The Reasons Commercial Drivers Opt to Retain Their Old Trucks A Truck Accident Attorney Opinion

Many trucking accident lawyers and other industry experts have urged for new requirements or at least incentives that would motivate commercial drivers to lease or purchase more modern vehicles. A key reason for this plea by a truck accident attorney is that commercial trucks have only recently been available with the most sophisticated driver-assistance technologies, such as forward collision detection, blind-spot monitoring, lane-departure alerts and automatic emergency braking. In fact, only about 40% of trucking companies use those advanced safety features, and that number is even lower among independent contractors.

Truck Accident Attorney: The Value of a Truck to a Trucker

American society as a whole relies heavily on our vehicles to get us to work and to run errands and so forth. Most of us therefore can appreciate to some degree how important trucks are to American truckers. These vehicles do not just get them to work but rather facilitate the work that they do. For truck drivers, their vehicles are a cost of doing business and will thus have a direct effect on their bottom lines. Having access to a truck is not optional, and there are four key ways that a driver can have that access. A truck can be:

• Owned
• Leased
• Financed
• Company provided

While a company-provided truck may seem like a good option—and it can be for the commercial driver just starting out—it restricts how much drivers can make and limits their access to jobs. For this reason, many drivers work very hard to at least lease if not finance or outright own their own trucks. They earn higher rates as a contractor—as opposed to as an employee—and can choose the most lucrative work available. If a driver already owns his or her truck, leasing or financing a new truck is often not appealing because of the costs. This is reflected in the average age of a commercial truck being around 15 years old, which is a number that has continued to trend upward for several decades now.

Old Trucks Hold Great Value

The notion that many commercial drivers will hold onto their semitrucks for 15 years or more may seem odd to the average driver, but it is important to note that semitruck engines are designed differently than engines for passenger vehicles. Modern passenger vehicle engines can last up to 250,000 miles. Semitruck engines, on the other hand, can last up to 1 million miles. These engines are about six times larger than your typical motor vehicle engine. They also use diesel fuel, which provides many benefits, including operating at lower revolutions per minute and thus being subject to less wear and tear.

Lower to No Ongoing Payments and No Interest

Operating and maintaining a semitruck is a business expense for a commercial driver. The lower that expense is, the more money a driver makes. There is a polarizing discussion within the industry whether it is better to lease or own. Many fleet management companies opt to lease because there is less up-front risk. They are willing to eschew long-term savings for knowable and controllable risk in the short term. Many independent contractors, however, value the long-term gains. They are working toward a future where there is no monthly loan payment, interest, leasing fees, and so forth.

Insurance

Another factor is depreciation. As with any vehicle, the older a commercial truck gets, the less it is worth, and while that may sound like a bad thing, it can actually work in a driver’s favor. Independent commercial drivers require owner-operator insurance. As of this writing, that insurance can cost between $8,000 and $12,500. A significant component of that cost is physical damage coverage, and the rate for that protection is based on the estimated value of the vehicle. It is worth noting that should a driver be at fault and the policy needs to cover damages, the lower book value can work against them.

Vehicle Taxes

Property tax is an expense where depreciation may have an even greater effect. As with passenger vehicles, commercial trucks must be registered annually. Registration requires various fees but also a vehicle tax, which is based on the current estimated value of the truck. Depreciation therefore can reduce that obligation by a significant amount. However, this may not be a factor for all commercial drivers. In New Jersey, for instance, the state waives sales taxes, use taxes, and property taxes on many commercial vehicles if you meet various exemption qualifications.

Income Taxes

Most self-employed drivers and owner-operators are sole proprietorships—a one-person small business—and have to pay federal and state income taxes based on all of the money that enterprise earned. These commercial drivers, however, have a number of ways to reduce those obligations. One of the most notable deductions is the aforementioned depreciation. Drivers who own fifth-wheel tractors can take this deduction every three years, and those who have trucks with attached cargo units can take it every five years. Drivers can also deduct insurance premiums, loan interest, and much of the maintenance that their truck requires.

Grandfather Clauses

The law and regulations governing commercial trucking are ever-evolving. The Federal Motor Carrier Safety Administration implements changes on an annual basis. Many of these rule updates have grandfather clauses. The National Transportation Safety Board, for instance, mandated forward-facing cameras in all commercial vehicles manufactured in or after 2010. If you drive a truck older than 2010, then you are exempt from this requirement, and there is a big list of equipment requirements with exemptions that motivate some drivers to retain their old trucks rather than acquire new ones.

Not all grandfather clauses in the trucking world are everlasting. One of the biggest changes in the history of the U.S. trucking industry occurred in 2012 with Congress passing the MAP-21 act. One of the main components of this act was the ELD mandate, which required many commercial vehicles to have an AOBRD—an automatic on-board recording device—as opposed to the driver maintaining a written log. All qualified vehicles were required to have an AOBRD by December 2017, but preexisting vehicles were exempt until December 2019, which greatly motivated owner-operators to retain their vehicles those additional two years.

Automatic Transmissions

Technology is another reason why many truckers retain their old trucks. Automatic transmissions have become so sophisticated that they are even becoming prevalent among semitrucks. But many commercial drivers do not like them for various reasons. One of the core reasons is that automatic transmissions are more expensive to maintain, which may mitigate any fuel savings. Automatic transmissions are also still less efficient when driving in mountainous regions.

How a Truck Accident Attorney from RAM Law Can Assist You

Commercial drivers offer an essential service, and their importance has perhaps never been more evident than during the COVID-19 pandemic. But mistakes do happen, and perhaps you or a loved one was injured in an accident involving a commercial truck. The law firm of Rebenack, Aronow & Mascolo, LLP, has represented many clients in similar situations in New Jersey. We have offices in Brunswick and Sommerville and encourage you to schedule a case evaluation with a trucking accident lawyer at no cost or obligation to you. Call RAM Law today at (732) 394-1549 or contact us online.