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How To Calculate The Value of Garage Equipment

18th October 1940
Page 56
Page 56, 18th October 1940 — How To Calculate The Value of Garage Equipment
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Which of the following most accurately describes the problem?

Current Conditions Enhance the Value of Equipment. A Straightforward Way of Assessing the Economies That Can be Effected by Suitable Equipment

• By S.T.R.

THE value of garage equipment to the commercial-motor user has always been great, greater than is, as yet, appreciated by many operators. To-day, that value has increased many times over, because of the special conditions due to the war.

This value can be described as twofold. First, there is the saving in cost of maintenance operations when suitable equipment is used, as compared with the cost when no equipment is available. The work is more effectively done and that, in itself, is an important economy. These may be described as the direct advantages derived from the use of garage equipment.

Secondly, because of the saving in time which results when up-to-date equipment is used, vehicles are back on the road more quickly and the loss of profit entailed when a commercial vehicle is in dock is, correspondingly, diminished.

• Applicability of "Loss of Profit " •

I use the -term " loss of profit " in its widest sense, so that it applies to the ancillary user as well as to the haulier. A commercial vehicle must be profitable to an ancillary user or he would not use it; if the vehicle be not in use he is suffering a loss of that profit. These can he described as the indirect advantages gained by the use of equipment.

It will readily be appreciated that, under present conditions, both the direct and indirect benefits are considerably more than they were in times of peace, and they were not inconsiderable then.

Take the direct advantages, for example. If, by using the right equipment, there is a saving in the cost of particular maintenance and repair, operations, that saving is, almost wholly, due to economy in labour charges. Labour charges are higher now than they were before the war and the saving is correspondingly greater. The fact that the work is done more effectively is an economy, because the time when the operation needs repeating is postponed. The wOrk needs doing less frequently and that represents an obvious economy.

• What are the Indirect Advantages • So far as the indirect advantages are concerned, wartime conditions have made it almost imperative that vehicles should not be taken off the road. There is a shortage of vehicles and more work for those that are available than they can do. Those vehicles which are in use are being kept in commission much' longer than they would in peace-time, so that the expenditure on maintenance and repairs is comparatively excessive.

That factor lends added importance to the aid which equipment can give to the cutting down of the cost of those operations. There is a shortage of labour as well as cf vehicles, and that tends to make it more difficult to repair vehicles, even as quickly as used to be the case before the war. By using suitable equipment, that disability again is diminished.

There are other reasons, but they are similar in character to those just enumerated and I think that, having indicated the direction of consideration of these matters, I can proceed to. the more practical problem of a.ssessing the potential economies which can be effected by the use of np-to-date equipment.

The subject is a wide one, for which reason it is, obviously, impossible to consider it in all its aspects and

with reference to all the possible conditions, including such matters as types of vehicle, number of vehicles in fleets, and so on. It will be useful, however, to take a typical example and work out some figures relating to that, thus showing the way in which operators should, for themselves, set about assessing the value of equipment.

A convenient number of vehicles to take in this example is 10. It will make it easier if I assume that they be all of the same size and make, say, 4-5-tanners of a popular marque. The problem can best he tackled, first by indicating what an operator might reasonably be expected to require in the equipment for the servicing of such a fleet and assessing its annual cost. Against that may be set the potential savings derived from the fact that maintenance operations cost less and, more particularly, that the vehicles give the operator a bigger percentage of working time. .

p Cost of the Equipment Needed • In considering the equipment necessary for a fleet of this kind, from the aspect of achieving economy of operatioh, . it is necessary to provide, in the estimated cost, for only those pieces of equipment which are used specifically for overhaul and repair. I am assuming, as a matter of course, that the operator of a fleet of that size will have provided for tyre inflation and washing and greasing, because his ordinary routine maintenance will be impracticable without

such mechanical aids. •

If he is to carry out overhauls and general repairs in his own workshop he will need the following equipment:— Engine kit. £35; cleaning tank, £30; spanners and small tools, £10: jacks, £20; wheel-alignment gauge, £3; boring machine, £80; tyre changer, £.8; connecting-rod aligner and borer, £30; sundries, £24. The total is £240.

The annual cost to the operator, arising from the above, can be summarized as follows:--Depreciation, £40; interest, £10: maintenance, £20; power (expenditure on electric current, due to the operations of these machines only), £5. The total iS £75 per annum,

Assume that the average weekly mileage run, by each vehicle is 400. The present-day operating costs per vehicle will approximate to £17 10s, per weekOverheads will total £2 Os. per week, so that the total cost is £20 per week. It is a poor business, to-day, which will not enable the operator to earn a profit of £4 per week per vehicle.

• Emphasizing the Economy of Equipment • If that vehicle be idle for a week, the operator, therefore, loses a revenue of £24. That, of course, is not all loss. All that he saves, however, are the running costs-the cost of petrol, oil, tyres, the wear and tear portion of maintenance and the depreciation, on a mileage basis. At to-day's cost, that is approximately 5d. per mile and at 400 miles per week, that is 2,000 pence or RS 6s. 8d. The net loss is thus £15 13s, 4d.

That is to say, the operator loses rather more than £15 for every week a, vehicle is idle; he can, therefore, offset the cost of this equipment if he can save five weeks per annum. Now, five weeks per annum amongst TO vehicles means saving only half a week—less than three days in a year—per vehicle.

Operators qf experience will not need to give the subject a second thought, having in mind present-day conditions and the delay which is being experienced in effecting repairs, to appreciate that this expenditure on equipment cannot be anything else but a strong measure of economy.


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