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B uying new trucks is a costly business.The current list price

16th March 2006, Page 62
16th March 2006
Page 62
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Page 62, 16th March 2006 — B uying new trucks is a costly business.The current list price
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Which of the following most accurately describes the problem?

for a 44-tonne tractor such as a 430hp Daf 85CF mid-lift 6x2 is more than 05,000 without extras. It's a lot for any operator to pay out and for anyone toying with starting up on their own , it's likely to make buying new out of the question.

A 10% discount drops the price to about 168,000, which could be attractive for an operator replacing a large fleet but is of little consequence to a small haulier or someone starting out on his own with limited resources.

Buying second-hand could be the way forward and there are certainly bargains out there if you choose carefully.

According to industry sources, depreciation figures are nothing short of dramatic.That new Daf tractor will drop to a trade-in price of about £25,750 (34% of its initial cost) in its first year; £20,95() (27.5%) after two years; and £17,100(22.5%) after three.Typical retail prices are £32,250 (42.5 % ); £25,5(X) (33.6%); and f21,750 (28.7%) respectively.

On the face of it, these figures represent huge savings compared with buying new— about £43,550 against new list price for a oneyear-old; more than £50,000 for a two-year-old; and f54,000 for a three-year-old.

But the choice boils down to economics — comparing the unit's whole-life costs during ownership with buying new, and considering how much you can afford in the first place. We've looked at the sums in more detail by punching figures into a computer programme designed to calculate truck operating costs. The results are not definitive, but do they serve as a useful guide: an indication of what effect any change will have on whole-life costs, and what to watch out for.

Overall cost per annum

Our comparison is based on the list price of a new tractor, depreciated over five years with no residual.Assuming an average fuelconsumption figure over its five-year life of 7.2mpg, with an annual mileage of 70,000 (112,000km), our sample tractor's overall cost per annum (CPA) is £104,566; that's 149.38p per mile (ppm).A £12,500 residual at the end of the five years reduces the CPA by more than £4,200 to £100,289 (143.27ppm)a drop of about 4°/.. Add in a10% discount at the front end and the figure falls by a further £1,890 to £98,392 (140.56ppm),giving a total drop in the region of 6%.

By comparison, the CPA and ppm for a oneyear-old depreciated over three years-all else being equal but with no residual would work out about the same, at £98,371 (140.53ppm). This reduces to £93,996 (134.28ppm) for a three-year-old, falling to £89,621 (128,03ppm) assuming a £10,500 residual value at the end of its tenure. A residual of £5,0(X) would increase this last figure to £91,910 (131.30ppm). Taking the worst-case scenario, with no residual and assuming a three-year-old would have inferior fuel economy and would need more maintenance, the figure would climb to £96.187( 1374 lppm) given a 5% rise in consumption (6.8mpg). A deterioration in fuel consumption to 6.6mpg (about 8.4%) would bring the figure up to £97,384 (139.12ppm). Add a 10% increase in maintenance and you're looking at £98.154 (140.22ppm).

Write the vehicle off over five years and this reduces to £94,906 (135.58ppm). Include a major repair bill of,say £8,000 and it increases to £96,908 ( 138.44ppm); still less than the £98,302 (140.56ppm) for our new sample unit with a decent residual and a 10% discount up front. Limiting the lifespan of the used examples to five years still sees the three-year-old's residual and consumption near the top of the list, with figures of £90,237 (128.91ppm).The same vehicle but with a fuel consumption of 6.6mfm is only slightly cheaper to operate at £93,625 (133.75ppm) than the one-year-old with the same economy at £93,737 ( 133.91ppm).

The overall annual operating-cost difference across this group is £11,200 ( 1 6ppm ), while the figure across the whole list of variations is more than £17.000 (24.30ppm).

The permutations are endless, but you'd have to buy areal dog to be out of pocket buying second-hand-particularly a threeyear-old. Of the three-year-old variations shown in the table below, 15 have CPA and ppm figures below those of a new tractor discounted by 10% and depreciated over live years with a decent residual.

Of the two-year-olds, nine are below: and of one-year-olds,only eight.

A clean, well maintained and properly serviced three-year-old example with 380,000km (237,500 miles) on the clock will still have clocked up only about 940,000km (587,500 miles) after a further five years. assuming it covers 112,000km (70,000 miles) a year. Manufacturers claim to design their heavy truck drivelines to last 1,000,000km without the need fora major overhaul.

There is always an element of risk buying anything second-hand, but running trucks is an expensive business whatever you buy. Buying second-hand has to be worth considering, particularly if you choose carefully and make sure the economics are sound. •

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