The U.S. commercial vehicle aftermarket is $53.1 billion dollars, according to Dave Fulghum, vice president, MacKay & Co. This figure includes, light-, medium- and heavy-duty trucks as well as construction and agricultural equipment.
Speaking before distributors at Heavy Duty Aftermarket Week, Fulghum talked about the size of the aftermarket, where service work is being performed and where parts are purchased.
In 2006, truck dealers captured 43 percent of aftermarket parts sales, while heavy-duty distributors took 26 percent and independent garages, 13 percent.
According to Fulghum, dealers are not growing their parts and service business, distributors are losing share points and independent garages have more than doubled their share of the business in the last 10 years.
When looking at who specifies the brand of part purchased, he found that more often than not, the truck dealer decides whose brand goes on the truck. Less than a quarter of customers who purchase parts from distributors specify brand, and 11 percent of customers specify brand when purchasing from a repair garage.
The service labor market, according to MacKay, was 484 million labor hours in 2007. Thirty eight percent of that was in preventive maintenance and another 22 percent was in paint and body work. According to Fulghum, fleets are looking to outsource more of their service work. Sixty four percent of survey respondents indicated they would like to outsource their engine overhauls, for example. Some of the reasons cited for the desire to outsource more work include lack of capacity, cost and the technician shortage.
Stu MacKay, president of MacKay and Co., talked next about the opportunities available for distributors in the aftermarket. According to MacKay, there are 27 million Class 8 vehicles in use, 1.7 million Class 6 and 7 trucks and 3.6 million trailers. This translates into a $15.6 billion aftermarket at the retail level.
In addition, 1.6 million trucks are in the hands of the first vehicle owner, while 1.1 million are in the hands of the second or third owner. Used trucks are a $6.9 billion aftermarket opportunity that distributors can take advantage of. Dealers lose 10 share points of the parts and service business between the first and second owner of the vehicle.
By 2011, MacKay predicts there will be 1.7 million trucks in the hands of first owners and another 1.3 million owned by subsequent buyers. By 2016, those numbers could grow to 2 million vehicles being operated by the first owner and 1.6 in the hands of second or third owners.
As a result, MacKay see the potential size of the aftermarket hitting $20.3 billion, measured in today’s dollar.
MacKay asked distributors what things they were most concerned about. Almost 40 percent indicated the economy was a major cause of concern along with things like oil, business operations and personnel.
MacKay suggested that other issues distributors should be aware of include proprietary technology and components, distributor consolidation, over distribution and what he called “white box” products.
Today, according to MacKay, Freightliner and Sterling have 67 percent proprietary power on their vehicles, Volvo has 63 percent, International claims 22 percent, but the introduction of its own big bore engine this year will raise that number.
MacKay says, “This is going to give dealers a bigger edge,” and he predicted that by 2016, truck dealers could have 50 percent share of the aftermarket.