Although newer safety features for commercial trucks add expense to the purchase process, being smart about what technologies to choose will lead to safer fleets as well as a positive ROI. Jim Sweeney of AmeriQuest explains the options available and how fleet operators should handle this issue.
The statistics from the Federal Motor Carrier Safety Administration (FMCSA) speak for themselves:
And then there are the costs associated with the accidents. FMCSA statistics show:
Those figures only include the cost of vehicle repair not other costs like medical and legal expenses nor damage to a fleet’s reputation.
Responding to this situation truck makers and truck component suppliers have invested in trying to make trucks safer. And despite the fact that the cost of a Class 8 truck continues to climb driven by requirements to meet government mandates, fleets are paying extra to include options that make their trucks safer.
Currently available on the market are:
These technologies are designed to help reduce accidents (or the severity of accidents), reduce fatalities and injuries, reduce insurance costs and help mitigate damage awards in lawsuits. However, all of these solutions add costs to the base price of the vehicle.
With all these choices available, how does a fleet know which safety technologies to select?
For starters, don’t rush into a purchase without fully researching all aspects of the technology. A fleet manager needs to ask what technologies are realistic for the fleet’s needs. How can the fleet take advantage of a given technology without getting hurt by a technology that may later prove to be flawed? There are long-term ramifications to every technology purchase and fleet owners and managers are wise not to jump on something that seems to be “the latest and greatest.”
Sticking to normal trade cycles is one way to avoid purchasing technology for technology’s sake. What the fleet needs to strive for is purchasing the right technology, with the right ROI (including how it contributes to the residual value of the asset) at the right time.
When new technology is introduced into a fleet following previously proven time frames, it results in less disruption, decreases the likelihood that one bad decision will be a burden on the fleet and leaves the fleet with enough capital to purchase other technologies — technologies that could provide even greater safety improvements.
Also keep in mind that the cost to add the safety options can run from $1,000 to $7,000, depending on the option selected. While this is not a small cost, it is not huge when viewed in terms of the potential savings. Look at it as a percent of the total cost of a $115,000 to $130,000 per truck.
Major banks and other finance sources are familiar with the cost of the safety equipment and the benefits. With more fleets adding these options to their trucks, truck financers are accepting the added costs as part of the truck financing.
Due to the newness of the options, there is very little data on the used truck market to determine impact of residual values. But based on current government mandates and the current and growing percent of new trucks ordered with safety options, trucks with these options will be the norm in the used truck market of the future and residual value will be market based.
If you find yourself having to justify the increased cost of a truck with these safety options to your lender, consider these stats:
The National Highway Traffic Safety Administration expects electronic stability control systems to prevent as many as 1,759 crashes, 649 injuries and 49 fatalities each year. Remind your lender of the average cost of one accident and they should be able to see a positive ROI.
Everyone is in favor of putting safer trucks on the road. The orderly introduction of new safety technology into the fleet along with an aggressive safety program is the best way to make sure the fleet is operating as safely and economically as possible.
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