Dollars and Sense
Weighing replacement options
By Kevin Rutherford
One of the most common questions I receive is: “When and how should I replace my truck or trailer?” There is no simple answer. Options include buying new, buying a newer used vehicle, building a glider kit, and reconditioning your current vehicle.
For starters, take a close look at your numbers, your equipment and your business. The two most important numbers are fuel mileage history and maintenance cost per mile.
FUEL MILEAGE. This is my number one indicator. Prior to 2004, I was confident that if I spec’d a new truck, I could get better fuel mileage than I could on the replaced truck. This made the decision to upgrade a little easier. This is no longer the case. We’ve never figured out how to get the best fuel mileage out of each configuration accompanying the emission regulations of the last decade.
My benchmark number is 7 miles per gallon. If you own a truck that gets better than 7 mpg, consider building a glider kit or reconditioning your current vehicle. If you are in the 6 to 7 mpg range, look at how feasible it is for improvements to get you above 7. If you are below 6, you probably need to replace the vehicle.
MAINTENANCE HISTORY. Some trucks I’ve owned have been almost maintenance-free, while others have been maintenance nightmares. I’ve learned that a truck seldom changes between those characteristics. So whether it starts as a dream truck or a nightmare, it will more than likely continue that way.
A good rule of thumb for judging maintenance cost: In the first 500,000 miles, maintenance should be 5 to 7 cents per mile. From 500,000 miles till the time the engine is due for an in-frame, maintenance should be 9-11 cpm. A truck that falls within those ranges is a good candidate for reconditioning. If higher, it’s best replaced.
For a truck with more than 500,000 miles, maintenance costs should not exceed 11 cents per mile.
If you choose reconditioning, an in-frame overhaul could run $15,000 to $20,000, while a top-of-the-line out-of-frame rebuild could run as much as $40,000. Before you invest that kind of money, you need to be sure this is a truck you are willing to keep.
The best indication of when an engine needs to be rebuilt is oil consumption. When an engine is going through a gallon of oil every 5,000 miles, it’s time to think of scheduling an in-frame and, if necessary, to complete saving for it. When it’s consuming a gallon every 3,000 miles, get it in the shop.
LIFESTYLE/PERSONAL PREFERENCES. There is no scorecard here as precise as fuel mileage and maintenance history. Consider safety, comfort, space, convenience and your overall satisfaction with your truck. Don’t rule out that you may be able to upgrade the truck and resolve some of those inadequacies.
BOTTOM LINE. Put a price tag on each possible option. If your decision is based solely on the numbers, you’ve got the answer. This decision, though, often includes lifestyle preferences.
If that’s the case, get a sheet for each lifestyle-related option, enter its price and list its pros on one side and cons on the other. Now you at least have a visual weighting of each option to compare against price. For example, a $3,000 seat might have no immediate, measurable return on investment, though it clearly has its benefits. Only you can decide how much an option like that is worth. n
• Our recent webinar on the subject with fleet maintenance expert John Dolce. Visit the Archive section of www.TruckerWebinars.com, where you can watch and listen to the one-hour presentation.
• Overdrive’s cover story: “Buy new or redo?” Visit www.OverdriveOnline.com and go to the April issue under Magazine Archives.
Kevin Rutherford is an accountant, small-fleet owner and the host of “Trucking Business & Beyond,” which airs on Sirius XM Radio’s Road Dog Trucking Radio. Contact Rutherford through his website, www.LetsTruck.com.