New vs. Old Semi Trucks

We all have imagined rolling off the lot with that new truck smell, riding high with a fresh warranty and a sense of safety. Or maybe your old truck is ol’ faithful. What lengths are you willing to go to keep your old truck running?

Initial Cost

Let’s start at the beginning. You never forget your first truck, but how do you get into it?

A new truck starts between $100,000-$150,000, with prices reaching as high as you can dream. On top of that, section 4051 of the IRS code describes the Federal Excise Tax, an additional 12% charge added to the initial sale price of certain large trucks.

To avoid retial prices and the FET, strong used semi-trucks frequently sell for $30,000 to $80,000 and can reach as high as $100,000+. Truck prices have been exceptionally high recently, but there is potential for a decrease in cost as inventory grows.

According to Sandhills Global market reports, used sleeper and day cab truck inventories increased 3.2% year over year in June, showing the first positive year-over-year inventory increase noted since early 2020. This represents the fourth consecutive month of inventory increase.

Now, there’s a big range in prices. To decide if the high initial cost is worth it, let’s dig deeper.

Depreciation

An Ernst & Young study found that, on average, assets could reach approximately 20% of their original price after 5-6 years and dip below 10% after 10 years. According to a study by the American Transportation Research Institute, the average number of years until replacement for a truck-tractor in 2020 was 8.7 years with an average of 669,903 miles driven until replacement.

A new truck will take a hit as soon as you pull it off the lot. While an older truck will have less value to shed with time.

Maintenance

Two popular schools of thought rule the truck maintenance debate. One says economic realities make a used truck, which has proven its reliability, more cost-effective to maintain. The other prioritizes a fresh truck, which is less likely to breakdown, covered with a warranty.

“Newer trucks ostensibly would decrease maintenance costs by lowering maintenance frequency and parts costs, but the historical ops cost data shows that newer trucks are expensive to maintain and repair; diagnostics, parts and diesel technician labor costs are all increasing,” the ATRI said.

The EY report on total cost of ownership showed maintenance costs increase exponentially with age. The largest cost increase came in the first and seventh year of ownership.

“Replacing vehicles before they get too old is critical to maintaining low costs, due to the exponential relationship of maintenance cost per mile to vehicle age,” the report said. “Based on actual data provided, some companies may appear to have extremely high maintenance costs per mile. However, when adjusted for the age of the fleet, we find in some cases that they are actually very effective at maintenance.”

While it would be great if we could all replace vehicles before they get too old, it’s never that simple. Working on an old truck may seem better than paying up for a new truck.

If you’re thinking you can work on your truck yourself, consider the wait time for parts. Fleetowner reported that since last June, dealers and distributors have been experiencing parts shortages at the 90%-plus level. Fleetowner also reports that dealer shop utilization rates remain over 80%, though a downward trend has appeared over the last few months.

Maintenance costs may continue to be on the rise as dealers, parts distributors and fleets experience parts shortages and high utilization rates. Plus, a difficult labor market lingers.

“Some experts believe that the diesel technician shortage may ultimately surpass the truck driver shortage over time – particularly when autonomous and advanced safety technologies become pervasive,” the ATRI said.

Safety

A TMC/FleetNetAmerica survey found that during the first quarter of 2021, fleets averaged 29,506 miles of operation between unscheduled road repairs – down 18.7% from the fourth quarter of 2020.

A new truck comes with a smaller likelihood of getting left on the side of the road. Plus, newer trucks embrace improvements in safety technology.

Fuel Economy

Fuel has been estimated to represent 39% of the total operating cost for a commercial truck in the United States. With increasing prices, fuel economy is more important than ever.

Other factors

A new truck could be a higher target for thieves. Plus, taxes, licensing fees and insurance may be higher. With older trucks being outlawed in some states, it’s also important to consider where you plan to run.

Conclusion

There’s no clear winner, as every truck is different. A new truck may run great or breakdown on day one. Your classic ride could be the king of the road. Maintenance reminders could be a key function of optimizing your fleet. Learn more about how Optym software solutions can keep your fleet running longer.

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