Hire or buy a forklift truck or vehicle?
With forklift trucks and vehicles being essential for businesses across the globe, small to medium companies, as well as large enterprises, rely on them on a day-to-day basis to move their goods safely and efficiently.
As with any business asset, however, vehicles can be very expensive to acquire, at which point you might be forced to think whether it’s more cost-effective to just go with contract hire.
If you’re still wondering whether vehicle purchase or or hire would be a safer bet, then here’s a list of considerations, along with some pros and cons of each.
If you hire a truck, then you probably know that you’ll be enjoying greater flexibility from the outset. If you need equipment for a seasonal business peak or, say, you need to move a fair amount of freight while working with a specific client, then a vehicle hire makes sense – you won’t have to pay a heavy upfront cost and you can fully utilise the rental payments.
However, be prepared to pay the insurance and maintenance costs that come with a rental agreement. Then again, this is the perfect chance to test out the latest technology and models from top brands. Consider the following -
Hire trucks and vehicles - pros
- Lower up-front costs – Use the latest and greatest technology-driven equipment without paying the full upfront costs. You’ll be paying for what you use only, so you’ll always know what your usage expenses will be.
- Test-drive the latest technology – Whatever innovating technology leading manufacturers such as Clark or Polaris are working on, you’ll be among the first business owners to try it out, potentially giving you an edge over your competitors who may still be using less efficient and outdated equipment.
- Productivity boost – Regular replacement throughout the forklift hire agreement means greater productivity and reduced downtime because a highly motivated and efficient workforce is only as good as the equipment they use.
Hire trucks and vehicles – cons
- Higher costs long-term – Even though the flexibility of a forklift rental agreement is undeniable, the fact of the matter is that it will most likely cost you a lot more in the long term. For instance, if you decide to buy the entire fleet at the end of an agreement, you might end up paying far more than what you might have if you had purchased the same equipment from day one.
- Inability to make modifications – Even though you can upgrade rental trucks, making certain adjustments or adding/removing parts to streamline operations isn’t possible since you don’t own them.
- You bear damage liabilities – If your trucks or vehicles get stolen, lost or are damaged in any way, then you must write that off as a company expense, and this includes damage and/or wear and tear due to weather elements.
Why purchase trucks and vehicles?
Having access to your very own fleet of vehicles and materials handling equipment can be a superb day-one investment. Given the initial high cost, having even a single model that’s reliable and built to last can significantly add to your productivity.
Ownership can get rid of a lot of the headaches that often linger around due to the terms set out in the lease or rental contract. After all, you can use the equipment as and when you please, and on your own terms. With that said, consider these -
Buy trucks and vehicles – Pros
- Immediate asset for the company – Having ownership rights to your vehicles means you have another asset to rely on. Not only that, but you gain additional security should you ever need to settle a large one-off tax debt or business loan.
- Use freely – Being the rightful owner of your equipment means you can use it however you like, without being tied down by any agreement clauses or penalties.
- May benefit personnel training – If you continue using the same model, training your personnel to use them effectively becomes easier, since everyone will be on the same page and pick things up quickly because they are familiar with one specific range; rather than having to learn the individual attributes of each range. This might eventually mean greater productivity for the business.
Buy trucks and vehicles – Cons
- Huge capital investment upfront – There’s no escaping it: buying a fleet means saying goodbye to large sums of capital in the blink of an eye. However, assuming that your business is generally doing well and you anticipate using the fleet for a good 10 years or more, this risk may be well worth taking.
- Costs after warranty expiration – The end of warranty period means that any unresolved issues or repairs might likely take a deep hit on your pocket.
- Obsolete equipment – A major downside perhaps of owning a brand new fleet of forklift trucks or vehicles is that in a number of years it may not be compliant with current market standards, which means you’ll be stuck with outdated equipment; unless you invest in a fleet that has been future-proofed for a good few years. Even then, technology advances can often be very unpredictable.
Ultimately, it all comes down to your business circumstances. If you’re still asking people in your business circle about forklift truck buy vs hire, then perhaps it’s time to give us a call. We will assess your business needs and provide you with the best advice, helping you make the most of your investment.