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TRUCK'S ECONOMIC LIFE.
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A Useful Formula.
une oi we prooiems tnat sooner or later
overtakes most owners of commercial mo
tor vehicles is the determination of the
proper time to dispose of old trucks and
replace witn new vemcies. it nas Been
stated that the proper time is that when
the most value has been had for the out
lay on truck. The difficulty comes in de
termining this economic point in the life
of the vehicle. A formula based on long
experience of motor transport is to divide
the total expenditures on the vehicle by
the number of miles travelled, the total
outlay to include initial cost of machine
and all the running expenses covering
maintenance, petrol, oil, tyres, etc. All
these items, divided by the aggregate miles
travelled, give a quantity known as the
cumulative total cost per mile. In practice,
when the system k applied, the cumula
tive total cost per mile decreases very
rapidly, but a time comes, however, when'
it ceases to decline and either remains
fairly constant or starts on the up-grade.
Experts declare that the truck should be
replaced at the point where the cumula
tive total cost per mile ceases to decline,
for it is then no longer an economic pro
position to run. Here is an example of
how this system applies. Suppose the
cumulative cost per- mile for a truck
ceases to decline when the vehicle has
run 50,000 miles and is 8d. per mile. As
sume also that the cumulative total cost
per mile remains constant until the ma
chine has run 100,000 miles. The total
cost of the first 50,000 miles is £1,666 and
for the next 50,000 miles is also £1,666.
If, however, the truck had been replaced
after it had travelled 50,000 miles, and a
similar new one purchased, the total mile
age and the total cost would have been
the same.
The position with two individuals, one
who kept his truck running for 100,000
miles and the other replaced at 50,000
miles, would, however, after 100,000 miles
of service be very different, inasmuch as
the man who replaced his vehicle has a
much better asset on hand, for, although
the cost in both instances is the same, his
last truck has worked ouly half the dis
tance of that of the individual who has
operated his for 100,000 miles, consequently
the replacement value of the respective
vehicles would be widely different.
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