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How to Balance Truck Application Against Resale

THIS POST WAS ORIGINALLY PUBLISHED ON THIS SITE Click Here To Read Entire Article

March 2018, Work Truck – Feature

by Mike Antich – Also by this author

Correctly spec’ing a truck is vital to giving it the ability to fulfill the intended fleet application. While this is your primary responsibility, truck specifications are important factors in optimizing your remarketing strategy.

When spec’ing a truck, you also need to think about the impact of specifications and equipment on a vehicle’s ultimate resale value. It is important to have a remarketing mindset right from the start when identifying the required truck specifications.

This is easier said than done. It is a fine art to creating a balance between fleet application needs and factors that enhance resale while keeping a lid on the total cost of ownership (TCO).

In addition, there are other factors that influence resale value that goes beyond vehicle specifications. For example, mileage and general condition will play a major contributory role in determining desirability and resale value.

More and more fleets are selecting powertrains that do not exceed horsepower and torque needed to fulfill the fleet application. While buying minimal horsepower and low-torque engines and the least expensive transmission may get your job done, will this be desirable to the next owner? This is the art of finding a balance between fleet application needs and factors that enhance resale values.

Take into account which engine will be more desirable in the secondary market. Make sure the truck is equipped with an engine that has enough power to be used in a variety of applications, which will expand your used-vehicle buyer pool.

Spec’ing higher horsepower and torque ratings will allow a truck to be used for a wider range of applications, expanding the potential pool of customers on the secondary market.

The key is determining the horsepower/torque “sweet spot” where the truck offers sufficient power for its initial duty cycle while increasing possibilities for future resale, without paying too much up front.

Likewise, many fleets acquire the lowest acceptable axle weight ratings and GVWR. While important in minimizing acquisition cost, it will limit the number of buyers who might consider buying the used unit. Similarly, many remarketing professional advise not to spec light-duty frame rails, wheels, and tires, because this will negatively affect how a used unit sells.

This is where balancing fleet application against resale considerations become very complex. For instance, a truck may be intentionally under-spec’ed because it is designated to carry a very light load or is part of an initiative to achieve better fuel economy to reduce fuel spend and to lower initial acquisition cost. These units at resale may be less attractive because they do not have enough “general use” ability. The question you need to answer is whether the loss in resale is offset by the fuel savings and lower initial price.

Most trucks today come standard with the necessities for resale and everything else is a choice about spec’ing the truck for a particular job purpose. It’s really only a spec’ing mistake if the truck is spec’ed wrong for the job and either doesn’t last and has to be sold too early (with problems) or can’t do the intended job and hurts driver productivity. A vehicle can also be over-spec’ed where the resale isn’t hurt (and maybe helped a little), but the initial cost, lower fuel economy, etc., can be negatively impacted causing total lifecycle costs to be too high.

Over- and under-spec’ing also impacts resale from the standpoint of weight. Many companies over-spec to handle more weight than necessary, which costs much more up front and is not necessarily recouped on the resale. Conversely, many companies

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