For most small and medium enterprises (SMEs), business growth almost always means acquiring a business vehicle. The question is how to optimise its value to the company when the vehicle is new, and then to determine just when it needs to be replaced, says Datsun South Africa.
Brian Joss – Both questions about buying and replacing a delivery vehicle are critical to SME owners who need to keep a wary eye on cash flow. It is important to ensure that, despite fluctuating fuel prices and the reducing value of the rand, that costs for a business vehicle are kept under control, says Des Fenner, general manager of Datsun South Africa.
“When buying a new delivery vehicle, questions should be asked about three different types of costs. These are the initial price of the vehicle, maintenance intervals and costs, and what expenses can be expected if repairs to the body or engine are required.”
Some key considerations to ensure that these are manageable is by:
*Matching the panel van to its purpose. Consider what it will be carrying, what the mass will be, and how much space will be required. Buying a vehicle that is too small or too large means money being wasted.
*Looking at the acquisition price. Keeping this price down means that cash flow isn’t severely compromised. Also remember that a VAT refund can reduce this price.
*Working out what the van’s average running costs per kilometre are. For instance, in the case of the Datsun Go+ Panel Van, this is R 1.87 per kilometre . Assess the maintenance costs of the vehicle.
*Look at the costs that could be incurred if the van is damaged in an accident or requires major parts.
*Always check insurance costs. The lower the purchase price, and the more affordable parts are, the lower the insurance premium will be.
*Keeping an accurate record of all expenditure on the panel van.
“It’s unwise to assume that because a panel van is small that prices don’t differ much between brands. The Datsun Go+ Panel Van’s price tag is lower than its closest competitors.”
“The same applies to load. The Datsun GO+ Panel Van carries loads of up to
542 kilograms and can swallow loads with a volume of 3.4m3. For an SME these figures mean fewer deliveries and lower costs per trip,” says Mr Fenner.
“A quick look at the independent Kinsey Report is then recommended. It will tell an SME owner that maintenance and repair costs for the Datsun Go+ Panel Van are the lowest in the country, as it shares the same running gear as the Datsun Go, the car which has held this accolade for two years running.
That’s good news when it comes to maintenance and insurance premiums.”
How to decide when it’s time to replace a panel van depends on many factors, says Mr Fenner. These include: Optimising trade-in price by trading in a van when its value is highest; traditionally, vehicles lose most of their value within the first 12 months and the value then declines more slowly until the end of the second year. Thereafter its value declines more rapidly.
An SME owner who wishes to keep vehicle payments around the same level for as long as possible should bear the ‘two-year rule’ in mind.
Trade-in: trading a van in for a newer model of the same brand usually means getting a better trade in price and having a record of all services and maintenance can also add to this value.
Running costs: noticing when running costs per kilometre begin to increase. This can be because of changing fuel costs, but can also be an indicator that the van needs more attention than it used to. When costs begin increasing rapidly, it’s time to think about trading in.
Mileage: if a van is being used around the clock, its mileage will increase quickly. Keeping the vehicle for a long period could then rapidly reduce its value. However, if running costs are under control, the vehicle is reliable, and the driver is happy, replacing it becomes a judgement call.
“One of the factors that can rapidly age a vehicle is overloading. Carrying excessively heavy loads places strain on the engine, gearbox, suspension and engine mountings. By making sure that you have bought the correct panel van and it is fit for purpose, it will be sure to deliver faithful, cost effective service until replaced,” said Mr Fenner.