Release Date: 30 March 2010
Release ID: 4619
There is a danger that in their rush to bring new ranges and highly customised products to market, some forklift manufacturers could be undermining the resale value of their existing ranges. In turn, this risks increasing the cost of ownership of these trucks for forklift fleet operators as well as truck rental companies.
That is the view of John Maguire, sales and marketing director of Narrow Aisle Flexi, manufacturer of the popular Flexi range of articulate forklift trucks.
“We are aware of certain products that were launched as recently as three years ago with a lot of marketing collateral behind them, that have now been succeeded by newer models. Even in a market where product release times are rapidly shrinking this, in my opinion, makes no sense.” he says.
John Maguire continues: “If I was a truck user or rental company who had been sold something that I thought represented the latest technology only for the product to quickly become all but obsolete, I would be very unhappy.”
“With any significant capital equipment purchase, the buyer needs to have the reassurance of knowing that the product s/he is buying is not going to be two or three models out of date when the time comes for it to be re-sold. If it is, the resale value will be seriously undermined. Quite simply, changing a forklift model too quickly, destroys the product’s used equipment value.”
A forklift truck’s ability to command a high resale – or residual – value has a significant impact on a product’s life-time running costs, particularly if the user is considering entering a lease rental package with a truck manufacturer or forklift rental company.
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.
It also means that forklift rental companies who lease lift trucks to end users must cover the truck’s net ‘book value’ at the end of the contract period. If, at the start of the lease period a rental company sets a RV for a truck which is not realised in the truck’s resale value at the end of the contract, then the rental company can suffer a significant loss.
“The complete process of bringing a new product to market involves idea generation, product design and detail engineering as well as market research and marketing analysis,” says John Maguire. “Innovation is one thing but it is essential that trucks are properly developed and tested over a period of time before they are brought to market. Anyone responsible for buying a fleet of company vans, for example, wouldn’t log on to the ‘Pimp My Ride’ website to find a product with a lot of modifications that had not been tested over sufficient time to ensure that it was reliable. Why would someone responsible for buying forklifts do the same?”
The Flexi truck celebrates its 20th anniversary in 2010. Since Narrow Aisle introduced the first Flexi articulated forklift truck in 1990, the company has gone on to develop six distinct articulated truck types.
“Each model in the range has been designed to offer reliable, safe and efficient operation to cover most industry requirements without resorting to ‘customisation’ of one product with the risks that this process can present,” says John Maguire.
The fourth generation Flexi model – the Flexi G4 was introduced in 2007 and has become the most popular articulated truck in Europe. Built on a standard platform, its design meets both US and European safety standards and. offers proven low maintenance costs and, therefore, low rental costs.
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