By John Blodgett, MacKay & Company
Most vehicle truck and component manufacturers, as well as those in the forecasting business, anticipate U.S. retail sales of Class 8 trucks will be down 30 percent or so in 2020 compared with 2019. Declines also are expected for medium-duty trucks and trailers. That is a significant drop.
The aftermarket for the current year is not impacted much by the vehicles sold in the current year. These vehicles are under warranty and they are a small portion of the operating population. They will, however, impact the aftermarket in future years as fewer trucks sold today means fewer opportunities for parts and service in the future.
Reading this publication and others over the last few weeks makes it apparent this expected downturn in retail sales likely will have an impact on the aftermarket in the form of more attention and competition.
The CEO of one of the major Class 8 truck manufacturers recently stated they are going to expect help with more parts sales profits to offset the decline in new vehicle sales. In another article, a truck dealer stated that his focus this year will be towards parts and service in reaction to the anticipated decline in new vehicle sales.
I do not think most truck dealer parts departments believe they have been slacking off the last several years. Most new truck dealer service departments have had an increase in make ready and warranty work related to the increase in retail sales, so they don’t likely feel they have been slacking off, either. Any good dealer organization strives to have its absorption rate at least above 100 percent where the parts and service departments cover all expenses.
In a recent survey, we ask parts distributors by channel who is their primary competitor. This includes truck dealers, independent parts distributors, engine distributors, automotive WDs and independent garages. They all say truck dealers are the primary competitor (except engine distributors — but truck dealers are second). This makes sense; we estimate truck dealers control 49 percent of parts sales in the parts aftermarket.
The challenge for those who compete against truck dealers (everybody) is there is now going to be more focus on the parts aftermarket by truck manufacturers and dealers. So, while dealer parts departments have not been slacking, it is likely they will have more programs and/or resources to address the aftermarket, which they may have wanted for years and now the market conditions justify the focus. Service sales, in particular, also will get more attention as more service sales equal more parts sales.
In addition, everybody who has ever worked for a truck dealership knows that no one at a dealership is immune to cutbacks or layoffs caused by new truck sales declines. The hits don’t just stay in the truck sales department so there is extra motivation to go the extra mile.
The flipside to this discussion would be that the independent aftermarket has had it easy for the last several years as truck dealers have not focused on the aftermarket.
I don’t think anyone on the independent side would agree with that statement.
What I have learned over the past 25-plus years is that all channels of the aftermarket have some very dedicated, hardworking and creative people and companies. The aftermarket offers opportunities for those on the OE side and the independent side.
The aftermarket is not a right, it’s an opportunity for those who want to fight the battles every day and come up with customer service and solutions that beat the competition. This year, the battles might just be a little more competitive.
John Blodgett has worked for MacKay & Company for more than 20 years and is currently vice president of sales and marketing, responsible for client contact for single- and multi-client projects. He can be reached at [email protected].
