Smaller trucks, big opportunity

News Lucas Deal April 15, 2013
The commercial trucking market is more than just heavy-duty fleets and owner-operators. Medium-duty customers are part of the market as well, and many aftermarket businesses have found that medium-duty customers provide an excellent business opportunity.
The commercial trucking market is more than just heavy-duty fleets and owner-operators. Medium-duty customers are part of the market as well, and many aftermarket businesses have found that medium-duty customers provide an excellent business opportunity.

This is the first in a multi-part series on servicing the medium-duty marketplace. The second installment, Acquiring medium-duty information, will publish later this week. 

When someone mentions commercial trucking, it’s easy for business owners’ and analysts’ minds to turn to the heavy-duty marketplace.

The heavy-duty trucking market has dominated the North American landscape for years, and in the aftermarket, servicing heavy-duty customers provides a great opportunity for business success.

But the commercial trucking market is more than just heavy-duty fleets and owner-operators. Medium-duty customers are part of the market as well, and many aftermarket businesses have found that medium-duty customers provide an excellent business opportunity.

It’s an area all aftermarket businesses need to investigate, says Allan Parrott, president at Tidewater Fleet Supply.

“I think it’s a market that is going to continue to grow,” he says. “I am seeing a lot more medium-duty vehicles on the road and some smaller fleets seem to be gravitating toward them.”

“It’s a growing market, and it’s a good market,” adds Harry Amoroso, president at B&A Friction. “I think some people think ‘We don’t know that market so it can’t be good,’ but that’s not true. It’s a great opportunity. If you spend some time researching your market, you can find [medium-duty] customers in your own back yard.”

Aftermarket companies that take a deeper look at servicing the medium-duty market will find a loyal customer base.

Unlike heavy-duty fleet customers, medium-duty customers typically are not in the trucking business. They own trucks because they have to — because they need to transport something else. The products in their trucks are their business, not the trucks themselves.

And while they need to keep their trucks on the road just like a national fleet, they are much less likely to have the parts and technicians to do that alone.

This makes them extremely reliant on the dealers, service providers and distributors in their area.

John Messina, president at Tampa Spring, says his company does a lot of business with medium-duty fleets operating 10 trucks or less. He says most of these customers understand maintenance is important, but they simply lack the ability to perform all of it on their own.

“They don’t have the same maintenance programs heavy-duty fleets have,” he says. “Their drivers might know to check the oil and maybe the tires before they drive, but that’s it. And they don’t have the [technicians] back at a garage to do that for them.”

“They are usually just smaller businesses or single owners — sometimes it’s just one guy,” adds Matt Thompson, vice president at Blue Hen Spring Works, Inc. He says even if these customers understand “they need to be proactive about maintenance; they still can’t do it all alone.”

That’s where the aftermarket comes in. Become a service provider they can trust and you may find yourself with a life-long customer, experts say.

“They definitely will be loyal,” says Messina. “Once a [medium-duty] customer trusts you and knows you’re looking out for his best interests he’ll stay loyal to you. And it’s not just a dollars and cents thing.”

He says medium-duty customers appreciate good value, but quality, honesty and consistency are just as important. “Price isn’t always number one.”

Michael Cancelliere, senior vice president and general manager of North American parts at Navistar, says medium-duty customers have the same loyal relationship with dealers.

“One of the biggest differences between medium-duty and heavy-duty customers is the reliance on the dealer network,” he says. “Medium-duty customers tend to rely on local dealers a lot more, while the heavy-duty customer is more reliant on the dealer network en masse.

“The medium-duty customer will go to the same dealer almost every time.”

That localized approach is another reason for aftermarket companies to incorporate medium-duty fleets into their customer base. Most medium-duty trucks operate within a designated area that can easily be serviced by a single aftermarket location.

Amoroso says that is especially true in urban markets where medium-duty trucks are the preferred delivery method.

“When you’re delivering into cities and dealing with traffic, you can’t really have a big tractor-trailer for that,” he says. “That’s where the medium-duty trucks come in.”

There are medium-duty trucks everywhere.

“Today’s medium-duty customer tends to be the last step in the supply chain or one step closer to the end customer,” says Tim Wenger, senior manager, parts marketing and product development at Hino Trucks. “Case in point, how often does a Class 8 truck pull up to your house to make a local delivery?

