Posted this on another board, but thought it might work ok here:

People always talk about how much more a classic is worth then an aero truck at trade in. That's not relevant. What's relevant is how much the truck has depreciated.

Buying price(market) - Trade in price = How much the truck has depreciated

So how much are people buying 379's for these days? How much will they be worth in 3 years?

One thing that was definitely skipped over during that show was how much EXTRA you're borrowing. If you're paying 40k extra for that "classic" truck you're paying more interest on that 40k. That difference alone accounts for 10k.

I see decent equipped 2008 379's going for about 138k on truckpaper. I see similar specced 2005 379's going for 75k. I see a lot going for less then that, but I'll give the classic the benefit of the doubt.

138k - 75k = 63k

The truck has depreciated $63,000. Now using an average, $21,000 per year.

Now let's look at a 2008 387. With decent specs they seem to be going for 115k. A 2005? Around 65k.

115k - 65k = 50k

We can already see, the "classic" HAS DEPRECIATED MORE. It is not meaningful how much more you can trade it in for, but rather how much it has COST YOU TO OPERATE.

50k / 3 = 16.6k per year in depreciation of the aero.

You paid 23k extra for that classic, and you must pay interest on that extra 23k. Over 3 years you'll pay about a nice 3k. Divide that by 3 and you have 1k in extra interest.

21k + 1k = 22k

22k per year for the classic truck, vs 16.6k for the aero truck.

BUT WAIT, OH NELLY WE'RE NOT DONE YET!

We haven't even begun to talk about fuel!

Put the perfect specs on that 379/389 and you'll get good fuel mileage driven properly. Do the same for the 387 and you'll get 1 mpg more. Every time.

Averaging 140k miles per year, at 6 mpg the classic will use 23,333 gallons. At 7 mpg the aero will use 20,000 gallons.

3,333 gallons X 3.47 per gallon = $11,565 per year in extra fuel used

$5,400 in extra depreciation and interest for the "classic" PLUS $11,565 per year in extra fuel =

$16,965 per year the classic costs you over an aero truck.

 

When you buy a truck, you get the depreciation on it. So if you buy a pricier truck, you get it all back. The difference is its resale value. A Classic XL won't might not bring you as much as a 379 at trade-in time.

Thats another angle to look at.

 

But what I'm saying is you shouldn't look at the resale value, but rather how much it depreciates.

That's the true cost of ownership, not how much the truck will be worth in 3-5 years.

I find truckers are more interested in that "warm fuzzy feeling" because their classic truck is worth more then an aero truck. Never mind it has actually depreciated more.

 

You gotta look at resale, and what your equipment is worth when time comes to purchase a new equipment. A century class will be worth a lot less than a 379/W9/etc at trade in time. I agree, it depreciates more, but it also costs more. There is an element of the "warm fuzzy" feeling of driving a truck that doesn't rattle or fall apart like some v.s. others. Things like engine and trans combos that cost more that also bring in more resale.

Neglecting resale is like neglecting maintanence costs of your operation. Trucks can be considered houses, just in reverse. Real estate is supposed to gain value. You want your house to gain equity as fast as it can when the market is favorable. A truck always depreciates, and you want it to depreciate as little as possible, over the longest term.

On another note, your point about operational costs, mainly fuel mileage is an enormous expense, and should be considered when purchasing the equipment. I have a T600. I'm writing off its depreciation over 3 years. My truck costs more than some, and less than others. What I have in 3 years concerns me in the used truck market *if* and *when* I decide to purchase something newer.

Since we're talking about depreciation, a point you should mention is the capital gains tax one must pay on a truck when an owner sells it outright, which is higher since its worth more and sells for more. This point doesn't support my side/argument.

 

Nice workup of the numbers to illustrate the difference in cost of ownership. With fuel over $3/gal those 1/10 mpg add up quickly!

"BUT WAIT, OH NELLY WE'RE NOT DONE YET! "

And now that the snow's settling in you guys must be getting a lot of Keith Jackson reruns up there hey?

 

A certain co. (can't remember which) recommends an overhaul at 100,000 gallons of fuel.

So if you're SAVING on fuel you're ALSO saving the engine/tranny/..all running gear. All things considered, you'll get more miles out of a fuel-efficient truck.

What's the $$ BENIFIT in engine overhaul/tranny etc. savings?

 

It was said that your fuel saving were negligible with a classic if you were traveling slower. Way less impact than going fast . No doubt true. But what was once negligible now means real money in the pocket. Right?

 

Driving 140,000 miles a year, the difference between 6 mpg and 6.1 mpg with fuel at $3.50/gal = $1340!

 

I'm surprised so many people agree with me, at least in a sense.

Bandit, your point is taken, however when you are constantly buying the more expensive equipment, the cost between the used "classic" and new "classic" will be greater then the cost between the aeros.

 

Why? Seems pretty simple to me. makes perfect sense. resale is only a component of depreciation.....not a reason to buy a truck.

x-y = z

x = cost
y = resale
z = depreciation.