Equipment

It's All About the Customers: Dealer of the Year Nominees Speak Out

February 2017, TruckingInfo.com - Feature

by Denise Rondini, Aftermarket Editor - Also by this author

SHARING TOOLS        | Print Subscribe

These five truck dealers were nominated for the annual Truck Dealer of the Year Award presented by American Truck Dealers, Heavy Duty Trucking, and Procede Software.

The award honors excellence in business practices, industry leadership, and community service. Faculty members from Indiana University’s Kelley School of Business chose the winner and finalist.

Following what many dealers describe as the best year ever for truck sales, “business has definitely softened,” says Robert Nuss, president, Nuss Truck Group, Rochester, Minnesota and ATD/HDT Truck Dealer of the Year. “I have 40 plus years experience, but the reality is I have 40 one-year experiences,” he says, commenting on the fact that each year brings its own set of challenges to truck dealers as they try to meet changing customer needs.

In response to the slowdown in business, Kathryn “Katie” Hopkins, executive vice president and dealer principal, Truck Centers Inc., Troy, Illinois, and Truck Dealer of the Year finalist, says she is eliminating stock trucks at her dealerships and is focusing more on having demo trucks available for potential customers. “We have multiple demos so we can allow our customers to try a certain product, but we don’t have a huge number of stock trucks on the lot anymore.”

Nominee James Carello, president and dealer principal, Regional International Corp., Henrietta, New York, describes business as OK. “While it is not devastating, there is no robustness to it. We are just plodding along. [Fleets] just aren’t buying now, whether it is over utilization of equipment or the fact they can’t find drivers.”

Gary Nicholas, president and CEO, Nicholas-Wyoming Valley Truck Sales Inc., Luzerne, Pennsylvania, believes the recent presidential election made buyers nervous, “but now that it is over with, we can move forward.”

While there have been challenges for Gateway Truck & Refrigeration, headquartered in Collinsville, Illinois, Zach Wagner, chief operating officer, says business has been “pretty good.” He attributes that to fact that 50% of his business is on the refrigeration side and “that market is not off like the truck market.” Still he says, “It is a bit hard to get the sales. Whether we are talking about units or parts, things are a bit more competitive than they were last year.”

He adds that he has seen some consolidation in the customer base and “some drop-off in some large customers who bought in quantity last year but are not buying this year.”

Uptime still a priority

While new truck sales may be slow, fleets are continuing to put pressure on dealers when it comes to keeping their trucks on the road. In fact, according to Wagner, uptime is the number one issue.

“It is super critical for our dealership and the personnel associated with the business to understand the customer’s perspective.” For fleets, the cost of the needed part is not the most expensive piece of the repair, he says. “It is the loss of revenue from missed schedules or the driver timing out of hours of service that is most costly to the fleet.”

To meet the needs of his customers, Carello has five subcontractors who are designated to sell parts and perform service, including warranty work. “We looked at the geography of our area — western New York and northern Pennsylvania — and selected locations so that no customer has more than 35 miles to travel to get parts and service work done.” He adds that he makes sure those subcontractors have “the right tooling, the right technology, the right number of technicians and that they are updated on the latest technology.”

Nuss says that to meet the fleets’ demand for uptime, “the first thing you need to do as a dealer is have higher quality people with a high level of industry knowledge and be sure they are placed in the correct position.”

But more than that, Nuss says, his dealerships push “proactive repairs. In other words, we don’t want to be the highest paid fireman; we want to be the best fire prevention people.”

He uses this example to explain what he means. If you know a fan tensioner is going to go out at 150,000 miles, you need to replace it before that. You can’t wait for something to break. We need to look at trucks they way airplanes are looked at, he contends.

“We don’t want breakdowns along the road for our customers, so we teach them to recognize potential problems with their trucks so they can be taken care of before they become critical.”

Hopkins says the need “to provide superior customer service and uptime is a key driving factor” of her company’s culture. The dealership has made a strong commitment to a two-hour express assessment for every truck that comes into the shop. Repairs are tracked through a system that sends updates to the entire team involved in the repair. This is especially useful if parts need to be expedited from one location to another, she explains.

