples.

"Always give the truck a good once over," agrees Dowart. "Pay special attention to frames, crossmembers, springs, suspension components, torque rods and front axle kingpins for worn-out bushings. Outside of the obvious crack or suspicious welding marks, make sure you don't see any suspicious cracks or rust marks on the frame, springs or crossmembers. It could indicate that something is wrong, or is in the process of going wrong.

"If at all possible, get a good look underneath, and bring a qualified mechanic along if need be," he adds. "Make sure you take a good look under the hood. Bad hoses and oil leaks can nickel and dime you to death; make sure that hoses are not brittle or leaky. And make sure the engine is not producing a lot of crankcase blowby, which could indicate that an overhaul is around the corner."

Today's electronic control units offer a wealth of data to potential buyers. "It has turned into an electronic world. You have the data there -- you just have to ask for it," says Walker. "If you read the printouts on the electronic engines, you can pretty much tell what is going on. You can find out how many times it has had 'check engine' codes or any kinds of fault codes that something needs to be checked." Make sure any fault codes were addressed.

Emulate dealers when shopping for a used truck. For example, Best Used Trucks performs every check previously listed. "We have to know what we are selling, and we have to know that we are buying a good piece of equipment," says Walker. "I want to make sure that I buy it right and know all about it."

"Don't hesitate to ask the seller for any supporting maintenance records or other supporting documentation, as well as any applicable state or DOT inspections," says Dowart.