What would an experienced o/o buy?

Alright Bill, you seem to want a debate - so since my opinions are not valid on caskadias and prostars, perhaps you can fill us in on why they are a better alternative over Petes and Kws for an O/O who wants quality, looks, and reliability.

Speak to me about the quality and reliability of caskadias and prostars. Please also tell me why they cost $25,000 less than the same comparable competitors truck.

 

This is an extremely good point. I have been crunching numbers with regard to the plan I mentioned in an earlier post in "How to become an Owner/Operator". The one where I would work an oilfield job, payoff my house and buy equipment.

Because I needed to purchase and expense (using Section 179) a piece of equipment each year, it begin to look like the house payoff was out of reach. I could still pay it down. I need to do it this way so tax savings pay about 25% of purchase costs.

When I got done and found out what paid off equipment meant, the house payoff was only delayed. Figuring operation for three out of the last five months of the startup year at 80% capacity and 17% less on rates than I expected, I still had cash to pay on the house. For me doing it like this make sense. However, this will leave me with no depreciation to use when earnings are higher. This will be a real incentive to trade as soon as my house is paid off.

The point is tax planning should be a big part of the purchase decision. Hopefully you have a tax professional that can run different scenarios for your comparison.

There is so much to consider and each person's tax situation, age and retirement plans and means will differ. My plan may be the the worst thing you could do from a tax standpoint. With 28% tax rates, if you can't shield that income it's not worth making more than you need.

I agree with you and Win Mag about the Peterbilt and KW. I love the 379 or W900. If I can find one that I think I can make the numbers work on, I'll go for it. MPG are the single biggest concern to me on making it work.

 

Starting out I would not base my decision as to what to purchase based upon unknown tax planning. Until you have at least a year of experience in your equipment you won't really know your tax situation. Everyone is different. Tax planning would be more critical when it comes time to replace your equipment or once your current equipment is depreciated out. Buy the equipment you need based upon what you plan on doing with the equipment. You are buying a piece of equipment that will depreciate every day you own it.

If you want to shelter money from the tax man, rest assured that you will have plenty of expenses running a truck. It would make more sense to set up a 401k or find some investments that you can gain some depreciation or tax credits rather than relying on a truck to save you from paying more taxes. Buy some real estate.

If you see that you are going to have too much of a tax bite then stop working so much. A friend of mine does that. He owns older trucks and buys a new trailer after he has gotten all the depreciation out of it. He is clearing the same money without as much effort. He can take more time off without it affecting his bottom line. He makes it work. If you are concerned about taxes you should get with a good CPA who understands this business. As an otr driver you have a per diem tax benefit of about $52/day for each day you are on the road without having to keep all your receipts. That is apart from the depreciation on your truck. If you plan on financing your equipment, you could do a lease from a leasing company with a buyout at the end. You can still own the equipment at the end, but take the entire amount of the lease payment off from your taxable income. Or you may be able to use an accelerated depreciation schedule for your equipment. A good tax professional is the one who can best advise you based upon your unique circumstances. Let your CPA worry about the taxes, you concentrate on making money and building your business.

 

First, I have never said a Cascadia or Prostar is a good purchase based on my research. I, like you, have no idea. My reasoning is that there is not enough cost of ownership data on these trucks. It could possibly be that when you have enough million and half mile Cascadias on the road they will cost $.10/mile more to run than a '03 379.
But you do have enough data on Centuries, Columbias, W900's, 780's, 387's, etc. Most cost effective on a per mile basis to run are (in order) Century, 780, 386/T2000. Bottom (and forget exact order) is FLD, 379 and Columbia. In fairness, part of the cost on the 379 was increased insurance cost and body parts replacement. And Columbia has to do with loss of value.
Quality, Looks and Reliability - based on what? On the looks part this is completely subjective. I believe that you and I are in the same boat. I like the looks of a 379 or W900. But from a business stand point I need to make a decision based on available data. And the data tells me that if I buy a '06 Century vs. '06 379 with 500,000. At 1.5 million miles, the 379 will have cost me $120,000 more.

Supply and demand. How many fleet Centuries and other such trucks are sold each year compared to W900's and 379's?
But after the initial depreciation, the price gap between most shrink.

 

You state your case well on those shakers and volvos. Better case than I could make.

You bring strictly dollars and cents into the equation, which is wise no doubt. Perhaps if I owned a shaker or volvo I could put a few thousand more per year in the bank....But then I'd have to drive it.

Dont get me wrong, I'm not out here to just look cool and break even. But one benifit of being an O/O is having the luxury of buying exactly what he wants. When I bought my trailer, I selected it for several reasons. It was in super shape, its a Great Dane (reliable and quality) and it looks very nice IMO. I could have paid a couple thousand less for the same year trailer, but it would have been an ex fleet trl with all the glue showing of the removed grafics, been pulled by several hundred newbs, scratches and scuffed, the minimum lights, all sitting on white buds with iffy recaps.

I know I could also put alot more money in the bank if I could go the whole year without patronizing the Blue Beacon, but I just cannot effingham stand a dirty truck.

It doesnt make me more right than you Bill, but at least now you know how I make my decisions and form my opinions.

 

One thing that you should consider when buying a truck is fuel economy. An aerodynamic truck will typically use less fuel than a flat hood. Let's look at what it will cost for fuel for two trucks. Let's assume that the hood will get 5.5 mpg. My last experience with a Peterbilt had my fuel mileage at 5 mpg. Assuming that you will run 100,000 miles in a year, you should purchase approximately 18,182 gallons of fuel (rounded off). At $4/gallon, you will spend $72,728 for fuel for one year.

Most any aerodynamic truck should get at least 6.5 mpg. Driving the same number of miles in a year (100,000 miles) you should need to purchase approximately 15,385 gallons of fuel. At $4/mile you will spend $61,540 for fuel.

The hood will burn 2797 more gallons of fuel per year. At $4/gallon for fuel that means that it will cost you $11,118 more per year to drive the hood than the aero truck. Most people will finance their equipment over 5 years. At $4/gallon, it will cost you (11,118 x 5) $55,940 for the duration of your loan.

Let's make another assumption. Let's say that the gap between the hood and aero trucks is only .5/mpg. If you only drive 100,000 miles during the year you will still spend $5,559 more per year. That translates into $27,795 more to drive the hood over the 5 years of the loan.

You can expect to pay as much as $20,000 or more for the hood compared to an aero truck. Granted you will have more depreciation, but will also have a much bigger payment and pay more interest due to the higher cost.

Everything is a trade off. I know some owners who would rather drive a Peterbilt even if it only gets 5 mpg. Others, such as myself, would rather drive a good aero truck and put the difference in my pocket. I am not going to try to sway anyone as to what they should purchase. I am merely laying out the numbers. You can make your own decision as to what is most important to you. The figures that I used are based upon driving 100,000 miles per year. You could drive more, which would raise the amount of fuel and cost of doing business.

 

Looks pretty much like the same wagon I have...
Dane Super Seal

 

Yeah but does your wagon sport a cute widdle puuuppy like mine does?...(grin)

 

Got me there.

Mine rides shotgun.
View attachment 11645

 

No, I think you win Gears.

Cool pic!