The dealership’s headquarters location in Troy, Illinois, is open 24 hours a day, 7 days a week. “Obviously it can be kind of an expensive endeavor, but that really helps us to be focused on moving trucks through the system as quickly as possible.” She describes the amount of business the shop sees on the weekends as tremendous. “Basically 31.5% of our business work comes into the shop between Friday and Sunday,” she says. “We track how quickly we get them on the road, and [currently] 81% of all trucks that come in Friday through Sunday go back on the road Monday morning.”

Nicholas says he stresses to his customers at the time they purchase trucks the importance of bringing them back in for maintenance on a regular basis and to monitor the trucks for developing problems. “A lot of medium-duty truck fleets purchase a truck, give it to the driver and send it on the road to make deliveries. They may not even see the truck again,” he explains.

“We have stressed to them that rather than waiting for a breakdown, they bring the truck to us at the first sign of a problem.” He adds, “We try to keep in touch with our customers to understand their needs and help them understand what is going on with their trucks. Price is one thing, but the personal touch is another, and it is of high importance.”

Nominees

James Carello

President and Dealer Principal

Regional International Corp.

Henrietta, New York

  • International Trucks
  • Capacity Trucks
  • Crane Carrier

Gary Nicholas

President and CEO

Nicholas-Wyoming Valley Truck Sales Inc.

Luzerne, Pennsylvania

  • Hino
  • Isuzu Commercial Trucks

Zach Wagner

Chief Operating Officer

Gateway Truck & Refrigeration

Collinsville, Illinois

  • Volvo Trucks North America
  • Hino

Shifts in spec’ing

In addition to the focus on uptime, the Truck Dealer of the Year nominees say they are seeing a trend toward fleets spec’ing for fuel efficiency and for driver comfort and convenience.

“Obviously, fuel efficiency is always going to be somewhat of a driver for our customers,” Hopkins says, “but we are seeing a shift toward driver experience. I think that is because of the driver shortage, so by offering a superior driver experience [a fleet] is able to differentiate itself.”

Carello concurs and says fleets are looking closely at the ergonomics of the trucks, in part because of the changing demographics of the truck driver population. The new crop of drivers is new to trucking, he explains. “Trucking is not something they got from their father or grandfather. They just decided they wanted to become a truck driver and they are used to sleeping in a comfortable bed.”

Wagner says his salespeople see a full gamut of customers, from those who are willing to take more risk to those who are conservative and will only adapt a new offering once the secondary market has embraced it.

He cited the example of automated manual transmissions. “While they absolutely did work — they did make the truck easier to drive — during the first trade cycle they actually reduced the value of the truck at the time of trade or resale.”

He adds that the problem corrected itself more quickly than lots of other technologies out there, for example 6x2 axle configurations and liftable axles. 

Another trend Carello sees among his customers, which are smaller fleets, is an investment in safety technology. “We are seeing lane departure systems and other types of safety systems as long as the cost isn’t too high. Customers are weighing cost against utilization,” he says.

Wagner too is seeing a migration to safety technology. “Any kind of driver awareness, whether it is something to prevent a rollover accident, a camera system, a radar type system, most manufacturers now offer that kind of thing, which gives the driver a little bit more awareness of the environment around the truck. Anything that makes the truck safer on the road has a little faster and a little better uptake than some of the other available technologies,” he says.

Coming back to fuel efficiency, Hopkins says, “The industry is moving toward downspeeding, and this will continue when trying to meet Phase 2 EPA requirements. Then there is obviously aerodynamics. That is never ending: new style fairings, more sloped hoods, rear axle fairings, trailer fairings. All that is to reduce drag and improve fuel efficiency.”

Regarding investments in new technologies, Wagner says, “If the technology allows the truck to go down the road and use less fuel, that makes it easier to justify the expense.” He adds, “If a fleet can save two-tenths or three-tenths (mpg), it really makes a big difference, particularly if fuel is $4 a gallon.”

GHG regs raise concerns

While admitting that he is not familiar with all the changes that will be occurring under the federal Greenhouse Gas Phase 2 Emissions standards, Nuss believes “it definitely will change our business. I think we will see a little bit of a pre-buy, especially when I hear numbers like another $10,000 to $20,000 per truck.”

