It all depends

Jan. 1, 2005
To the chagrin of many fleet managers, the road from the added expense of specifying new technology and components to the increase in a vehicle's value at re-sale is often a long one and sometimes leads nowhere at all. But if you make the right choices, it is possible to add $3,100 to $4,200 to the value of a piece of equipment. The most basic way to assess the re-sale value of a high-end option is

To the chagrin of many fleet managers, the road from the added expense of specifying new technology and components to the increase in a vehicle's value at re-sale is often a long one — and sometimes leads nowhere at all.

But if you make the right choices, it is possible to add $3,100 to $4,200 to the value of a piece of equipment.

The most basic way to assess the re-sale value of a high-end option is to determine whether it added to the re-sale price or simply made the truck easier to sell.

Unfortunately, the length of new-equipment trade cycles means it could take three or four years to get your answer.

In addition, to get a true picture of value, the quantity of used equipment sold with that particular type of technology or component has to reach some minimum level.

There is a benefit to new-equipment trade cycles in the used truck marketplace, however. Both dealers and buyers get to see the actual performance of the “new” technology or component.

REAL WORLD

Despite the benefits touted in initial marketing, disappointing results in terms of real-world performance can seriously impact vehicle value or make it difficult, if not impossible, to sell a vehicle on the used market.

Components that do seem to be adding value to on-highway tractors include Hendrickson Airtek front suspensions and automated transmissions from both Eaton and ArvinMeritor.

The Airtek has overcome some of the drawbacks of earlier air ride front suspensions, and now adds $400 to a 3-yr.-old tractor's used value.

An automated 3-pedal transmission can add $1,950, while a 2-pedal automated transmission can add $3,050 over a standard 10-speed.

However, if something was optional at time of original purchase but is now required by law, it will not add to the value of the vehicle when sold on the used market. One example is ABS brakes, which were spec'd as options in the late '90s before the federal government made them mandatory.

SOON TO BE

At the other end of the spectrum is the attempt to avoid a soon-to-be-required technology or component. One example would be trying to avoid equipment spec'd with engines that meet EPA's '02 emissions restrictions.

Some have argued that trucks equipped with pre-'02 engines will be more valuable on the used market than those with '02 emissions-compliant engines.

Another issue is whether the technology you're trying to get “added value” for at re-sale has been surpassed by still newer technology available at the time of trade.

Did the latest component or technology represent a fundamental improvement or just one more step in a continuously evolving technology? Has competition among suppliers brought initial cost down?

ESSENTIAL?

In addition, you have to think about whether the option is as essential to owner-operators — who represent the majority of used truck buyers — as it is for fleets.

Trailer tracking is one example. Fleets can realize a benefit from this relatively costly item in terms of improved logistics and equipment utilization, as well as load protection. This is probably not the case for owner-operators, few of whom would opt for this type of option.

Staying abreast of industry trends will help you make better spec'ing decisions.

Today's new technology or component may become tomorrow's standard equipment. The big component adds in the '90s were 72-in. sleepers and 455 hp., 14L engines. Today they're considered minimum specs for on-highway tractors.

And since 2004, the Truck Blue Book has considered the following “options” as standard for on-highway tractors: engine brakes, air ride cabs, cloth interiors, air slide fifth wheels, and two aluminum wheels.

About the Author

Terry Williams

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