Among the many factors fleet managers consider when specifying new tractors is the projected resale value the equipment will have at the end of its service life.

In addition to choosing systems and components that will meet a fleet’s needs, premium items may be a worthwhile long-term investment. Similarly, other specifications deemed necessary for a carrier to meet its customers’ needs might decrease a tractor’s resale value.

To address this subject, Fleet Equipment posed several questions to representatives from the industry’s manufacturers of heavy-duty tractors. On the panel were:

• Matt Gervais, product manager, Sterling Truck Corp.

• Keith Harrington, heavy-duty marketing manager, Freightliner LLC

• Craig Kendall, director of pre-owned equipment, Peterbilt Motors Co.

• Michael McColgan, senior manager of sales & commercial development, Volvo Trucks North America

• Jeff Sass, marketing planning director, Kenworth Truck Co.

• Debbie Shust, director of heavy vehicle center marketing, International Truck and Engine Corp.

• Jerry Warmkessel, highway products marketing manager, Mack Trucks

Q. When specifying tractors, how important is it to consider resale value and why?

Kendall: Resale value is very important to most fleets. Performing routine maintenance and spec’ing the truck for a second or third life can add over $10,000 in resale value. As truck prices increase, investing in a quality model will help maintain the vehicle’s overall value and ultimately a higher resale value.

Sass: Purchase decisions made based on initial acquisition price alone will miss cost-savings opportunities available from undertaking a more thorough and complete evaluation of the total cost of owning each truck. Resale value is an extremely important factor in the equation to help calculate the actual cost of each vehicle over its life cycle. Premium brands and models typically command a higher resale value than non-premium brands when looking at trucks of the same age, mileage and specs.

Shust: If the customer anticipates trading the vehicle in four to six years, then resale is an important part of the purchase decision. In addition, if a customer desires a lease, residual value is a critical part of the payment equation.

Warmkessel: Fleets must take into consideration second life ownership to gain the highest residual value. While a new vehicle must certainly be specified to accommodate the original owner’s application, adding options that are attractive to a second owner can pay high dividends at trade-in.

Harrington: When operating vehicles for three or four years, a higher resale benefits the fleet’s bottom line with a lower cost of ownership. Even if you use the vehicle longer, a higher resale means a larger down payment on your next truck. By spec’ing items that enhance the value, you have a vehicle that is in greater demand.

Gervais: When specifying tractors, it is extremely important to consider resale value. Buyers should create a spec that will accomplish the task at hand, and also be applicable to a wide variety of other applications in a second life. This will result in higher resale value, offsetting the costs of purchasing new tractors.

McColgan: It is very important to consider resale value when specifying tractors. The used truck market has matured a great deal since the early 1990s. The financial difference between a well-specified truck and a poorly specified one is significant today and used truck buyers realize that they have choices. The value difference can amount to over $10,000 in the worst-case scenario. Furthermore, if a fleet manager compares the upfront price of many options to the enhanced resale value benefit there is almost always a gain on the investment. Lastly, when market conditions are down, well-specified trucks will always hold their value better than poorly spec’ed vehicles.

Q. Which systems and components generally increase the resale value of used tractors?

Shust: Day cabs, 13- and 18-speed transmissions, 475 and higher HP engines and upgraded interiors.

Warmkessel: A good example is aerodynamic devices. On a sleeper chassis that typically hauls tall trailers and spends the majority of its time on Interstate highways, full air fairings, side shields and chassis fuel tank fairings, which result in better fuel economy for the original owner, can also enhance the value of the unit at trade-in time. And since the second owner is typically not a fleet, high horsepower is usually a positive feature as well.

Kendall: A higher level or upgraded interior can more than pay for itself, bringing in as much as $3,000 more when compared to the standard level interior. For some makes and models this can even be higher. Functioning amenities are also an attractive item for used truck buyers. Typically, 13- and 18-speed transmissions offer at least a $3,000 greater return than ten-speed transmissions in over-the-road tractors. We are also starting to see more demand and a greater return for automated manual transmissions because they are much easier to operate, opening the truck up to a wider range of potential drivers. Higher engine horsepower and torque levels add increased value to used trucks. Often, an engine that is rated at least 475 HP/1650 lb./ft. is worth $1,000 to $2,000 more. Aluminum wheels can be worth at least $150 to $200 more per wheel on trucks under five years old.

Harrington: Generally, 500 HP and higher engines, 13-speed transmissions, aluminum wheels, engine brakes and premium interiors add value.

Gervais: Proper selection of major components, like engines, transmissions and axles, affects resale value the most. Key things to consider when selecting major components for a tractor are durability, reliability and applicability to the vocation. Selecting the right major components can increase the resale value of tractors by thousands of dollars.

Q. Are there any systems or components that might decrease resale or make a tractor less attractive to second owners?

McColgan: Non-upgradeable low horsepower sleeper tractors that are gear bound to 62 MPH and direct-drive transmissions can decrease resale value. While customers who purchase direct-drive transmissions in new trucks state that they get better fuel economy, they are still a tough sell in the used truck market, especially in sleeper trucks.

Warmkessel: A longer than normal wheelbase that was required by the original owner for special equipment can be a significant issue in this regard.

Harrington: Low horsepower, steel wheels, spring suspensions and single drive axles.

Gervais: Specifications that are applicable only to niche vocations can reduce the resale value of the tractor by limiting second life opportunities.

Kendall: Truck features such as lower level interiors and non-upgradeable engines can reduce resale value. Fixed 5th wheels bring up to $1,000 less than trucks with air slide 5th wheels and steel wheels decrease a truck’s appeal versus aluminum wheels. Customers may also look for an engine warranty, preferably one that offers at least six months/50,000 miles of coverage on injectors, turbochargers, head gaskets, valves, etc. If these components fail and they aren’t covered by warranty, the service costs can put a used truck buyer out of business.

Kendall goes on to note a few other important factors to consider:

• Mileage is very important. Some used truck buyers focus more on miles than the model year. For instance, a 2005 tractor with 250,000 miles will most likely be more attractive than a 2006 with 400,000 miles.

• Fluids should be up to date and have been changed recently to get maximum value from used trucks. If your truck has good maintenance records, make them available to potential buyers. A truck with a positive service record can increase resale value.

• A new set of matched drive tires can add at least $3,000 or more to a used truck’s value. Mismatched tires and drive tires that have been capped more than once generally hurt the value of a truck priced over $50,000.

• One of the most important factors is the cleanliness and overall condition of the truck. If the truck has not been well taken care of it can impact resale value. A clean, well cared for, used truck will always be worth more at the time of resale than one in poor condition.