Aftermarket continues to rebound, dealers begin to show optimism in TPS weekly survey

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Updated Jun 11, 2020
How has the coronavirus affected your parts and service business_

We saw more good news in our Trucks, Parts, Service reader survey on business conditions related to COVID-19 this week, with the parts and service market and, finally, equipment sales channels continuing to show progress in the long climb out from the depths of the pandemic.

The percentage of parts and service operations responders who said their sales have decreased since the onset of coronavirus lockdowns fell again in this week’s survey to 74 percent — the lowest point seen since early April when business was cratering. Impressively, 15 percent of responders actually said their sales have increased since the pandemic began; another 3 percent said their sales have “increased significantly.”

Those positive signs could be seen in how aftermarket operations and their supplier partners view the weeks and months ahead.

More than half of parts and service responders anticipate sales to rise in the next month (47 percent increase; 6 percent increase significantly), while only 3 percent expect sales to continue to decrease. Those numbers are even stronger when extended to the third quarter, where 65 percent of responders (62 percent increase; 3 percent increase significantly) are anticipating sales growth.

“March and April were a slow down. Recovery is accelerating through May,” said one survey responder. Another stated, “We are back to sales level before the virus. Expect it to stay that way or increase.”

The parts and service rebound isn’t steady across the entire market, responders on the coasts remain more cautious than their landlocked counterparts, but overall even those in areas that were hit with high levels of positive virus cases and extreme stay at home orders are beginning to progress back toward normalcy.

“California in particular is coming out of this slowly,” said one responder on the west coast. “The way of doing business has changed … but things are feeling like they are turning around.”

Sales in the equipment market are still in the tank, but May’s slight uptick in new truck orders could be seen in the guarded optimism dealer responders provided when looking at the months ahead. Not a single dealer responder to this week’s survey said their new and used truck sales or new trailer sales have increased since the pandemic began in March, though one dealer said their used trailer sales had rose.

But when asked about the next month, 32 percent of dealers expect their new truck business to increase. That number jumps to 47 percent for the third quarter, with only 21 percent of dealers still expecting sales to be decreasing in the second half of the year.

Other segments are optimistic as well. More than 20 percent of used truck dealers are expecting sales growth in the next month — with 37 percent anticipating rising sales in Q3 — while a third of new trailer dealers are predicting sales growth for June.

In our question asking responders to rank business conditions this week on a 1 to 10 scale, (with 1 being the worst week ever and 10 being the best), responders in the dealer and aftermarket channels continued to share their hope for a steady recovery.

On average, parts and service responders rated the time frame in which our survey was conducted at 5.21, far and away the best score the market has recorded since the pandemic began. Additionally, that same segment responded that it expects this week to track at 5.69 and the next 30 days to climb to 6.33. Distributors are slightly more bullish than their supplier counterparts — independents predicted a 5.85 for the week ahead while suppliers just a 5.25 — but both segments continue to show they believe the worst of COVID-19 has passed.

“If things stay as they are now, we will continue in good shape,” said one responder.

Dealers are starting to feel the same way as well. Dealer responders said last week was another tough one, rating as a 4.43 on average, but this week they are expecting a 4.95. In the month ahead, that number rises to 5.05.

Yet despite gains, both the parts and service and dealer channels acknowledge many of the challenges of the last three months will not go away as summer returns. Asked to evaluate the impact COVID-19 will have on day-to-day truck maintenance and repair operations this summer (with 1 being no impact and 10 being significant), parts and service responders averaged a 5.83, dealers a 5.48.

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It appears the industry realizes business has fundamentally changed.

“More business will be conducted remotely instead of person to person. More parts will be shopped and purchased online. More service requests, quotes, and invoicing will be done by email or text. Even training will likely be conducted via the internet or webinars,” said one parts and service responder. Another noted the industry will likely evolve to be more conservative with its parts inventory levels, utilizing “just in time parts delivery to keep customer down time minimized.”

“The high number of unemployed will be a drag on the economy for several months,” added a dealer responder. “This will suppress the demand for goods, which will lead to less freight movement. Without freight movement, the trucks sales as well as parts and service sales will be low. If there is a strong return of the coronavirus in the fall or winter, the recovery of the economy will be slowed even further.”

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