Buy or repair? The best time to buy a new trailer or repair an existing one is often blurry, especially in today’s market. Everyone is watching as trailer prices continue to reach an all-time high due to the lack of supply. As a result, many fleet managers are trying to make their equipment last longer, which is increasing the price for repair work and causing many repair shops to become overloaded.
Shop overload is costing fleet managers, owner operators and anyone who owns a trailer to pay for the repair in time, lost income opportunity, and repair costs. Despite the large costs in repairing trailers, buying a new trailer is never an easy decision. It is up to you to maximize your profitability of your trucks and trailer which is dependent on so many factors.
In this article, I am going to show you how you can maximize profitability and get the highest return on your assets by helping you make a better decision on when to buy or when to repair. We will look at two factors – the inefficiencies of older trailer and real cost of getting a trailer repair – that many fleet managers and owner operators do not account for when making a purchasing or repair decision.
The Inefficiencies of Older Trailers
Old and used trailers never run as good as new trailers. The often cost a lot more to run on the road than a new trailer does. Old trailers will get less miles per gallon of gas due to drag problems and a decrease in aerodynamic functionality.
Older trailers are less cost efficient and can hide many costs. Fleet manager, therefore, should keep accurate records of the cost per mile for every single trailer and run a comparison analysis of a new trailer versus an old trailer.
For example, you might run a comparison analysis and find that the older trailers in your fleet cost about $0.03 per mile more than your new trailers. Taking the average miles a truck driver travels – 100,000 – running an old trailer can cost $3,000 more per year than running a new trailer.
You will not be able to make a decision to buy a new trailer from this factor alone, but it needs to be accounted for. Too many organizations forget to factor this into their decision, so they run trailers beyond the optimal time period.
How Much Are You Paying in Repairs?
This factor is relatively straight forward, but as we will see later, there are some hidden variables that makes calculating the cost of a repair difficult. To start, take the repairs of a trailer over the last year and figure out the average monthly repair cost. Your repairs should fit into one of two categories – your repairs will exceed or be below the payment for a new trailer.
If you can purchase a new trailer and make monthly payments below your average repair costs, then it is time to buy a new trailer. For example, if your current trailer costs $400 per month in repairs and you can get a new trailer for $375 per month, then you should get a new trailer.
If your repair costs do not exceed the cost for a new trailer, then it may be better to do the repair. Here is where the hard part comes in. Every second a trailer is in the shop when it could be on the road, it is also costing you money in lost opportunity. For example, if your used trailer take 3 days to get back to you when it could have been on the road, you lost money that you could have made.
This increase the cost of repair and should be factored into your cost of repair. If your repair costs and the amount of lost money is greater than the cost of a new trailer, then it is time to get a new one.
Making the decision to purchase a new trailer or repair an old one is never an easy decision. Unfortunately, sometimes the optimal decision is part timing and luck. But to increase your odds of success you should calculate the inefficiencies of running an old trailer and find out the real cost of a repair.
Find out what our trailer repair company can do for you by calling 734-299-3455