What do you think are the key overriding factors weighing on the truck aftermarket?
Here are the top dynamics, according to Kumar Saha, industry analyst with consulting firm Frost & Sullivan’s Automotive & Transportation practice:
- The lingering economic uncertainty remains a drag, continuing to raise the average age of vehicles.
- With businesses still slow to grow, and no clear end in sight of the depressed economic climate, fleets and owner operators are still delaying the purchase of new vehicles, often preferring to repair and refurbish their existing trucks.
“These trucks will need more frequent maintenance and major repairs and rebuilds,” Saha noted, “thus increasing revenue opportunities for parts manufacturers, distributors and service providers.”
- Budget restraints are forcing smaller fleets and those operated by the government to either delay major repairs or outsource their maintenance work to reduce their operation costs.
- The growing complexity of components is also a major factor in the outsourcing trend for smaller fleets whose technicians often do not possess the capabilities to work with advanced technologies, while government fleets, which are typically urban, find it more economically viable to outsource their work to dedicated service specialists.
- Government regulations: EPA 2010 engines, the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis (CSA) program and the new stopping distance regulations.
- Technological advancement - driven not just by regulations but by ROI considerations as well. The correct diagnosis and repair of these technologies require more training and advanced tools, thus driving up cost of operating repair facilities.
- The competitive environment within the distribution and service channels.
The original equipment service channel (dealerships) have made considerable gains in the heavy duty segment thanks to competitive pricing, quicker turnaround times and increasing verticalization of components, said Saha. “Some smaller participants may be disappearing, but increasing consolidation through takeovers and parts networks are leveling the playing field for the heavy duty specialist independents.”
Saha provided this information in his market analysis, North American Aftermarket Channel Outlook, presented at the Heavy Duty Dialogue (HDD) ’12, the theme of which was: The Global Commercial Vehicle Industry.
HDD is a business conference for executives in the global and domestic on-and-off highway, heavy duty and commercial vehicle industries.
The conference takes place the day prior to the annual Heavy Duty Aftermarket Week (HDAW) - the largest North American gathering of the independent heavy duty industry, held each January in Las Vegas.