The Ins and Outs of Equipment Purchasing
August 1, 2005
The Ins and Outs of Equipment Purchasing
When its comes to acquiring trucks, regardless of whether you are buying new or used or leasing, the principals involved in selecting the appropriate vehicles are the same. The objective is to maximize the return on your investment.
Here are some recommendations to assist you in defining and evaluating your purchasing decisions in order to make the wisest choices.
Stay Informed. Keep abreast of developments with vehicles and their components and technology. Along with reading trade publications, attend truck and equipment trade shows. These are excellent opportunities to be hands-on with the latest new products and to talk directly with vehicle manufacturers, component suppliers and service providers.
Take advantage of truck and component manufactures’ resources. They have considerable experience with specifying trucks for all kinds of applications and vocations and can provide sound advice and guidance.
Find a truck dealer or leasing company to partner with for business solutions and value-added support services.
Requirements. Decide on your expectations with, and requirements for, your vehicles. What do you want in terms fuel economy, performance, durability, efficiency, productivity, maintenance, safety, driver comfort and so forth?
Consider such things as your load requirements, operating environment and conditions, driver proficiency, powertrain (diesel or gasoline engine; automatic, automated or manual transmission), wheelbase and cab style (which impacts maneuverability), desired road speeds, maintenance requirements and cycles, trade-in or resale cycles, etc.
Review your current and previous equipment specs to determine if your equipment is performing well or if there are recurring problems or trends. Scrutinize maintenance and operating costs.
Components. Consider components and options that offer increased reliability and durability and less downtime through extended service intervals and lower required maintenance. By way of example, brakes, wheels, clutches, drivelines, fifth wheels, synthetic lubes and coolants are among the components that can be spec’d for increased vehicle uptime.
Investigate the benefits of specs, options and accessories that will improve truck and driver safety.
Don’t overlook driver ergonomics. The driver has a critical role in achieving optimum vehicle performance. The happier and more comfortable a driver is, the safer and more productive he will be.
Lifecycle. Building a vehicle optimized for your specific application will provide the lowest overall cost of ownership over its lifetime. Rather than making equipment acquisition decisions on initial acquisition cost, base them on total cost of ownership — long-term operating and maintenance costs, vehicle productivity, trade-in/resale value, impact of taxes, cash flow and so on.
Leasing. Leasing, particularly full-service leasing, may be a viable alternative to buying. Along with tax advantages and predictable costs, leasing improves cash flow because there is no down payment and allows capital to be retained for other matters.
Leasing programs can be tailored to fit a specific business and as changes occur, can be renewed or modified. They can include scheduled maintenance, vehicle washings, 24-hour road service, substitute vehicles and fuel tax reporting, licensing and permitting.
One advantage of a lease compared to buying is that at the end of the lease term, the truck doesn’t have to be sold or traded in, a process that can be time-consuming, expensive and frustrating.
Take the time to do your homework before making your decisions about acquiring trucks. You are not just buying a vehicle, you are investing in your organization’s business. BI
David Kolman is a veteran truck communicator, keynote speaker and long-haul trucker. Commissioned as an Honorary Colonel on the Kentucky governor’s staff for his work promoting traffic safety, he actively participates in trade associations and reports news and information about the trucking industry for broadcasting and print media.
Changes to the heavy vehicle use tax
For the tax year ending June 30, 2006, changes to the Heavy Vehicle Use Tax include:
Tax now due in full; there no longer is an installment plan.
Now a credit for a tax-paid vehicle sold during the tax year.
Companies paying the tax for 25 or more vehicles have to file electronically. However, the IRS is not yet prepared for this so taxpayers need to continue to file their Form 2290s by mail or in person. The IRS hopes to have the electronic filing system operating by year’s end.
Vehicles registered in Canada or Mexico that operate in the United States no longer get a 25 percent reduction in the tax.
Equipment news roundup
Eaton has two new fully automated transmissions: the Fuller UltraShift HV (Highway Value) medium-duty transmission and the heavy-duty Fuller UltraShift LHP (Line-haul High Performance) transmission. The HV is designed for Class 6 and 7 vehicles with diesel engines in the 195 to 260 hp. range with torque capacities up to 660 pounds/foot and loads up to 33,000 pounds gross vehicle weight. A key feature is the Hill Assist which automatically minimizes rollback on grades while the operator makes the transition from the brake pedal to the accelerator. The LHP transmission provides fully automatic “two-pedal”operation and features 13 speeds and progressive gearing for superior startability and better operating efficiency.
Freightliner Group plans to include electronic stability control with its Roll Advisor & Control safety technology for its trucks. Developed in cooperation with ArvinMeritor’s Meritor-Wabco Vehicle Control Systems subsidiary, the technology uses sensors integrated into a truck’s anti-lock brake system to track the truck’s lateral acceleration and wheel speed and detect the potential for rollover. The technology is designed to prevent rollover by alerting drivers to recognize risky vehicle maneuvers and/or reduce the forces pushing the truck toward rollover by automatically slowing the truck to reduce the risk of an accident.
Nissan Diesel America has increased its standard warranty coverage on its 2006 model year UD Trucks for longer protection periods for the base vehicle and selected chassis and powertrain components. Coverage is now for three years with unlimited mileage and 100 percent parts and labor reimbursement for warranty repairs.
Sterling Trucks unit of DaimlerChrysler plans to introduce a new cabover truck that covers Classes 3, 4 and 5 for the North American market next year. The vehicle will be manufactured using common components and parts from across DaimlerChrysler’s various brands. Further development of other medium-duty trucks is also in the works.