When to buy and sell vehicles

When to buy and sell vehicles

Follow this expert advice from the on the best times to upgrade your fleet.

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November 10, 2017
Kate Spirgen
Industry News Irrigation Show

It’s hard to know when it’s the right time to buy and sell when it comes to your trucks. Don Duckworth, area sales manager for Enterprise Fleet Management, gave some inside tips on how to make the smartest choices at a session sponsored by the Florida Irrigation Society at the Irrigation Show in Orlando, Florida.

Understanding the market

It’s a common misconception that buying a vehicle at the end of the model year is cheaper than buying at the beginning. Duckworth explained that dealerships can actually help you lower the price if you order early and qualify for incentives.

The average base price increase averages $1,200 from the beginning of the model year to the end. However, the average incentive is going to go up even more, so that’s why you’ll see a net decrease, Duckworth said. You’re taking advantage on both ends.

He recommends ordering early and setting a later delivery date so that you can lock in the price, but also still take advantage of incentives. That way, the purchase will be price protected so you won’t be subject to any of the price increases.

“Dealerships are usually in the today business so this is something you’re going to have to suggest to them,” he said.

Incentives

There are three types of incentives, Duckworth said:

1. Volume incentives are the biggest, but you have to place 25-plus orders. Duckworth said most companies aren’t going to be able to use these due to the volume, but it is possible to reach out to local associations and see if you can piggyback with their orders.

2. Fleet incentives are the next highest and you’ll need to order 15-plus vehicles, or piggyback. These are greater than the retail incentives but they’ll stay flat.

3. Retail incentives are the lowest, but continue to increase throughout the year.

Additional incentives include:

Up-fit: incentives for aftermarket up-fitting

Loyalty: provided if you currently have a vehicle by the same manufacturer

Conquest: Provided if you currently have a vehicle from a competing manufacturer

Remarketing

Commercial vehicles have a much higher resale value as a percentage of the original cost than consumer vehicles, Duckworth said. Cosmetics are much more important to someone who’s buying a vehicle to get around than someone who’s going to go out and put more nicks and dings on a pickup truck.

“The resale market has been strong,” he said. “A lot of businesses we meet with don’t recognize how much their vehicles are worth at $100,000.”

If you’re planning to get rid of a vehicle, the market usually picks back up March and April. So if you want to sell in December or January, just wait a little, he said.

Operating costs

Fuel

The price of fuel increases, on average, 4 percent each year, according to Duckworth. “This is something you can use conservatively as you’re forecasting next year’s expenses – and that’s the minimum number,” he said.

The Corporate Average Fuel Economy regulations require manufacturers to improve fuel economy between 3.5 and 5 percent every year through 2025, but buyer preferences for SUVs and trucks are making it hard for automakers to hit the 54.5 mpg CAFE requirements, Duckworth said. But improvements are happening.

For example, take an F150 pickup. The 1997 version got 14 mpg, but now it’s 21 mpg, plus the engine is 90 hp more with 375 torque instead of 310. “So it’s not just theory, it’s definitely happening,” he said.

Maintenance

Maintenance spikes in the third year of vehicle ownership because you’re replacing parts like brakes. Then in the fourth year, it decreases again and spikes in the fifth year.

People tend to want to keep a vehicle longer once they’ve put money into it, but the maintenance is just going to keep getting more expensive, he said. “Look at your own fleets and the maintenance records and you can see it happen,” Duckworth said.

Risks and safety

If you have vehicles that are 10 years or older, you are not taking advantage of standardized safety improvements,” Duckworth said.

He recommends rear video as a good, low-cost safety option since he rarely sees a used commercial truck that doesn’t have significant bumper damage.

 

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