The third quarter did not offer a bounce back for dealer and independent aftermarket operations, reported responders to the Trucks, Parts, Service quarterly MarketPulse survey last month.
Our second-quarter survey revealed a slight improvement in business for aftermarket operations but no similar improvement emerged in the third quarter. Business conditions for dealers and aftermarket responders were both down in Q3, with the latter posting their weakest quarter since our survey began in 2022.
The numbers tell the story.
Dealers ranked business conditions in the third quarter as a 5.2 on our 1-10 scale (where one is the worst quarter ever and 10 is the best), while aftermarket responders were even more bearish, pegging the quarter as a 5.0 on our 1-10 scale.
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Comparing the period to the same quarter in 2023 doesn’t improve sentiment. In the dealer space, 44% of responders said their profits in the third quarter were at least 5% below the same period last year. Another 25% were down 1-5%, while 19% were even. Only a small few (13%) reported profits that were up 1-5% from 2023.
Aftermarket year-over-year sentiment was mostly similar. Only 37% of responders claimed profits were down at least 5% from 2023, but 42% said they were down 1-5%. The number of aftermarket responders with positive year-over-year data was also in the teens at 16%, up 1-5%, with 5% saying their business profits were flat.
The extended slump caused one aftermarket responder to question, “Has this been the longest down cycle in the history of the aftermarket parts distribution industry?”
As such, optimism also is waning for the months ahead — especially among dealer responders. Our Q3 dealer responders predict business conditions to rate as a 5.1 average on our 1-10 scale in Q4. Extending out six months, 94% of those same dealers expect business conditions will be down year over year through March.
Aftermarket responders offered a similar outlook for Q4 — predicting a 5.3 average on our 1-10 scale — but are slightly more optimistic when projecting into 2025. Among that cohort, more than two thirds believe business conditions will be equal to (37%) or 1-5% better (32%) year over year through March.
But what’s fascinating about that measured optimism is how it doesn’t translate to aftermarket business planning. Dealers remain much more committed to their growth plans, per our survey responders.
Three quarters of our dealer responders reported they are considering adding facilities at this time, mostly by opening a new facility. In the aftermarket, only 16% of responders said they are still considering adding facilities, equal to the number of aftermarket responders who plan to reduce their workforce in the next six months.
That openness to layoffs is not new to our survey. Dealers and aftermarket responders first stated a willingness to contract their workforce in early 2024. That sentiment sustained among a small percentage of responders throughout the year, with the Q3 aftermarket percentage being the highest number we’ve recorded.
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Dealers, fortunately, are more optimistic about their workforces despite the softer market.
No dealer responders to our Q3 survey said they intend to reduce workforce, but 31% would like to expand. Recruiting new talent also is no longer the top concern for dealers. That has been replaced by economic/business conditions (63%) and the regulatory influence on the trucking industry (19%). Recruiting technicians was ranked as a top five concern for only half of dealer responders; recruiting non-technicians for only 25%.
On the topic of regulation, one dealer responder stated, “We cannot continue to go down these paths where the change does not have a business case to support it. Our industry has wasted billions of dollars on technologies that are not safe and are not desired by the customer. It ceases to become a free market society when regulatory agencies and a handful of states can dictate to entire nation and industry. The amount of resources and investments that have been forced are senseless. What other industry is dictated to by people who have no knowledge of the challenges and intricacies of the business than transportation and those who support it?”
Aftermarket sentiment around concerns were mostly similar. Business conditions ranked as the biggest concern for 74% of responders, with political influence on trucking (21%) a distant second. Hiring techs (59%) and non-techs (68%) remains a top-five concern but was not viewed as the No. 1 concern for any aftermarket responders.
TPS will conduct its 2024 fourth quarter MarketPulse survey in January and publish a brief synopsis of the data after it concludes.
Want to read more insights from our first 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].
