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That hauliers need trucks to go about their business is
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not up for debate. What's not so obvious, however, is how to buy. CM looks into the pros and cons of buying new or second-hand.
What's your best
option when you can't avoid putting off purchasing a new wagon — perhaps to replace an existing truck or to undertake a newly won haulage contract?
Hard-pressed manufacturers would much rather you bought or leased a new one, citing waiting times for a bespoke unit of as few as six weeks and the availability of Euro-5 engines. Those arguing against a new acquisition point out the weak value of the pound against the strong euro and the higher prices for every make of truck occasioned by the extra equipment and R&D required to ensure emissions compliance.
UK road transport is a service industry and manufacturing, a major customer, continues to suffer a downturn. Is this the right time to be tying up equity in trucks? For many firms, and not just one-man-bands or the precariously undercapitalised, the answer is probably not. Dealers may make much of whole-life costs when pitching the virtues of a new lorry, but although it isn't as bad as a car, the greatest capital depreciation occurs immediately after a truck leaves the showroom.
Not surprisingly, used truck dealers take a different view of when to relinquish your readies.
"There's never been a better time to buy," says Lee Smith of Thurrock dealership Hanbury Riverside. Well, he would, wouldn't he? However, closer examination shows this to be more than just simply sales flannel.
Smith believes the used truck market is in a "realisation and transition period" — everyone has been "making-do" and "used trucks can't get cheaper".
As economic confidence in some sectors is slowly
increasing, Smith is seeing more prospective buyers, partly, he thinks, because: 'People haven't had their feet in the water and are surprised by new (truck) prices — how much they've gone up. Euro-5 etc is a lot of expense."
This is made worse by the poor exchange rate between the euro and the pound.
Hanbur)„, Riverside runs a fleet of 500 leased vehicles which, in turn, feeds into its second-hand truck sales of Scania, Volvo and DAF — mainly big tractor units between one and three years old.
"I've never sold a truck to Eddie [Stobart]," says Smith, of a customer base that leans towards owner-drivers and smaller fleets, including Westfield Transport, VG Mather, Parsons, George Taylor, Ralph Davis, Shirley Tankers and Redburn. many repeat customers for more than 20 years.
Future implications
Smith believes that with new truck sales very slow, there'll be a scarcity of good used buys in two to three years' time, which will push prices up by 20% Well-respected used truck sales expert Chris Hodge says: "Demand is reasonable, it's got better as the year has gone on, following a terrible final quarter of 2008, when people didn't ring or were too frightened to decide. New trucks are perceived as increasingly expensive." Hodge also thinks prices have "firmed up" and, given the high quality of many used vehicles, "customers are getting more for their money".
Paul Young of DAF Trucks concurs: "2007 saw long lead times for new trucks, so second-hand prices were high, typically £28,000 to £30,000 for a three-year-old unit," He thinks that by 2011, the volume of used trucks for sale will fall "for everyone, not just DAF".
Since the UK market is effectively ring-fenced by RHD and higher GVW three-axle units, stock can't be augmented from other countries "The past two months across Europe have seen more customer enquires for (used) trucks, not necessarily converted (to sales), but it is a sign that the market is starting to rise," he says.
Young also says that used sales are made mainly to family firms and owner-drivers, although large concerns that gain a new contract and need kit quickly also buy recent used models. Many fleets have finished down-sizing for the recession, and this, coupled with few new sales, will cause future supply to shrink.
"The backlog has cleared, prices have bottomed out and are coming back up. Now is a good time to buy. Those who bought in 2007 and early 2008 at the top of the market will be disappointed with current values and may hold on [to trucks] until they written down more," says Young.
The manner of purchase varies, he explains, depending on the government's tax-break policies. A few years back it was operating lease, then HP, now operating lease is again favoured for big fleet purchases of new vehicles, which may help future supply to the used market. "DAF doesn't own any of its dealers," adds Young, "so. unlike other manufacturers, we can't control used prices."
For those with money to spend, there are certainly opportunistic bargains to he had during a downturn, especially for specialist vehicles.
CM spoke to caravan and car transport operators who have bought at a fraction of the usual used price. If you've got the cash and the confidence, there's an argument for buying used rather than new trucks, while stocks last and prices are modest.
FG Bond & Co
In 2009, FG Bond celebrated 75 years in the haulage business. The Wiltshire family firm, deeply routed in its local community, where it also runs the village garage, operates a mix of makes that are widely known for scooping multiple best working truck prizes at shows.
The 18-strong, all rigid (one drawbar) fleet, in which tippers dominate, is composed of new and used purchases. Once renowned for running Cotruner, Dodge, and latterly ERF chassis, the superbly presented red and green lorries are cleaned daily and maintained in-house on a strict six-weekly service rotation.
The latest new acquisitions, two DAFs, were bought for very specific reasons and could not, says transport manager Edward Bond, have been obtained second-hand. A skip truck, which operates on long runs, needed a high differential and nine-speed gearbox, unavailable in the