With fiscal prudence uppermost on the agenda within every boardroom, John Maguire, sales and marketing director of Narrow Aisle Flexi – manufacturer of the Flexi range of articulated trucks – says that in the current climate it is particularly important that companies considering investing in forklift trucks choose models with the best value “from cradle to grave”. In other words, trucks that are able to command a good resale value when they reach the end of their first, second or third life.
“When it comes to the purchasing decision, a truck's residual value – or RV – should be considered from the outset – particularly if the user is considering entering a lease rental package with its supplier,” John Maguire explains.
In simple terms, if a forklift is being leased, then its residual value (RV) will have a significant impact on its monthly rental price. A truck's RV is calculated on its expected market value at the end of a lease period and monthly payments are worked out using a combination of the initial cost of the truck and its anticipated RV. For example, if a new forklift truck costs, say, £30,000 and its RV has been set at £6,000, the monthly rental fee is calculated on the difference between the two amounts. This means that forklifts that command the highest RV should be available on the lowest monthly rental fee.
But a truck's ability to retain a good second and third life value is not only beneficial to users looking to negotiate the most cost efficient lease terms: forklift truck distributors too have plenty to gain if they can market a product that holds its value.
“I think far too many dealers in the UK have in the past ended up having to 'dispose' of more specialist trucks that come back to them at the end of a lease – they do know the potential income that a truck with a high RV can generate but they often do not consider this at the time of purchase,” says John Maguire.
Over the last five or so years, a thriving market for used Flexi trucks has developed, as John Maguire explains: “We have built-up an efficient spare parts operation which means that Flexis are very cost effective to refurbish. Thanks to their inherent high build quality Flexis are straightforward to maintain and our distributors are able to make healthy margins on used Flexis that they put back into the market on contract hire with maintenance packages.
Such is the demand for used Flexis – both from users and within the 'trade' – that the resale value of a five year old FLEXI truck in the European market is often over twice that of, say, US or French-built alternatives.
“Typically a used and refurbished Flexi will be sold for in the region of 65 per cent of its price when new,” says John Maguire, who likens the Flexi brand's high resale value to that of classic sports cars – which are worth almost as much restored as they are when new.
John Maguire believes that – like their counterparts in the automotive sector – those forklift truck dealers that cannot generate enough margin on used equipment resales to pay off the guaranteed RV in customer contract hire agreements will struggle in the current climate.
“We have sold over 4000 Flexi trucks through independent distributors worldwide and, in part, our continued success is due to the fact that our distributor partners realise that they can rely on the Flexi to achieve a good market value at the end of it's first life,” he concludes.