Posted by NCWayne on November 26, 2011 at 21:24:27 from (69.40.232.132):
I was reading the post below about buying a new truck vs a used truck and I've got a question I'd like someone to answer. In a nutshell it's this. What does everyone have against buying something used????
Running a business myself I can understand the whole deptreciation thing but even then I don't understand the mentality of "buying new" is the only way to go.
I say this for several reasons. One is that when you buy a used truck it's worth X amount, say $10,000 and not $40,000. Even so the cost can still be depreciated out over time just like a new one. Maybe our illustrious waste of a government will give you 'extra' tax benefits, EPA incentives, etc, etc, but there are still write offs there with the used one. Now, if you buy the $10,000 truck you can typically drive it for a few years, and if you take care of it, it won't lose that much value if you decide to sale it. On the other hand with the $40,000 truck it becomes a used truck the minute you drive it off the lot and loses a significant portion of it's value from the word go. Two years or so down the road it's a well used truck and worth maybe 1/2 what you paid for it, if your lucky. In other words with a used truck you may not have all the incentives up front tax wise, etc but on the tail end your only 'losing' say $2000 for a few years of use vs the $20,000 your gonna lose on the new one. And that's not taking into account the money your forced to spend to keep full coverage on a financed vehicle vs being able to keep only liability on a used one for the time owned if you so chose.
As far as repairs, on the older vehicles many people could do all but the most major repairs themselves if they were even the slightest bit mechanically inclined. On the new stuff your all but forced to take it to the dealership, or to a repair shop to get anything done due to the thoudands of dollars woth of diagnostic equipment needed to do anything. Gone are the days of listening to an engine and having a good idea of what's wrong, now there are dozens of sensors, several ECM's, etc, etc. . Not to mention with the newer emission requirements coming about things like the particulate filters, etc, etc are all gonna need routine maintenance/replacement (usually expensive according to everything I've read concerning the technology) that old exhaust systems had no need of beyond a possible muffler and tailpipe replacement at some point. In either case repairs can usually be written off the year they are performed so there's nothing to gain by buying new here.
Now I see the reason given that with a new truck you 'know where it's been', how it's been treated, etc. That I understand, but look at it this way. If you bought an older truck for $10,000, there's nothing keeping you from taking part of the $30,000 you 'saved' and having the engine rebuilt, having the suspension checked, having the interior redone, having it repainted, etc, etc. In the end you wind up with a "new" old truck with all the same benefits of a new one, at alot less cost. An added benefit is that all of the repairs you do to it are also a write off, just like any other repair would be.
What got me to thinking about all of this is two customers who I have restored/refurbished equipment for over the years. When it comes to buying equipment for business use, be it a truck or a tractor, basically the same rules apply across the board. One about 10 years back had Dad and I redo a 70B Bucyrus Erie crane. Between parts and labor they had about $175,000 invested in the machine vs close to a million and a half dollars plus to buy a new machine with the came capabilities/capacity. What they got for their money was new or reman parts in critical areas such as the house rollers, bottom rollers, etc. It got them new bushings/bearings in key wear points, oversized pins in the tracks to make them like new, new linings on all of the brakes, new cables all around, etc, etc, etc. Basically we set the machine apart, rebuilt it from the ground up, and except for an engine rebuild addressed everything that was needed to make the machine like new. When it was over they had a machine that was new in all areas that needed to be new, with another 20 plus years of life expectancy on all those parts just like they got out of the origional parts. Basically a like new machine for something like $1,325,000 less than a brand new one would have cost them.
We also redid a D9G for another customer. That was a complete radiator back restore that included a recored radiator, rebuilt engine and transmission, new steering clutches, rebuilt final drives, a complete new track system, new seat, wiring, etc, etc, etc. About the only thing not touched was the ring and pinion and they showed no appreciable wear so replacing them would have been a waste of money. This was all done a little at the time, over a period of about 5 years, as his schedule and budget would allow the down time. When all was said and done he had a 'new' D9 sized machine for around $200,000 vs spending, again, nearly a million for a brand new one. Had he bought a new one he would probably still be paying on it, while the one that we rebuilt has been sitting most of the time, and not costing him a dime, since the economy went South.
In both cases the companies budgeted in the repairs in advance and when the machines were complete their expense was over. From that point on when/if the machine was setting idle it wasn't costing them anything. Now had they bought new machines and financed them, every minute that machine was setting idle was costing them money. Too both companies new exactly what had been done to their machines. In fact, they were all continuing to operate with proven technology vs taking a chance buying a new machine, with 'unproven' technology that could possibly have caused them even more costly problems.
Seen that scenario happen too. Customer was running an older dragline that we had rebuilt for them. With proper maintenace they could have gotten another 20-30 years out of it. Instead they used $hit for grease due to the 'bean counters' that wouldn't foot the bill for the good stuff. As a result they had numerous problems and eventually opted to buy a newer machine, by about 30 years, in hopes of 'solving' their problems. When all was said and done they spent nearly $250,000 on a machine that by the account of the operator was moving about 1/2 the material per day the old one was, and using about 3 times the fuel to do it. Not to mention all the down time they had due to problems with the electronic engine controls, repair parts having to ship from overseas, dealership snafus like leaving the oil out of a major gearbox (because the 'new' machine included a maintenance contract), etc, etc, etc. Basically could have spent maybe a million and a half for a new machine or spent a little of that money on buying a good quality grease for the old machine and come out ALOT better off all around. Instead they spent enough money buying a 'newer' machine to have rebushed the older one again, bought good quality grease, and kept it going, for another 20 years plus, and had a machine that would not have had electronics problems even the OEM couldn't diagnose, parts only available from overseas, etc, etc.
I guess what has beought this whole line of questioning to mind, beyond reading the truck post, is that this whole "buy new" mentality has been the downfall of many, many companies in the past few years with the economy falling out like it did. Instead of buying and paying for a used piece of equipment they all bought new and when the work stopped they were still paying on equipment that wasn't making them any money. As a result many of the machines were repossessed. So, instead of having a 'cheaper', used, paid for piece of equipment setting there, that had more than likely already paid for itself, they now had no machine, and even worse all the money paid toward the machine until that point was also gone, wasted.....
Granted I've used machines here as examples because I've seen the whole new -vs- used scenario plaid out alot of times over the years and the consequenses of both for the customers involved. The thing is, regardless of wether the vehicle involved is a truck, tractor, or whatever, the same principles apply pretty much across the board. Now granted there are times I can understand the need to buy new, and in some cases it can be justified and is a good thing. What I have a problem with is the whole mentality of 'it has to be new' to work, to be reliablem or whatever. That simply isn't true. That 20 year old truck or tractor, or whatever was once considered the latest, the greatest, and the most reliable too. With a little TLC and a few new wear parts it can once again be just as 'new' and reliable as a brand new one......So why the mentality that the only 'relable' machine has to be Brand New?????? Just doesn't make sense to me.........Can someone please explain what seems to be the prevailing mentality in the US nowdays that NEW is great and USED is just 'old and outdated junk'?????? Inquiring minds want to know....
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Today's Featured Article - Listening to Your Tractor - by Curtis Von Fange. Years ago there was a TV show about a talking car. Unless you are from another planet, physically or otherwise, I don’t think our internal combustion buddies will talk and tell us their problems. But, on the other hand, there is a secret language that our mechanical companions readily do speak. It is an interesting form of communication that involves all the senses of the listener. In this series we are going to investigate and learn the basic rudimentary skills of understanding this lingo.
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