Opportunity for fleet service contracts growing

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Dealers and independent service providers trying to sell their services to fleet owners may soon be met with more open doors than ever before.

John Blodgett, of MacKay & Company, says a recent company survey showed 75 percent of all fleet maintenance was performed in-house in 2011, but that is expected to drop to 69 percent by the year 2016.

“I think what we’re seeing is a lot of fleets asking ‘What is our primary business?,'” he says. “‘ Is it fixing all these vehicles and keeping the vehicles running, or is it in transport?'”

A recent MacKay survey revealed that 82 percent of responding fleets wanted to outsource more of their service.
“Fleets consistently tell us they want to outsource more work, but we’ve not seen that shift yet,” he says.

According to the survey, there are currently 2.8 million Class 8 vehicles on the road, which equates to 293 million hours of service labor opportunity. An additional 84 million hours is available in trailer work.

Still, fleets own the lion’s share of this business, performing a whopping 91 percent of all preventive maintenance themselves.
“The less complicated and less intricate work, the fleets will just do themselves,” Blodgett says, adding the survey revealed that fleets preferred in-house maintenance well above the 75 percent average on electrical work, air brakes, wheels and bearings and steering and suspension work.

When fleets do look to farm out more complex work, they favor dealerships. According to the survey, dealers perform 18 percent of outsourced engine overhauls, 13 percent of paint and body work and  13 percent of fleet’s engine external component work.
Independent garages see a slightly smaller slice of the pie, nabbing 11 percent of outsourced engine work, 10 percent drive train work and 9 percent air brake work.

The independents, Blodgett says, have found a strong market with often smaller fleets.

“Independents tend to have stronger relationship with fleets with used vehicles,” he says.

The survey also revealed proximity was a major factor in how fleets chose maintenance providers, citing an engine overhaul as the only service fleet owners said they would drive more than 35 minutes to receive. Respondents said 38 minutes was the limit. Paint and body services was a close second at 35 minutes exactly.

If MacKay’s survey holds true, 2016 could be a robust year for service providers, as the number of available service labor hours is expected to soar to 527 million in Classes 6-8, up from 495 million in 2011.

That increase represents a boost of 25-30 percent for dealers and independent garages.

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