Slow and steady growth in 2014
The aftermarket survived a slow start to post a solid year in 2013, its fourth in a row since last decade’s recession.
Business growth has been minimal but it’s happened, and early indications are 2014 will be more of the same. Considering what the market went through just five years ago, most industry veterans are thankful to be back on solid footing again.
“I don’t think we’re heading back to where business was prior to 2007, but after being down for so long I think there’s reason to be optimistic,” says Kevin Cyphers, vice president at Cyphers Truck Parts. “Sales have been increasing and there’s a feeling of positivity [in the market].”
“[The aftermarket] is in pretty good shape,” adds Bill Nolan, president at Power Brake & Spring. “It’s not as strong as we had thought it could be earlier, but it’s so much better than it was four or five years ago that it’s hard to complain.”
Indeed, the aftermarket has experienced its fair share of ups and downs since peak years in 2006 and 2007. The recession hit the market hard. Some members were forced out of business, and many of those who remained dramatically cut back their operations.
The last few years of steady improvement have allowed aftermarket businesses to start ratcheting up their operations again. In reaching out to all areas of the aftermarket for this month’s cover story, it sounds to me that while most businesses plan to remain conservative, there’s a reason to be optimistic about the aftermarket in the coming years.
“In general we see the 12-month outlook as pretty positive,” says Tim Kraus, president and COO at the Heavy Duty Manufacturer’s Association (HDMA). According to Kraus, the most recent HDMA Supplier Barometer survey shows a majority of aftermarket suppliers are starting to add inventory and production capacity for 2014.
Kraus says that activity is the result of positive sales growth over the second half of 2013 and strong sales projections for 2014.
I think a major reason for this current growth opportunity is the aging fleet on North America’s roadways.
New truck builds were up over the final months of 2013 — and I’m hearing OEM projections of better sales in 2013 — but today’s active Class 8 fleet is still old as it’s ever been.
While part of that is due to the recession — another factor has been new emission regulations — it’s also important to remember that the North American OEMs are producing great trucks.
Today’s trucks can run for a long time, and with proper service and maintenance, there’s no reason for an owner-operator or small fleet to rush to trade in trucks they like and trust.
That’s a good sign for the independent aftermarket.
“There are a lot of older vehicles on the road today,” says Don Reimondo, president at HDA Truck Pride. “These are trucks being used by their second and third owners and that’s a great opportunity for [the aftermarket.]”
I don’t have a crystal ball, but if I was to guess, I think 2014 will continue the growth trend we’ve seen recently: slow but steady.
New truck sales will rise, but used trucks will remain a valuable commodity and make up a significant portion of the national fleet. Hours of service regulations will require fleets to operate more trucks to move freight, and the economy will lumber forward like the tortoise racing the hare.
The only area where significant growth seems inevitable is the natural gas field. I haven’t seen or heard anything to expect that business slowing down in the next year.
It won’t be 2006, but it shouldn’t be 2008, either. I think most of us will take that.