Commercial Motor Vehicle Consulting's CV Parts Aftermarket Leading Indicator decreased 0.2% in November to 100.82 following 0.3% decrease in October. The downturn in PLI is moderating and appears to bottoming out as the slowing of fleet cyclical factors has abated and some factors, such as industrial production, have recently moderately accelerated.
In the near term, this will not have a large influence in parts aftermarket sales, since the commercial vehicle population and truck utilization remain relatively unchanged. The truck population is operating at relatively high utilization rates, so trucks are depreciating at normal rates, but vehicle demographic factors in general are a drag on a sustained upturn in parts aftermarket sales.
In 2013, U.S. Class 8 truck retail sales were approximately equal to replacement demand, so over the past three years U.S. Class 8 truck retail sales have been roughly equal to replacement demand volumes implying a stable truck population.
A stable truck population for an extended period of time implies parts aftermarket sales will be more closely correlated with parts life-cycles and truck sales cycles. For example, parts with short life-cycles, such as filters, sales will be relatively flat since the population is relatively stable, while parts with long life-cycles, such as engine overhaul kits, are expected to increase in 2014 as increasing number of trucks sold during the 2004 to 2006 strong truck sales period are coming in for major repairs/overhauls.
CMVC predicts parts with medium life-cycles, such as brake drum will remain relatively soft, since the population of trucks three-to-six years old will remain near the trough of the current cycle. The recovery in parts aftermarket sales for parts with medium life-cycles will be gradual due to the sluggish recovery in new truck sales during the economic recovery.
A stable truck population for an extended period of time implies greater differences in parts sales growth rates among parts groups differing by life-cycles – short, medium and long. In the past, truck sales patterns played less of a role in CV parts aftermarket sales since the truck population was trending upward implying over time an increasing number of trucks depreciating resulting in higher CV parts aftermarket sales across parts with differing life-cycles.