Wagner is not sure whether there will be a pre-buy. “It is hard to know too far in advance what customers are going to do. Legislation is notoriously difficult to understand and we don’t know what manufacturers will be doing to meet the new regs.”

He adds, “Customers are a bit weary because there has been continual churn for the last decade along with the increasing cost of acquisition for equipment. At the end of the day, unless the technology very clearly results in reduced operating expenses, the cost of acquisition is going to get passed on, which means you and I are going to pay more for milk or dishwashers or whatever.”

Nicholas is not concerned about a pre-buy. “We sell to small one-, two- and three-truck users and they only buy what they actually need when they need it.”

Hopkins says fleets are paying attention to what is going on regarding GHG Phase 2. “The industry as a whole doesn’t want to see a repeat of what occurred with EPA ’07 where there was a poorly designed technology that was rushed to the market. The goal of the OEMs and dealers is to work better on this and make sure the technology is proven and well planned before it is introduced.”

Used trucks: It’s complicated

Describing the first half of the year as “pretty abysmal” when it comes to used trucks, Wagner has seen some pick up in the last several months. He adds that the slump earlier this year had more to do with “residual values going down than it did with the volume of the business.” Although he is quick to add that volume is down too.

Nuss says he saw used truck prices decline in the fourth quarter of 2015, and when that happens, “you don’t have the wholesale sources or outlets that you can move trucks to. There are some but they want to buy at today’s lower prices.” This means dealers have to reset their inventories, especially those who have been aggressive in inventory. “Some dealers have $10 million, $20 million, even $30 million in used trucks. If costs get adjusted 30% that is a significant amount of cash.”

He adds, “When we sell a new truck and take a truck in trade that we think is worth $50,000, it is like taking a counterfeit check, because we really don’t know what that truck it is going to be worth until it is on our lot ready to be sold.”

Nuss is planning to “right size” his dealership’s used truck inventory before the end of the fiscal year. “We certainly don’t want a truck on our books that we think is worth $50,000 but is actually worth $30,000 in the current market.” But he adds this adjustment does not mean the dealership is getting out of the used truck market.

However, the used truck market for medium-duty trucks seems to be holding its own, at least according to Nicholas. “Activity is very high and we have been holding the price,” he says. He believes that in part is due to the fact it may have been five to six years since a medium-duty customer purchased a new truck. “Back then the truck was $30,000 and today it is $50,000. Sticker shock is hitting them so they ask us what we have in the way of a good used truck.”

Wagner thinks dealers can be successful in used trucks, but “you have to match up the right truck with the right customer. And certainly having inventory is a big deal. That is why a lot of dealers got stuck this year. But if you want to be serious about the used truck market you have to show that you have inventory, so when a customer shows up they have something to look at.”

MOU: challenges and opportunities

In January, a memorandum of understanding between engine makers and the independent aftermarket regarding

access to repair information went into effect, but Hopkins says her dealership “has not seen a significant change in customer behavior as a result of the change.” She attributes that in part to her dealership’s hours of operation, which tend to be the longest in the area.

In addition, she says that all the OEMs have “very specific and regimented requirements for training. That is going to continue to be a challenge for the independent repair facility to get the same level of training as the dealership that has invested millions of dollars in training.” Truck Centers built a training center and employs four full-time trainers to keep its staff properly trained.

However, Hopkins sees independent garages as “great parts customers for us” and plans to continue selling them parts.

In Regional International’s territory, independents continue to do “brake and clutch jobs, but we have not seen them diving into the engine portion of the repair business,” Carello says. He says the high cost of keeping technicians certified to perform engine repair is a likely contributing factor. “Knowing what I spend, I don’t think the small shop can afford the technology, the computers, the software, the crazy amount of stuff you have to have to work on engines.”

And Carello thinks being able to keep customers coming to your dealership for service “is not rocket science. Customers want to be communicated with and they want to know how much something is going to cost upfront.”

Wagner welcomes the MOU, saying, “whether it is the first, second or third owner of a truck, customers who buy our products need as good an organization and as wide a choice of options as they can to get their truck back on the road.”

