Bleak fourth quarter creates more consternation for dealers, aftermarket

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Updated Feb 8, 2024
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Truck dealers and aftermarket responders took it on the chin last quarter. At least that’s what it appears from the responders to the Trucks, Parts, Service MarketPulse quarterly survey conducted last month.

Among dealer responders, the fourth quarter of last year was ranked as a 6.40 on our 1-10 scale where 1 is the worst quarter ever and 10 is the best. That was the lowest rating dealers have given a quarter in two-year history of our survey. The aftermarket also pegged Q4 as its worst quarter since the inception of our survey, with an even lower average rating of 5.70 on our 1-10 scale. 

For those who participate or regularly follow our quarterly report, the negative readings should have been expected. Dealer and aftermarket market confidence has mostly fallen since our survey debuted in the first quarter of 2022.

Aftermarket responders have reported weaker business conditions for every MarketPulse survey in existence, with the market falling from 8.86 on our 1-10 scale after the first quarter 2022 to last quarter’s 5.70 reading. Dealer business conditions peaked with an 8.27 average reading in Q2 of 2022 and have now fallen for six consecutive quarters.

[RELATED: Flat freight market keeps dealers’ expectations low for 2024]

For what it’s worth, dealer responders to our Q3 survey last fall did predict a 6.30 for business conditions in Q4, which means despite setting a historical low at 6.40, the industry did barely exceed expectations. That glimmer of positive wasn’t found in the aftermarket, where responders to our Q3 survey also had predicted a 6.30 average.

Expectations for the months ahead aren’t much better. As TPS reported last month in our three-part state of the industry report, optimism is scant for the first six months of the year.

[Download our state of the industry survey results!]

Dealer responders to last month’s survey predict a 6.13 average for business conditions in Q1. Nearly half (47%) also expect business conditions for the first six months to be equivalent to the first six months of 2023, with another 40% percent expecting things to get worse.

Aftermarket sentiment is very similar; 38% are expecting similar results to 2023 in the first six months with 34% expecting business to be worse. Regarding Q1 in particular, responders predict an average of 6.00 on our 1-10 scale.

Last quarter’s survey also enabled us to ask year-end questions and, as expected, many responders stated 2023 was an unspectacular one.  

One third of dealer responders stated 2023 closed as 1 to 5% worse for business profits than 2022 and another third said the year was equal to the prior one. Also rather interestingly, an equal number (13%) said their business was up or down by at least 5% year over year. The final 7% of dealer responders were up just 1 to 5% in profits from 2022.

Looking at 2024, 53% of those same dealers expect profits to be equal this year to the last — with only 7% of dealers expecting to be up by at least 5%.

The aftermarket fared a little better in the year-end assessment.

While 34% of responders said their profits were down year over year, another 29% were up, slightly higher than the 20% in the dealer channel (with 38% of aftermarket responders rating 2023 as equal to 2022).

[RELATED: Aftermarket battling fading margins, demand entering 2024]

When shifting their attention to 2024, 48% of aftermarket responders expect to be up by 1 to 5%. No responders expect to be down by more than 5%, with 29% expecting profits to be flat and 24% bracing for year that is down by 1 to 5%.

That belief the market will not crater can be seen in long-term employment and business planning. Only 5% of dealers and aftermarket responders are looking to cut their workforce. Two-thirds of dealers want to add staff while in the aftermarket that total is 52%.

Our final survey question regarding top business concerns showed inflation continues to dominate executive’s minds. Economic and business conditions (including inflation) was the top concern for 40% of dealers (and a top five concern for all but one responder). In the aftermarket, it was the top concern for 52% of responders and was a top five concern for everyone.

Any discrepancy in fears between the channels can be seen in secondary concerns. Nearly 80% of dealers rate regulatory influence on trucking as a top five concern. Only 35% of aftermarket responders have regulations as a top five issue. But in the aftermarket, 52% of responders say relationships with supplier partners (including order fulfillment) is a top five concern while only 26% of dealers feel the same.

TPS will conduct its 2024 first quarter MarketPulse survey in April and publish a brief synopsis of the data after it concludes.

Want to read more insights from our fourth quarter survey? Or participate in future surveys? We’d love to hear from you.

All truck and trailer dealers and independent aftermarket businesses are encouraged to participate in the TPS MarketPulse survey, and only businesses who choose to participate will receive complete survey results each quarter. For more information, and to register, please email [email protected]

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