Dealer Vs. Distributor: Panel Highlights Importance of Service Operations

OEM truck dealers and independent aftermarket distributors often have a love/hate relationship. So Stu MacKay, president of market research and consulting firm MacKay & Co., got a dealer and a distributor on stage at HDAW for a panel discussion
for the Heavy Duty Aftermarket Forum.

Terry Dotson is CEO/president of Worldwide Equipment Inc. in Kentucky and surrounding states, with 12 full-service dealerships, plus parts-only stores and other related businesses. He sells a $100 million a year in parts, from everyone to the guy who only buys used or salvaged parts, all the way up to running six maintenance facilities for major truckload fleet U.S. Xpress.

Dotson was a pioneer in the concept of OE dealers offering aftermarket parts. "In the early '80s when we saw changes beginning to happen in the industry, we went to the OE we went business with at the time and talked to them about it. They didn't listen very well." When Dotson took matters into his own hands and opened a warehouse operation, the OE threatened to cancel his franchise. Eventually Dotson allied himself with a different OE, and during the '80s the business saw the truck makers "wake up to the commodity parts business," he said.

Bill Ryan is CEO/owner of Point Spring and Driveshaft, with 10 locations in Pennsylvania and surrounding states, $6 million in parts inventory and 50 service bays. He, too, has tried to stay ahead of the curve, he said.

Dealers have always been the biggest competition, Ryan said, and it's only gotten worse. "In the last 10 years we have looked at them and said, 'We have to be the best in the supply chain.' Wherever we can improve, we will do it. A big thing is, we have been on the service side of the business since the inception. We bought our major competitor 10 or 12 years ago and converted them to service. So we're able to service what we sell. Service is absolutely critical going forward."

He has expanded his business from the original suspension business, adding brakes, wheels, driveline, transmission, auxiliary power and electrical business. "We pretty much decided to stay away from the engine business; we'll never be able to touch the truck dealer or the Cummins distributor on that."

In fact, Ryan describes his business pretty much as a "truck dealer without the trucks." He's looked at buying a truck dealership, but just hasn't found it appealing. "I'm just not used to having outsiders tell me how to run my business."

When asked about the competitive landscape, Ryan said his company's goal is not taking business away from dealers, but from the other independents and distributors who haven't stayed ahead of the curve, who don't provide service.

Dotson said they take an aggressive approach. "We take an approach to the business that our share of the business is all of it," he said. "If we go to a company like U.S. Xpress and we're getting their engine and transmission business, then we want to know where the battery business is going, and what does it take for us to get that business? We ask every customer, 'What have you always wanted a truck dealer to do for you that he's never done but you're willing to pay a fair price for?'"

One audience member asked Dotson to share what, in his opinion, is the biggest weakness of the independent distribution channel. Interestingly, he echoed Ryan's belief in the importance of service: "I don't think you're going to be able to enlarge your markets and compete without service," he said.

From the April/May 2010 issue of Heavy Duty Aftermarket Journal.