the costing column Let the buyer beware

22nd September 1972, Page 216

22nd September 1972

Page 216

Page 216, 22nd September 1972 — the costing column Let the buyer beware

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• By definition a commercial vehicle — i contrast, say, to a sports car — is purchase and subsequently operated with an objectiv in mind that can be quantified in financi terms. The value of the transport service i provides, set against the cost of providing the service, indicates the efficiency of th operation.

These two aspects of road transpor operation are, of course, inter-related. Fe example, the more specialized a bulk body th quicker the turn-round, the greater the dail tonnage and so the higher the revenue. Bu invariably the more specialized is the bad) the more the operating cost is likely to b higher. Only a comparison of probabl revenue and estimated cost will determin whether a particular proposition is viable c not. This is where so many operators hay taken a costly plunge in the past.

In addition to recognizing that the separat items of cost are also inter-related, as well a revenue and cost, prudent operators will als appreciate the chronological significance c the sequence of events in the life of commercial vehicle — namely purchase operation and maintenance.

No matter how efficiently a vehicle may b operated and subsequently maintained, could still be inefficient overall if the mat suitable vehicle was not selected initialh, Admittedly, in commercial vehicle operation i is unlikely that a completely wrong choice c vehicle will have been made. But because c the high mileages averaged by man commercial vehicles, a relatively margine shortcoming could accumulate to al appreciable sum over the course of a year.

The ratio of initial cost to overall operatioi cost is relevant to the selection of .

commercial vehicle. For example, a truck witl a load capacity of 7 tons may cost £2,330 ti buy. If its mileage life was reckoned to b.

150;000 then the total cost of operating i throughout that life would be £21,555 base. on CM Tables of Operating Cost data. S.

oniy a 10 per cent :Inefficiency" in choici could involve a loss in revenue or increase ii operating cost almost as much as the initie cost of the vehicle. So it is truly a case a "buyer beware".

Among the various factors which need t, be taken into account by the prudent buye when purchasing a new vehicle is the effect a variations in specification on subsequen operating costs. For example, the direct effec of specifying some form of bulk body coul, affect at least half the 10 items of operatin, costs. The probable resulting increase in botl unladen weight and initial cost could, at thi

outset, put up the cost of the excise dut, licence (based on unladen weight) an

interest on the increased capital outlay. Ii subsequent operation, at least three items o running costs — fuel, maintenance an, depreciation might also be increased.