It’s Not New Anymore
Trucking with
By: PASH BRAR
It’s Not New Anymore
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hen equipment is bought new it’s often an exciting day for the dealership and the purchaser. Everyone has a smile on their faces as the equipment leaves the dealership and goes out for their first load. However, the moment that piece of equipment leaves the dealership on the first day, it becomes used and is no longer considered new. With a brand new trailer, the moment it leaves the dealership, it drops in value by approximately 10%. For the first few years, it will continue to decrease in value by 10% each year. For example, a trailer that cost $55,000 brand new is now worth $49,500 the day it leaves the dealership and for one year. $55,000- $5,500 (10%) = $49,500. For the second year you take $49,500 – $4950 (10%) = $44,550 for the second year. This formula is an approximate guideline and things like wear and tear and options and maintenance must be factored in. If you’re not sure, ask a dealership for an appraisal. I had a client who bought a brand new trailer and wanted to sell it after 2 months. I had to explain that the 10% in value was gone. He was trying to sell it for the same price he paid for it new. The trailer was no longer new and no one was willing to pay that. I also explained to him that he had put 10% down and now it was 10% less in value and someone had to pay for the drop in value, and that would be him. A compromise we reached was I suggested he rent the trailer for a few months and get his 10% value out of it first, and then sell it so he wouldn’t lose money, and he agreed. With brand new trucks, the value drops considerably the first day you pick it up. A brand new truck loses approximately 20% of its value the moment it leaves the dealership and becomes a used truck. So a truck that was $150,000 brand new, is now worth $120,000 when it leaves the dealership lot. $150,000 – 30,000 (20%) = $120,000. A year later, the truck drops in value approximately another 15%, and then 10% the subsequent year after. Again this is an approximate guideline and wear and tear and extra options, and - Pash Brar B.A. Pash is a mobile leasing representative with Auto One Leasing LP in Vancouver. She has a banking, collections and accounting background. She specializes in importing vehicles and trailers from the USA.
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