He adds, “while there is a potential impact to our bottom line, ultimately if we find a way to make it more convenient for our customers to do business with us but also work with [other repair] places where they are on a regular basis, we all win.”

Nuss describes the MOU as a non-event and says “it is basically long over due.” His dealerships work “with independent shops along with fleets and small customers to show them how to diagnose their own trucks.”

Advice to the new president

We spoke to the Dealer of the Year nominees prior to the election and asked them what advise they would give to the new president.

Nuss wants the new president and all the legislators “to understand the importance of the trucking industry. I have meet with congressmen multiple times asking them to totally remove the federal excise tax on trucks and replace it with something much simpler, and that would be to raise the fuel tax.”

Hopkins hopes the new president and legislators will “focus more on the small businesses that I think really drive America. I hope they listen more to small business to understand what a change in regulation means to small business and what the additional costs are to small business.”

Nicholas agrees with Hopkins and hopes that the new president and legislators will “get more information before they issue a regulation, especially those that concern drivers and equipment. They need to understand how a new law or change in regulation is going to impact the rest of the economy including trucking.”

Wagner would like to remind the new president that “as transportation goes, so goes the rest of the economy. Pay attention to our industry because it will tell you how things are really going out there.”

He adds, “Make sure that we are not just spending money for the sake of feeling better [when it comes to the environment]. Let’s make sure that we actually are better.”

The year ahead

Dealer of the Year nominees had mixed thoughts about what 2017 will look like.

“Customers are saying ‘we are going to be delaying everything for a little bit,’” Carello says. “Utilization has diminished to the point where they have spare trucks, so they are looking at what they have and getting rid of bad trucks.”

Nuss does not think business will be up next year, either. “My gut feeling is we are going to be in a little bit of a slowdown. Iron ore, coal and grain pricing is down and that is going to affect people’s financial ability to buy more equipment. Freight has to be higher than it is right now for fleets to purchase new trucks.”

Hopkins is more optimistic and expects to see a pick up in truck sales later in 2017. Wagner is upbeat as well. “My prediction right now, despite looking at other economic predictions, is that 2017 is going to be a pretty good year. I don’t know that it will be more than the number of units delivered this year, but I do know that for my dealership and my area of responsibility, my customers sound like they are going to buy more next year than they did this year.”

From a medium-duty perspective, Nicholas says that although customers have held off buying new trucks, “we have seen a lot of activity recently for them purchasing trucks next year.”

Winner: Robert Nuss

President

Nuss Truck Group

Rochester, Minnesota

  • Mack Trucks
  • Volvo Trucks North America
  • Isuzu Commercial Trucks
  • Volvo Construction Equipment

"I was born into trucking,” says Robert Nuss, adding that his father was a Mack Truck distributor in Rockford, Illinois, “and as soon as I was old enough to help out I was educated on the proper care and maintenance of all nature of vehicles.”

Except for a brief detour into the paint business, Nuss has been involved in the trucking industry his entire career. He joined his father’s business as parts manager and stayed there until an opportunity presented itself to manage a dealership in Rochester, Minnesota. In 1979, he took over as owner of the dealership and since then has added locations in Burnsville, East Bethel, Mankato, Proctor, Roseville and Sauk Rapids, Minnesota, and Eau Claire, Wisconsin.

One of the things Nuss attributes his success to is his economic philosophy. “When a recession comes along, our dealership elects not to participate.” He credits his diversified product lines with allowing him to “weather the storms that rolled through the national economy in recent years and positioned us to continue our steady growth trajectory.”

One way Nuss diversified was to get into the trailer business. “We hired trailer specific people who know trailers and have been able to sell to customers who don’t run a Mack or Volvo truck, but they all run trailers.” Trailer lines include Manac, Jet Trailers, X-L Specialized Trailers, Walker Stainless Milk Tanks, Midland Truck Bodies, Delta Truck Bodies and Talbert Trailers.

He adds that selling construction trailers “ has given us a nice lead into supporting and building a relationship with new customers.”

