When a fleet is purchasing new tractors, how important are drivetrain specifications in terms of resale value? Do premium drivetrain systems and components raise the resale value of tractors? Is it possible to place a dollar value on any increase in resale value for these components? What factors about drivetrains impact a used truck buyer’s decision about purchasing a vehicle? Are driver preferences, maintenance requirements, brand reputation or other factors important to consider in terms of resale value when writing new vehicle specs?
Spec’ing a new vehicle with resale value in mind is a shared responsibility between the fleet executive and the dealer or OEM. For their part, fleet managers need to give the dealer and OEM all the information needed to make an accurate evaluation of the proper drivetrain components for the job. And the dealer or OEM salesperson needs to check with the OEM’s sales engineering staff to be sure what is desired can be delivered.
Valuable lessons
Having sold used trucks for more than 10 years, Stephen Duncan of the International Used Truck Center in Indianapolis, says experience has taught him a few valuable lessons about spec’ing vehicles with resale value in mind.
“Driver preferences, maintenance requirements and brand reputation all play a part,” he says. “In my opinion, many buyers of used trucks merely want the best quality for the dollar and often dispense with brand loyalty to get it.”
Addressing drivetrain concerns, Duncan notes that fleets pay for engine horsepower at the initial purchase.
“The same engine model is priced in a tiered fashion according to horsepower levels,” he says. “Fleets generally buy enough horsepower to meet their application requirements, not for resale considerations. For example, 500 horsepower or more engines might help raise a vehicle’s resale value, but are rarely spec’ed because fleets don’t need that much power.
“Used [truck] buyers may want to be the first truck to the top of the hill and hate being passed,” Duncan continues. “That’s a fairly universal thing, so building a drivetrain that can be upgraded later by tweaking the electronic controls can be a good idea. Fleets may also feel that a nine- or 10-speed transmission is sufficient, but on the used market a 13- or 18-speed gearbox has a value as much as $2,900.
Chief concerns
Most used trucks on the market started life in a fleet, Duncan says. “Most fleets spec trucks with a few chief concerns in mind, including cost, carrying capacity needs, driver recruiting and retention, and safety. In my experience, fleets seem content with leaving desirable specs for resale value off a truck if it saves money, won’t hinder driver hiring and retention efforts, and still get the freight moved.”
For example, many trucks are spec’ed without a sliding 5th wheel because drivers can too easily damage side extenders on the cab due to improper spacing of the trailer, according to Duncan. In addition, engine brakes are left off some trucks because inexperienced or negligent drivers don’t know how to use them or abuse them. While tilt and telescoping steering columns are extremely popular with drivers in the used vehicle market, many fleets leave them off their specifications because of cost, he says
“From what we’ve seen, vehicles lacking these items will have significantly lower resale values,” Duncan says. “At resale, for example, NADA values an engine brake at $2,300 and a sliding 5th wheel at $1,200. Some specs aren’t assigned specific values but can make or break a resale. For instance tilt-telescoping steering columns are very attractive at resale when the buyer is an owner-operator.”
Duncan concludes with some helpful advice to specify the drivetrain for the application as recommended by the manufacturer. “If there’s any doubt, specify premium products for their greater durability and reliability, and because they will enhance the vehicle’s resale value,” he says. “This effort will then pay dividends when it comes time to trade in or sell the vehicle on the used market.”