Considerations for Purchasing New or Used Trucks

By David Brierley, Fleet Maintenance

No matter the size of the fleet, a commercial vehicle is a major purchase – one that is not taken lightly. As a fleet grows or its existing trucks age out of service, a decision must be made to purchase new or used.

There are numerous considerations to weigh for each, and the best option ultimately depends on the specific needs of the fleet. Factors such as warranty, maintenance history, depreciation, and the latest technologies all play into this critical decision.

It is important for fleets to thoroughly assess all options when making this sizable investment in order to acquire vehicles that sufficiently suit their budgets as well as their specific needs.

Cost

One of the most obvious comparisons between purchasing new and used vehicles is the upfront cost. Buying virtually any vehicle new will be more expensive than buying a similarly specified pre-owned version, and this can be especially true for Class 8 trucks when market conditions are right.

“Right now you can find quality used trucks at record low prices due to high inventory levels and low market demand,” says Rick French, district sales manager for Kenworth Sales Company, a Western U.S. dealership network offering sales of new and used trucks as well as leases and rentals.

Chad Seth, director of truck sales at Rihm Kenworth, a dealership network with locations in Minnesota and northern Wisconsin, estimates that depending on factors such as model year and mileage, fleets can expect to pay 40 to 60 percent less for a used truck than a comparable new one.

A lower upfront cost means a lower down payment as well as lower monthly payments for fleets that finance. While this option may be attractive to fleets who don’t have the capital or simply don’t wish to invest in new trucks, a used vehicle can end up costing more in maintenance down the line depending on the vehicle’s mileage and how well it has been maintained.

As with vehicles from all classes, fleets purchasing new trucks will take a hard hit on depreciation. When they can be found, a lightly used model only a year or two old can offer significant value.

“There are a lot of used vehicles that are virtually new,” says Shane Gallick, senior vice president of national account sales at NationaLease, a commercial truck leasing company. “They’re late-model vehicles [with] not a lot of accumulated miles on them, but they are technically used vehicles.”

Warranty

For fleets that purchase brand new trucks, there should be no reliability concerns, at least initially. Similar to passenger vehicles, new Class 8 trucks come with OEM warranty coverage for virtually any quality issues experienced within a set mileage and time period from purchase.

“New vehicles typically have a one-year, 100,000-mile warranty that covers the truck, and there are options to extend that up to five years,” Rihm Kenworth’s Seth says. “The base warranty for your engine and aftertreatment is two years, 250,000 miles. Other major components such as transmissions and axles have manufacturer warranties that are longer than the OEM base warranty.”

Warranty coverage can help justify the premium new trucks command over used trucks. A single major issue covered under warranty could make up for the price disparity since a fleet that purchased a used vehicle with no warranty would be paying for the repair out of pocket.

Used truck buyers are not left without options, however. Brian Daniels, director of used truck sales and distribution for Daimler Trucks Remarketing, says that some used trucks may have remaining OEM warranty coverage that is transferrable to the second owner. Daimler Trucks Remarketing is a subsidiary of Daimler Trucks North America selling used trucks under the SelecTrucks brand.

Daniels notes that dealerships may also offer additional coverage for used trucks that are beyond their OEM warranties. SelecTrucks, for example, offers 60-day buyer's assurance and selected limited warranty options up to 48 months or 400,000 miles.

It is up to each fleet to decide if the peace of mind offered by warranty coverage – whether included with a new vehicle or purchased with a used one – is worth the extra cost.

Maintenance

In addition to warranty coverage, purchasing a new vehicle provides confidence in knowing the exact history of how it has been operated and maintained since it left the factory. Knowing that drivers are operating the vehicle according to the fleet’s standards, and that preventive maintenance (PM) is properly executed at the correct intervals, provides fleets reassurance the vehicle should remain reliable and free from unexpected downtime for many miles.

Used trucks, on the other hand, can present a lot of unknowns.

“If you buy a used truck, you’re buying someone else’s great truck or someone else’s problem,” says Chuck Davis, director of sales for Paccar Leasing Company (PacLease). “The question is, which are you getting? Be sure to ask the salesperson if the truck has any maintenance records. If the truck doesn’t have them, think twice. If you’re serious about the truck, you may wish to take the truck off-site for an independent mechanical evaluation.”

The mileage of a used vehicle is another factor to consider since parts and components will begin to wear out as the truck reaches higher mileage.

“There is some risk involved with buying used since trucks with higher mileage need more maintenance and parts replacement as the odometer creeps up,” Davis says. “You save money at the get-go, but you may have to invest more money down the road to keep the truck running. Ultimately, the key for those in the know is buying a used truck with good maintenance records documenting the condition of the truck. It helps eliminate surprises.”

Used trucks previously owned by fleets that documented excellent maintenance standards, those from full-service leases, and former rental trucks all typically have comprehensive maintenance records. This can help a fleet decide if the used truck in question is right for them.

“In my opinion, you can’t go wrong when buying a used truck coming off a full-service lease or from a leasing company’s rental pool,” Davis says. “I truly believe those are the best used trucks. Everyone wants a premium, quality used truck, and a leasing company keeps meticulous records, plus it’s in their best interest to have top maintenance practices in place. These trucks are also often eligible for extended warranties – another safeguard.”

