News & Views
By Mike Whalen
For all those looking at our publication for the first time, here is a brief explanation of who we are and our mission.
It is to produce a cross-market publication, and supporting website, that provides vocational work truck and equipment owners with information about technology, products and services that help make informed ‘buy or repair’ decisions that reduce life-cycle costs. Each issue will provide the truck and trailer systems professional with insight into on/off highway truck, truck equipment and trailer specifying, maintenance and cost reducing tips – plus new technology, products and educational resources.
I’m not quite sure of the actual numbers – but as Director of Marketing for a tier 1 component manufacturer for a number of years, I learned that the vocational / work truck population is by far the largest truck market segment in Canada.
When the parts and service business is dissected, the vocational work truck market is by far the leading segment. Not only do these trucks stay in service longer, they are also re-purposed as they get older. They are repaired, repowered or completely overhauled during their life. The vocational market environments are unusually hard on a truck – think construction, logging, aggregate, heavy loads, rough roads, etc. All these factors increase the parts and service value of each unit.
This has led to a highly competitive parts and service aftermarket. The question is who shares in the Canadian parts and service business?
Independent Aftermarket Parts Distributors (AMD) and OE Dealers (OED) share in the primary parts side while Independent Service Providers (ISP) and the OED share the parts installation and service work not performed by the fleet. Reports indicate a 60/40 split with the OED and ISP enjoying the larger share.
Over the years, to compete for a larger share of the aftermarket, many OE dealers have morphed into ‘parts and service distributors’ that also sell trucks. The OE dealer has also realized that, if they serviced their competitors’ trucks and built a relationship with the owner, they would be first in line to supply the replacement truck.
The challenge for all is access to all the parts and components required to look after all makes of trucks.
The ISP has the advantage. They usually have relationships with all OE dealers and AMD’s that will, collectively, provide all their needs.
But, how does the OE dealer and AMD plan for the parts necessary to support their service department, ISP customers or the fleet account’s need – and have the right part at the right time?
Welcome the private brand and parts consolidator.
The OEM now has a combination of direct ship, PDC programs – plus their own in-house branded parts consolidation to provide all-makes parts to their dealers. As well, a number of new independent parts consolidators offer a catalog of specific categories of service parts: cooling systems, drive lines, engine, fuel systems, body parts, etc.
These private label and parts consolidators serve the OE dealer and the Independent Parts Distributor allowing access to parts that may not be available from current suppliers.
Another advantage is that they provide a way to keep slow moving parts inventory to a minimum and to consolidate a mixed order of slow movers for prepaid freight. Plus, they eliminate the need to carry more than one manufacturer of a given service parts line. Filters are a prime example. As a past distributor, I recall carrying three filter lines to ensure mixed fleet coverage.
The parts consolidator also provides the parts manufacturer with a second channel of distribution to reach those that don’t have their line on a direct basis.
So, this is a good deal for all.
With the courier service we enjoy today next day delivery is usually not a problem for rush ‘unit down’ orders.
Who will win the future? Major ‘highway’ fleets will continue to gravitate to the OEM dealer network that can provide the maintenance connectivity and computer technology expertise. It’s the mixed vocational work truck fleets that will need all-makes support. I suggest the Independent Service Provider, particularly those with a national footprint, will play an important role and the ISP with both truck and off-road equipment expertise will become a prominent player.
The critical need of all in the vocational workm truck side is a source for the technical repair information, plus parts and components, necessary to manage the planned maintenance programs for many brands of trucks and equipment. This provides the argument for ISP consolidation and the growth of the parts consolidators.