Nuss has always been an early adopter of technology. In the past, when the only way for a customer to check out a truck was to come to the dealership’s lot, if a customer called about a truck, someone from Nuss’ staff would make a quick videotape walkthrough of the vehicle and send it overnight to the customer.  While that technique seems antiquated given today’s easy accessibility to trucks via the internet, it was a successful sales tactic for its time.

Today the Nuss website provides “a state-of-the-art search tool that rapidly updates vehicle and parts inventory and allows a search for parts even if you only have a partial part number,” Nuss says.

He explains that a fleet can look into the dealership’s parts inventory at 4 a.m., order what they want and at 7 a.m. it will be ready for pickup.

But Nuss has done more than build his own dealer network; he has served on the Mack Dealer Council and was its chairman. “I have also testified in federal court on four occasions on behalf of Mack Trucks and several other times as a representative of the broader trucking industry,” he says. Most recently, Nuss was the only dealer to testify in a federal anti-trust action alleging collusion between the trucking industry and a transmission manufacturer.

Nuss has also given back to the communities his dealership services through involvement in groups such as the Rochester Area Foundation, Rochester Boys & Girls Club, Rochester Art Center, Seasons Hospice, St. Cloud State University, and Minnesota Private College Fund.

When asked to name one contribution to the community he is most proud of, Nuss quickly answers, “our employees. They are tremendous ambassadors for our brand in the various communities where we work. They are responsible for the solid foundation upon which this company is built, and we recognize that they are the key to our ongoing success.”

As are the next generation. Nuss has two sons in the business and has added the fourth generation to the dealership team with a granddaughter who currently works in the billing department at the Rochester location.

Finalist: Kathryn (Katie) Hopkins

Executive VP and Dealer Principal

Truck Centers Inc.

Troy, Illinois

  • Freightliner
  • Western Star
  • Sprinter
  • Fuso
  • Kalmar/Ottawa

"Our focus is to provide the greatest customer experience possible and to do whatever it takes to make a good connection with the customers,” says Kathryn (Katie) Hopkins.

That commitment has taken many forms. Significant investments have been made in facilities and personnel. Truck Centers’ headquarters location offers service 24 hours a day. That puts added pressure on the dealership to have enough technicians to meet customer demand. Hopkins says they now recruit at the high school level, at local military bases, and at traditional technical schools. The company has even created its own training program.

The dealership also invested in a 24,000-square-foot training center and employs four trainers. “For instructor-led classes, class size is limited to make it as hands-on as possible.”

In response to customer needs, Truck Centers has parts stocked in three customer facilities along with parts specialists. At two locations Truck Center technicians work on-site maintaining and repairing customers’ vehicles.

Hopkins has also made a commitment to make the nine — soon to be 10 — dealership locations greener. “Some of this is driven by not only wanting to help the environment out, but also gains and payback for us,” she says. Solar panels were installed in the St. Louis location and T5 lighting at other locations. “For our new facility in Effingham, Illinois, it is a little easier to incorporate green initiatives because we are building from the ground up. We are doing things like geothermal, more solar and obvious things like T5 lighting.”

Hopkins has also given back to the industry, serving as the first chairperson of American Truck Dealers’ NextGen committee. “The vision for the group was professional development and advancement of truck dealers and managers of the future.” She has also been a member of various other trucking industry associations.

Truck Centers has been actively involved in serving local communities. “An early life lesson for me was the virtue of generosity,” she says. Organizations the dealership has been involved with include Gene Slays Boys & Girls Club of St. Louis, St. Louis Children’s Hospital, and Ranken-Jordan Pediatric Bridge Hospital. Dealership employees have also participated in canned food drives for Operation Food Search and an Angel Tree program with Home Instead Home Care.

Comment On This Story

Name:  
Email:  
Comment: (Maximum 2000 characters)  
Leave this field empty:
* Please note that every comment is moderated.

Newsletter

We offer e-newsletters that deliver targeted news and information for the entire fleet industry.

GotQuestions?

sponsored by

ELDs and Telematics

Scott Sutarik from Geotab will answer your questions and challenges

View All

GotQuestions?

Sleeper Cab Power

Steve Carlson from Xantrex will answer your questions and challenges

View All