|This article orginally appeared in the January-February 1967 issue of MHEDA Magazine|
Atlas Lift Truck Rentals & Sales, Inc.
Schiller Park, Illinois
This decision must be made daily by all equipment dealers when determining trade-in and possible disposition of used trucks.
To the best of my knowledge, there has been no way of compiling industry statistics on the number of used fork trucks sold annually. However, with the high percentage of trade-ins today, plus the number of used trucks constantly being sold out of dealer and surplus inventories, I now believe that numerically there are more used trucks sold annually than new. Are you getting your share of this market on a profitable basis, or do you have a yard full of rusting iron?
We are very fortunate that forklift trucks have such an excellent retention of value, which is a credit to the original design and quality of their manufacture. Most 10-year-old forklift trucks have comparatively high trade-in values which very often justify complete overhauling for resale.
The decision of first evaluating the trade-in, and then deciding what to do with the truck can make the difference of operating in red or black. Here is where we separate the men from the boys . . . the boys let the customer hood-wink them into allowing a high trade-in value on an old relic. It would be best to consider any such allowance as a discounted sales price. Do not try to get out from under by reselling, since the cost of storage, handling, freight, capital, time and thought only compound the problem. The men among us start out by telling the customer that they will allow no more than scrap value.
|Remove Ancient Units From Market|
Let’s first establish the fact that there are now increasing numbers of used forklift trucks always available, and the days of nonavailability are over. This means we must remove from the market those ancient units that are no longer economically desirable to sell. High cost of replacement parts as well as poor delivery of such parts automatically eliminates many trucks.
First of all, let’s do the customer a favor when we sell him a truck. Don’t encourage him to buy one that now, by comparison, operates much too slow. Don’t let him buy one that is too big and bulky, that would demand too large a turning radius. Don’t let him buy gas if he should need electric, or conversely let him buy electric if he should need gas. Don’t let the customer’s first experience with material handling equipment be so bad that he will not consider upgrading it to more modern equipment at a later date.
The customer relies on reputable equipment dealers to guide him into the proper equipment for his business. Don’t jeopardize your own business as well as the future opportunity of the material handling industry by letting the customer obtain obsolete equipment which is expensive or impossible to repair and will not do a job properly.
Modern industry cannot afford the wasted time and space, with accompanying down-time of equipment that a salesman said would “do the job.” Removing such equipment from the marketplace is in the hands of the individual dealer who must properly evaluate trade-in equipment, and tell a customer that “old Betsy” is ready for the graveyard—scrap value only.
In the last issue of MHEDA Magazine, our Vice President, Bud Achtenhagen, posed a question that many of these candidates for the graveyard still come back to haunt us; this literally can be true.
Too many times the burial place (scrap yard) happens to have a spray gun capable of making “old Betsy” bright and shiny orange. “Repaint” shops like this certainly do not help the material handling industry. ONLY YOU CAN STOP THIS PRACTICE! Cut the frame! Remove the masts! Pull out the drive motor! Do not send operable equipment to the “graveyard.”
Do you have a lift truck “graveyard” in your backyard? Does it consist of old iron which you are carrying on your books at unrealistic trade-in values? Is the net profit of your business dependent on your being able to “cash-out” in these values?
|Adjust Inventory Value Properly|
Be realistic! Adjust inventory value to true worth. Physically scrap-out all equipment not representing saleable values. Do not be left holding the bag; the old iron is not getting any newer. Your first loss is usually the best.
Late model modern lift trucks, however, represent a true asset. A healthy strong market for used trucks enables us to allow substantial trade-in allowances. This encourages customers to replace an old truck with a new one.
If we did not have the secondary market, the new market would be correspondingly smaller. You, of course, guarantee a future new truck potential when you properly place the right high quality used equipment in the hands of a company that cannot justify the expense of a new truck.
Your responsibility in the sale of a used truck is identical to that of a new one, with the following added responsibilities:
So, let’s trade-in, but trade-in right!