At the National Truck Equipment Association’s 37th annual convention and equipment exposition last week, Dolce argued that identifying year-to-year repair costs and miles operated on a per unit are data critical to solving the life cycle puzzle.

In a presentation entitled “Understanding Vehicle Life Cycle Costing,” he said the key to identifying the optimum replacement cycle for vehicles and equipment is to determine the point at which combined fixed and repair costs start to increase. However, he cautioned that those costs can vary widely due to factors outside a fleet’s control, such as interest rates, fuel prices, and used truck prices.

Dolce said when the principle and interest of an old vehicle decrease, the maintenance and operational costs typically tend to increase. Obviously, when the combined costs of an old vehicle – principle, interest, maintenance, and operation – are larger than that of a new unit, it is time to replace the old vehicle, he said.

The annual resale value, however, can become an important factor or “tie breaker” in deciding when a particular vehicle has reached the end of its useful life cycle for the fleet. If the resale value of the old vehicle is high enough – coupled with new vehicle purchase incentives – it will reduce the principle and interest paid to acquire a new vehicle, said Dolce.

By the same measure, if resale values are low, it may be advantageous to keep the old unit, he said. The key to extending the life cycle of older equipment is if the higher maintenance and operation costs exceed to reduced principle and interest cost savings associated with holding onto older equipment longer, said Dolce.