• . TRANSPORT TIPS FOR TRADESMEN.
Page 17
If you've noticed an error in this article please click here to report it so we can fix it.
Particularly Addressed to Those Who are Replacing Horsed Vehicles by Motors, or Contemplating So Doing.
ACONSIDERABLE percentage of traders owning motorvana pay small annual subscriptions for the privileges of membership of some association which undertakes to protect their rights and to work on behalf of their interests. At the same time the great majority of those who do so, pay their subscriptions as a matter of form and make little or no use of the organizations to which they subscribe.
The Value of Association.
As often as not, these bodies are regarded merely as being potentially useful in the event of the trader finding it necessary to defend some action for technical or other breach of the law. The mere fact that subscriptions are comparatively trilling is, in a sense, a disadvantage. If the subscriber were obliged to put down a large sum of money, he would probably take a very active interest in its subsequent expenditure. He would refuse to renew his subscription year by year unless he could clearly see the value of doing so. But, if the sum is nominal, it is paid as a matter of course, very probably, as has been suggested, with the idea that it acts as a sort of insurance in the event of trouble with the police.
Now, any really well organized body representing an important group of motor users will certainly function in the manner just suggested. It will be able to give sound legal advice and will be prepared to support its members in the event of unjustifiable or arbitrary attacks being made upon their legal rights. Occasionally, some such case involves a new and-important principle. A good deal is then heard of it, and it is not surprising, in consequence, that many people come to think that the organization which fights such a. case for the trader regards this kind of thing as its main, if not its only function.
As a matter of fact, the staff of a central organization can be used by the members as a kind of living reference book. It. is their business to help any trader who subscribes to their funds, in his capacity as a van owner, to obtain any information he may require in that capacity. One of the real difficulties of association work is to get members to make use of their membership. As often as not, the member pays his subscription placidly for a period of years and nothing further is heard from him. Then, perhaps, the committee of the. association comes to some decision with which this member does not agree, and he is very nruch annoyed at what he regards as a betrayal of his interests. He ought to remember, however, that if his views are never expressed to the association either in writing or in person, it is impossible for the governing committee to know what those views are. If then, the committee is required to arrive at an important decision at short. notice, it lacks proper guidance as to the general opinion of members and can do no more than act upon its own opinion.
Possibly the committee in such an instance may be to blame for not having anticipated events and circularized the membership with a view to getting guidance. One cannot, however, throw the whole blame on the committee, when it is obvious that the .eomplete lack of interest shown by the bulk of private members is really at the bottom of the mistake, a.nd one knows that the replies received in response to the most important and appealing circular only represent the views of a very small percentage of those to whom that circular has gone.
Life of Industrial Vehicles.
My attention was drawn a few days ago to a series of quite interesting figures showing the details of the cost of operation of various classes of motor vehicle in the service of an important London firm. I noticed that, in many cases, but not in all, no allowance whatever was made for depreciation. The omission was quite properly explained by the fact that the vehicles had been so long in service that the whole of their cost had already been written off and they, therefore, stood.in the firm's books as assets of no. value. This is, of course, rather a ridiculous state of affairs. It is evident enou_gh that, if the value of the machines were really negligible, it would have proved inadvisable to retain them upon the road.
In the life of aavehicle, the time must. sooner or later be reached at which the costs of operation compare so unfavourably with those of a new machine of smaller capacity as to make it advisable to scrap the old vehicle or to sell it for what it will fetch. In. almost every case the latter course will be preferable. The price realized will not be high, but it will certainly. be better than nothing.
From certain standpoints, it is good policy for a firm to write off the value of such property quickly and completely, but from the point of view of the fair estimation of real operating costs, this policy is cer tainly not justifiable. Its effect is to increase the operation costs during the earlier years of the vehicle's life. Supposing it is decided to write off in -five years the whole value of a vehicle costing 21,000. We must have an item of 2200 for depreciation during each year, and we should alsd.charge against the vehicle interest at a reasonable rate on the invested capital which it represents. In the first year the item of interest may be put at 260, i.e. 6 per cent on the whole first cost. In the second year we must allow 6 per cent. on. L800----or 148--and so on, the amount decreasing each year. After the vehicle is five years old, depreciation and interest: cease to figure in our tables of operating costs arid the result may well be that our records will create a false imptessien that the vehicle is functioning just as effi ciently as ever, whereas, in reality, it is costing so much more in fuel and repairs that it would he sounder policy to dispose of it and to purchase a new machine.
The possibility of being misled,in this way can be reduced if depreciation is put ea.611 year at some prearranged percentage of the value at which the vehicle stands at the beginning of the year. Under such an arrangement the value never decreases to nothing, but, after five or six years, it may reach a low figure beyond which the annual depreciation is. compara tively small. We should, in fact, treat the machine each year just as if we had purchased it at a. reasonable price at the beginning of that year, .which will naturally give us a much more accurate and informative costing system.