Understanding commercial vehicle depreciation

Running a successful freight or delivery business requires careful financial management, particularly when it comes to your business’s largest capital investment: the trucks or vans at the heart of its operations.

While tax depreciation affects all equipment regardless of brand, market value depreciation can vary significantly based on multiple factors that every owner/driver or fleet operator should understand.

While there are many factors that can affect your truck's or van’s resale value, here are some major ones to consider...

How your truck compares to newer models in terms of fuel efficiency and technology. Is your prime mover suitable for multi-trailer combinations? Does it have driver support systems such as lane-keeping assistance, forward collision warning, or autonomous emergency braking?

Highway trucks that conduct steady, long runs will depreciate differently than city delivery vans with their constant stop-start cycles. Urban delivery vans often rack up maintenance-intensive hours, while long-haul trucks may accumulate miles faster. What major repairs have been completed during that time?

The state of the truck’s cabin interior and exterior paint and brightwork. Does it still present well upon first inspection? Is it a truck or van that promotes its owner’s business well? A clean and tidy vehicle paints its owners in the best possible light.

Industry demand cycles will affect the availability of used trucks. Supply and demand significantly impacts resale pricing. Is it the right time to sell?

To understand which commercial vehicles hold their value best, we consulted Mick Anic of Mick Anic Wholesalers, a veteran of the second-hand commercial vehicle market. Mick has extensive experience tracking value trends across the industry.

“Without naming brands, those that have been manufactured for Australian conditions tend to last longer, as they’re more durable. On the other hand, when it comes to driver preference, automatic trucks can hold greater value than manuals in the current climate.”

Also, you need to take into consideration that vehicles from manufacturers renowned for reliability typically retain value better, as do premium or widely used models that are popular with other businesses.

Conversely, oversupply or economic downturns can push values down, making it a poor time to sell.

Want to protect your truck’s value? Here are some proven strategies to slow depreciation…

Choose the right specifications for your intended usage from the start to avoid premature wear. Don’t oversize a truck for light urban work – a smaller van might retain value better in that role.

Ensure your truck isn’t underpowered for its intended work, as this creates premature engine and driveline wear. Consider that optional features like bullbars and auxiliary tanks may or may not add resale value.

Mick’s go-to first up is the books. “The Gold Service is offered as part of the initial purchase by some OEMs for scheduled maintenance,” he says. “So, if you were to purchase a commercial vehicle from one of these dealerships, for example, you would obviously acquire the Gold Service schedule.

“This schedule tells you when [the truck] must go back to the dealership to have upgrades or servicing at the time it specifies. If you don’t keep up to date with the schedule, then suddenly you lose your documented service ratio because you haven’t followed the guidelines.”

This in turn will drop the resale value of your truck and its history will be more difficult to prove. Major repair documentation and documentation of rebuilds is particularly important for resale value too.

Regular maintenance is key. Oil changes before or at the specified time as well as regular brake and brake booster checks contribute to a well-maintained vehicle. Keep on top of your tyre rotations as specified by the manufacturer.

Scheduled services not only prevent breakdowns but keep resale values high. Repair or replace parts before they fail and potentially cause further damage to the vehicle.

Maintain a detailed logbook and service records to prove proper care of the vehicle has been taken.

Apply rust-proofing or undercoating, especially if the truck will conduct much of its work in coastal areas or regions of high rainfall. Use protective films or covers on high-wear areas.

Prevent unnecessary body damage where possible. Secure trolley jacks, pallet jacks, and other loose equipment in the truck or trailer bodies to avoid accidental damage.

Good presentation can significantly increase resale value, but market conditions determine whether preparation investments will yield returns at trade-in time.

According to Mick, “If you were to bring your truck in, the tyres worn out, windscreen sandblasted, guards hanging off etc, I will price that accordingly. I will price that accordingly to allow myself to do the work required to bring that truck back up to be suitable for resale.”

Though market factors are largely beyond our control, economic indicators like interest rates and consumer spending patterns can help forecast optimal times to sell or trade in your truck or van for a newer model.

At the end of your depreciation schedule (which varies by application), your fully depreciated truck’s resale value can offset the cost of your next purchase.

“The only thing I look at, if you’ve got a truck for five years and you’ve never had to rebuild it, whatever you get for it is a bonus … because you haven’t had to spend. I mean, maintenance is standard, but if you can get five years out of a new truck and not have to rebuild it out of your own pocket … and if you sell that and get $50,000 … that you didn’t have beforehand, it’s been a good truck to you," Mick concluded.

The message is clear: treating your truck as both a working asset and a future investment pays dividends. To maximise your vehicle’s resale value, you need to be proactive in these strategies starting today, because every day of proper maintenance and care going forward puts dollars in your pocket when it comes time to sell.