Meeting or exceeding market price should be the goal of any seller in a used truck sales transaction. Fleets looking to recoup maximum value for used trucks often turn first to private-party sales, a sales model free from transaction fees that include consignment costs and commissions.
Large fleets are adept at private sales of used trucks, but they have plenty of built-in advantages, including high inventories, wide varieties of truck makes and models, dedicated used truck sales staffs and the resources to effectively market and advertise their fleet of used equipment.
For small and mid-sized fleets, however, the hidden costs associated with private transactions can thwart even the best-intentioned fleet manager. Once a truck is removed from fleet service and prepared for resale, time is the enemy. The longer your used asset remains unsold, the more you incur in insurance coverage, storage and upkeep costs. Throw in depreciation that can drop a truck’s value thousands of dollars each month, and those do-it-yourself savings quickly diminish.
Fortunately, several other sales channels exist to help you unload your used trucks and are worthy of consideration.
If your fleet typically purchases new equipment, you likely have an established relationship with at least one truck dealership in your area. Trade-in programs with dealers offer an easy divestment strategy, but that transaction often comes at a cost.
At present, dealer lots are flooded with used truck inventories, and your ability to get top dollar for your used truck trade-in is limited, even as you negotiate new truck orders. “There are very few mega-dealers that can take it on the chin for used equipment, and most smaller dealers don’t have the cash to do that,” says Darry Stuart, president of DWS Fleet Management.
Even in low-supply market conditions where dealers are actively looking for used trucks, trade-in offer values can’t compete with those from private-party sales since dealers require enough cushion when accepting used trucks on trade to cover their own overhead costs and make a profit.
If you have a number of used trucks to sell at the same time, auction houses can be an attractive bet. They typically bring together large groups of pre-approved and qualified buyers at the same time, creating better opportunities for a quick sale with no negotiation. Auctions come in two forms: reserved and unreserved.
Reserved auctions allow the seller to set a reserve price to guarantee a minimum return on a used truck sale. If no bidders cross the reserve price threshold and the truck doesn’t sell, you’ll still be charged for any auction-related fees.
Unreserved auctions guarantee your used trucks will sell since there are no reserve prices. Instead, the used truck is awarded to the highest bidder, and you net the winning amount less the auctioneer charges. The main disadvantage is you lose any control over the final sales price in the bid process.
In addition to dealer trade-ins, transactions with third-party buyers offer an expedient means of selling used equipment. Once a third-party buyer agrees to purchase assets, they can make full payment as soon as the trucks pass inspection.
“Auctions certainly have their place, but time is money with used equipment,” says Steve Clough, president of Arrow Truck Sales. “Used truck prices don’t depreciate every day, but they do depreciate frequently. When we make a decision to buy [from a fleet], we want to get it to ourselves as fast as possible.”
No matter which strategy you prefer, Stuart advises not to get locked in to any single sales channel; instead, explore all options for selling used trucks.
“Every transaction, every fleet and every deal stands alone, and sometimes complacency gets in the way of good business,” says Stuart. “Make your decision based on the easiest method to dispose of the asset with the best profit or margin.”