To be an owner-operator is to develop myriad skills, then manage them all as you multitask through every single day. When juggling short-term responsibilities and long-term decision-making -- self-dispatching, maintenance, customer relations, service experiences, equipment investment choices -- picking the perfect time to take advantage of new opportunities is never a predictable chore. The story of Matthew Mickenberg’s recent truck purchase, nonetheless, shows the value of keeping your mind open when circumstances change.
The owner-operator heard from a salesperson he’d previously attempted to negotiate a new truck purchase with back in February. As regular readers will remember, Mickenberg declined the offers early this year.
Since cutting off that negotiation and deciding to keep his five-year-old T680 Kenworth, he’d made moves to backstop the potential for costly repairs with risk management. He bought an NTP warranty contract he paid for weekly, integrating the cost into his cash flow with relatively little stress.
Then, a new phone call with an unanticipated offer from a dealer salesperson shifted the landscape. The timing for Mickenberg was better than it had been earlier in the year. He was staring down the prospect of considerable downtime for repairs after someone had backed into the hood of the Kenworth.
He was mentally – and, crucially, financially – ready to listen to a new offer.
The influence of timing: How does a a $50K price drop sound?
The offer? He could order a 2025-model unit spec’d to his liking for the price currently listed for a 2024, avoiding anticipated price increases.
Before jumping at the offer or saying too much, Mickenberg researched dealership inventories on his own, finding a different new truck there that might fit his needs. Knowing what he did about inventories, could he turn the negotiating table in his favor for price and terms?
Dealership inventories had been on the rise through the year. Maybe there was more room to negotiate than anticipated.
The first thing was getting the dealer to shift the conversation to a truck sitting at the dealership without coming across as overeager. Over the next few weeks, details on a possible deal began to materialize, and Mickenberg was doing the math. Beyond a $50K drop in price over the prior negotiation, he considered both cost increases and reductions he might anticipate over the next 60 months of a loan term: increased insurance rates, for instance, and reductions in both repair costs and downtime.
The big thing a $50,000 price drop would provide was a reduction in cash needs for each month’s payments. Gaming it out with what he knew about his own numbers, the drop amounted to about 10 cents/mile, Mickenberg found.
[Related: RigDig Truck History Reports: Research any used truck you're considering now on Overdrive]
He had plenty latitude to either trade his T680 or sell to another dealer for cash, with a plan to keep the insurance money he received for the damage to his hood to apply to a down payment, further reducing monthly outlays.
Aside from the reduction in overall price, another goal -- could the dealer find a way to reduce the interest rate from 13% to no more than 9% interest? The difference in fixed costs would equate to a savings of well more than $300 a month. Mickenberg made clear to the dealer he’d be taking on additional cost of at least $135 monthly for insurance with a higher valued truck.
Throughout these negotiations, he was clear-eyed about assessing personal risk/needs as well. He and his wife strive to maintain six months of income in savings, a goal they’ve been better able to achieve and maintain since the deal on the truck closed.
That's right, success was the ultimate result, showing that it can be done, even in the current market, if owners keep their eyes on the prize and engage in negotiations with the reality of the burden they're taking on with any deal. Mickenberg’s negotiation success was surely a boost in personal confidence, after the early-year disruption of his plan, and more repair issues. Feelings of doubt that arise from such disruptions can hamper our future decisions. When we slip into a negative mind-set, issues have a way of compounding. Maintaining one’s resolve with an optimistic mind-set is a quality of legions of owner-operators who have been successful for the long haul.
If you're in a similar position, weighing a deal on equipment, the calculators at this link might help you game out the cost of borrowing, and don't forget gains with newer equipment that might be had with better fuel mileage. Do the math to get started weighing the pros and cons. A side-by-side flow-chart-like comparison may help you visualize the decision and make the right call.
[Related: $240K financed at nearly 9% interest on a new truck: Deal or no deal?]
Owners looking for additional money- and other management tips, among a myriad of other topics, can find more in the Overdrive/ATBS-coproduced "Partners in Business" manual for new and established owner-operators, a comprehensive guide to running a small trucking business. Click here to download the updated 2023 edition of the Partners in Business manual free of charge.
