Buy, sell or hold — Perfect storm of regulations, recession and maintenance

This story is part of a four-part series on how the recession, changing regulations and evolving equipment have changed equipment trade life cycles for fleets. Click here to see all of the stories.

The American Trucking Associations reports that the average age of a truck in a U.S. fleet today is an unprecedented seven years old.The American Trucking Associations reports that the average age of a truck in a U.S. fleet today is an unprecedented seven years old.

Consultant Darry Stuart, president of DWS Fleet Services, never was in favor of extending vehicle lifecycles – although he recognizes that many fleets felt they had no other good options a few years back.

“Extending asset life was due to the cost of the vehicle essentially doubling since 2001,” Stuart says. Fleets had to extend vehicle life due to rising upfront costs, low residual values and the overall state of the economy – on top of the push to meet emissions regulations. “For maintenance operations, it was horrible, and massive costs came along with that,” he says. “The learning curve was harsh and expensive and took its toll on customer service.”

The result, Stuart says, was a nightmare that still haunts fleets today. “All of a sudden, there was a drive to outsource maintenance because the fleets weren’t up to speed on the new technology and had their hands full just trying to keep trucks running,” he says. “The dealers were supposed to be the experts, but even they couldn’t handle the sudden workload. Then the technician shortage everyone was wondering about became a massive problem.”

Stuart says the industry ended up with a “perfect storm” where fleets were “being held hostage” by dealers because of U.S. Environmental Protection Agency emissions requirements and other new technologies. “I firmly believe now that things are better, fleets have got to take more control of their destinies and return to doing more of their own maintenance in-house,” he says.

Stuart also believes that while the success story is that fleets learned to operate equipment for significantly longer lifecycles, the reality is that many fleets went broke trying to keep troublesome worn-out equipment on the road.

“At the end of the day – no matter what’s going on with the economy, technology or anything else – equipment life and trade cycles boil down to acquisition costs along with trade and sale dollars,” he says. “If that book-value formula doesn’t work, all the maintenance in the world isn’t going to change that. And if you’re locked into a cycle with older worn-out equipment, you’ve got to dive down deep into the books and really analyze your costs to come up with an escape plan.”

Lessons learned: Is holding on to old equipment the best route in an economic downturn?>>