A fleet that handles maintenance in-house may need to take extra precaution when considering purchasing a used truck. If maintenance records are not available, costly repairs could be necessary if regular PMs were not performed in the past.

“When making the decision to buy a used vehicle, it's critical [how] it lived its life up to that point,” says Jim Lager, senior vice president of sales at Penske Truck Leasing. “All of our vehicles are going to be on the same or very similar rigorous maintenance program, and all of those have records.”

While used trucks can be a reliable investment, it pays for a fleet to do thorough research and ensure maintenance records are in order before making a purchase.

Technologies

Technological advancements in heavy duty trucks have gained momentum in the last two decades. Prior to that, it did not make much of a difference if a truck was two years old or 10 years old; the technology was roughly the same. Now, a two-year-old truck is a very different vehicle from one that is 10 years old.

“Specifically speaking about safety technology, it is extremely important [to have features] such as forward and side collision mitigation,” says Rihm Kenworth’s Seth. “It greatly reduces catastrophic accidents, reducing insurance costs, and saves lives. Standard electronic stability control greatly reduces potential rollover accidents. Lane departure technology reduces potential accidents by alerting drivers with an audible alarm when crossing lanes without the turn signal engaged.”

Seth goes on to say that many new trucks have built-in wireless technology that can connect for engine control module (ECM) updates and that idle-reducing technologies such as battery-powered APUs help extend the life of the engine and improve fuel economy.

There are also new in-cab technologies such as infotainment systems and driver displays to consider, as well as emissions technologies required to remain compliant with the standards of all 50 states.

By purchasing new trucks, fleets can ensure they have the latest technologies available. Not only are these technologies important for safety, but also for driver comfort (and therefore retention) as well as emissions compliance.

The downside to advancing technologies is that they tend to inflate vehicle prices.

“In many cases, the cost of the equipment continues to rise,” says NationaLease’s Gallick. “The trucks themselves, the technology requirements, whether regulatory requirements like ELDs, as an example, or ... greenhouse gas emissions, have created an environment where ... the cost of the truck continues to escalate.”

The rising prices of new vehicles can make newer used models a more enticing proposition. Gallick says that when purchasing a late-model, low-mileage vehicle, the fleet gets the benefit of an almost-new vehicle with the most current technology, without paying the high cost of a brand new truck.

Application

The final determination to purchase new or used trucks comes down to the fleet’s utilization of the assets. A fleet needing vehicles for a specific application may have trouble finding used trucks with the proper specifications, in which case buying new is the most logical option.

“If the user has any kind of attributes or characteristics of their operation that require some type of vehicle configuration that's more specialized for their application, a new vehicle is going to address that need because it can be engineered and spec’d more precisely to the application in which it's going to be used,” says NationaLease’s Gallick.

Likewise, if a fleet will be using the trucks for long-haul routes where they will rack up extensive mileage, it may be in their best interest to purchase new vehicles for the warranty benefits, longevity, driver comfort, and latest technologies.

“Fleets should take into consideration their business model to see if payments of a new truck make sense and can support their business,” Rihm Kenworth’s Seth says. “If it is a low annual mileage haul, a late-model used truck might be a better option for the lower upfront cost. If you have a high-mileage operation a new truck may be a much better option.”

On the other hand, if a fleet’s needs are more basic or short-haul, a new truck might not be worth its initial cost.

“Outside of the owner-operator market, typically, used trucks work best for regional operations, for port work in many parts of the country, and for those who need trucks in agriculture operations, or for low-mileage construction jobs,” says PacLease’s Davis. “The key is having the trucks close by, running lower miles. That way if there is an issue with downtime, that truck is nearby for repairs.”

Making the purchase

There are many resources available online to research and determine the best option for a fleet looking to purchase new or used trucks, but a trusted dealership partner may provide the most comprehensive information.

“I always encourage buyers to purchase from a trusted source – where the truck has gone through an inspection before being offered for sale,” says PacLease’s Davis.

Kenworth Sales Company’s French says it is a good idea to consider safety and driver retention, and also calculate the estimated cost per mile for each option. When calculating for used trucks, it may be necessary to factor in estimated downtime and repair costs for higher mileage vehicles.

When buying new, it is important to ensure the fleet is getting the best possible price and financing terms, that the trucks are specified exactly to the fleet’s needs, and that warranty information is clearly spelled out.

A used truck can present a challenge because not all of its flaws may be visible. Still, it is important to check the basics.

“Pay particular attention to high-cost replacement items – like tires,” Davis says. “Tires should have at least half their tread life left. There should be 50 percent brake life remaining, no ‘check engine’ lamps illuminated, no fault codes showing, and the truck should be DOT roadworthy if the plan is to put the truck to work right away.”

When it comes to acquiring commercial trucks, fleets may find that signing the paperwork for a new or a used truck purchase is the easy part. It is often the research and considerations ahead of that purchase that require assessment.

There are many factors to consider when determining whether to purchase new or used vehicles, but it is important to take the time to look at them all and make the best possible choice for the fleet’s future.

Link to full article: https://www.vehicleservicepros.com/vehicles/truck-and-truck-body-oems/heavy-duty-vehicles/article/21136479/considerations-for-purchasing-new-and-used-trucks