“Class 5-7 trucks are in local neighborhoods everyday performing services that we all depend on as part of our daily activities.”

Amoroso says his urban California-based business has a large medium-duty customer base for that very reason. He says West Coast fleets are adding more medium-duty trucks to combat highway congestion and traffic issues, and he says urban distributors and service providers that don’t evolve with fleet changes risk missing out or losing potential business.

“Some people just don’t think about looking at [medium-duty] business, or maybe they only want that big fleet business,” Amoroso says. “They might not think of the medium-duty business as a viable option.”

He believes if they took the initiative they would be pleasantly surprised.

“I think sometimes the time and effort put into those smaller fleets might bring in better returns than a larger fleet, and with those smaller fleets they are always buying from a local source.”

“It’s a growing area for my shop,” adds Thompson. “We’re seeing more and more companies that want to run medium-duty trucks.”

The inability of most medium-duty customers to carry their own inventory is another reason to look into the market.

The medium-duty market is filled with specialty trucks, and each truck line requires duty-specific components. But because medium-duty customers lack the capital and space to stock parts on their own, they rely on distributors who can help them out.

Messina says his company carries a wide array of specialty components to service its medium-duty customer base. He says those customers are extremely appreciative that they can go to Tampa Spring for all their parts needs, but he warns other distributors that adding medium-duty components shouldn’t be a snap decision.

It requires a considerable investment in inventory.

“The [medium-duty] parts market is very vehicle specific,” says Parrott. “It’s not like you can just put in a few product lines and cover the majority of these vehicles.”

He says Tidewater Fleet Supply works with its customer base, service provider customers and suppliers to make sure the parts in stock are the correct ones. That keeps the inventory fresh and minimizes part obsolescence.

Adds Messina: “We take a proactive stance — inventory isn’t a bad word, it’s something we need. We have to carry a lot of product lines because we have to get that truck on the road. You can’t tell a guy with two trucks he has to wait a month for a part.”

David Segal, president at Sanel Auto Parts, says once you enter the medium-duty market it’s not that much different than the heavy-duty market. After you’ve created your inventory, it’s just a matter of proactively managing it for your customer base.

“You have to make a long-term commitment,” he says. “It’s the same commitment you have to make with heavy-duty. You have to commit to learning the industry.”

Cancelliere says Navistar stresses researching the market to its dealers. Knowledge is a vital aspect to managing a medium-duty parts inventory.

“We encourage dealers to not look at just turns, but also have a broader parts inventory that might not turn fast but is always available,” he says. “It’s all about having the parts on the shelf.”

Servicing the medium-duty customer base also gives aftermarket businesses opportunities to work together to complete service requests.

A medium-duty customer may rely on a distributor for specialty components but rarely will have the staff on hand to install what it purchases. In those situations, distributors can direct their customers to service providers they have a positive relationship with or trust to get the job done.

This is good for both businesses bottom line.

Parrott says his business sells medium-duty components to a variety of service providers and can direct customers to repair facilities. At Blue Hen Spring Works, Thompson says his service department tries to stock as much as possible, but won’t hesitate to contact dealers or independent distributors when it needs a component.

That’s just another opportunity to build customer loyalty, he says.

“It would be ideal to stock everything, but physically it’s just not possible and money-wise it doesn’t make sense,” Thompson says. “The best thing you can do is have a great relationship with your suppliers, and know who you can contact to get that part the next day.”

He adds, “The customer can’t wait on that truck. They may have no other way to do business.”

That might be the most important thing to remember about the medium-duty marketplace. Medium-duty customers don’t always have the luxury of returning to a garage for another truck, or the financial flexibility to rent one when their vehicle breaks down.

Most are reliant on the aftermarket in a way average heavy-duty fleet customers are not — completely and without an option.

“I think they are more appreciative to the service and what you can provide to them,” says Amoroso. “If they only have 12 trucks they need all 12 of them to go. When you help them do that, they are pretty quick to build a strong relationship.”

Those are good customers to have, and they are part of a growing marketplace to boot.

To pull them in, Wenger recommends an active approach.

“Be active and visible in your community and present yourself as a medium-duty vehicle solutions provider that can be trusted for dependable service and a comprehensive parts supply relationship,” he says.

Customers will come to your business if they believe you can help, says Messina.

“I think people need to look more at this market and help these c

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