With the growth of all-makes (often referred to as private label or value line) parts programs, fleets have more choices than ever for fulfilling their parts needs. But do these programs offer real choices or just muddy the parts purchasing landscape?
All-makes programs aren’t new, although there’s been a proliferation of them in recent years. For instance, Navistar’s Fleetrite line has been around for 42 years, but it has recently been re-energized, according to Michael Cancelliere, senior vice president and general manager of North America Parts at Navistar.
MacKay & Co. recently asked fleets about value line brands and found various levels of recognition for those brands. For example, brands such as Fleetrite, Euclid and Alliance had higher recognition than others such as Road Choice, TRP and Rig Tough.
“Fleets who recognize the brands are using them,” says John Blodgett, MacKay’s vice president of sales and marketing. Usage percentages were as high at 80% for some of the more established brands.
The 556 fleets that participated in the study take into consideration a variety of factors when choosing value line products.
“While the age of the vehicle is important in the fleet’s decision,” Blodgett says, “it is really more about where the vehicle is in its life cycle for that particular customer. If a fleet that turns its trucks every five to six years only has one year left on that vehicle and knows when it goes to resell the vehicle it isn’t going to get any more money for the truck because it has a particular brand widget on it, the fleet is more likely to consider a value line product.”
OEMs aim for bigger piece of parts pie
The fact that fleets are holding onto their trucks longer is one explanation for the growth of OEM all-makes programs.
“It used to be that major fleets turned their trucks in three or four years,” says Dan Bambrick, private brand manager for Road Choice. “That has changed over the last few years, and now fleets are keeping trucks for as long as eight years. That means there is more opportunity to sell parts that may not be genuine OEM parts.”
One of the advantages of an all-makes program, according to Bambrick, is it provides mixed fleets with a one-stop shop for their parts needs.
Being one of the later entrants into the all-makes parts market, Road Choice avoided the mistakes of some of the earlier entrants, Bambrick says.
“The Road Choice brand is not what a lot of people refer to as a white box program where you have a cheap part, put it in a box, slap a label on it and try to sell it. There is more to our program,” he says. “The parts are good quality parts that are value priced over premium products and typically come with a one-year warranty, although some have extended warranties.”
Bambrick says Road Choice (which is owned by Mack) continues to build its product portfolio. “We are looking for more maintenance-type products like batteries. And we plan to introduce fan belts, wheel seals and bearings, radiators and brake shoes soon.”
Fleetrite is growing its product line as well, and according to Navistar's Cancelliere, in 2014 alone the company has added 20 new product lines, with another 25 planned for inclusion in 2015.
“The real growth in the parts business is to reach customers who don’t run our trucks or buses. They all have batteries. They all use fluids. They all have HVAC systems. They all have wheel ends.”
The Fleetrite line is focused on what Cancelliere calls highly used products. “We asked ourselves why fleets weren’t buying these products from us — oil, coolants, DEF — and the answer was because we didn’t offer them. But by offering these types of products we position ourselves to get a greater share of the addressable all-makes parts on a truck.”
While he acknowledges that there are gaps in the Fleetrite, line especially in the driveline and engine components arenas, “we feel good about what we’ve done in the wheel-end area in rounding out the product offering.”
That achievement was aided in part by the launch and subsequent folding of Navistar’s PartSmart product line, which was started in 2009 and was offered through mid-2013. "Navistar learned from the PartSmart experience how to properly execute a private label go-to-market strategy,” Cancelliere explains.
“One of the things we learned from PartSmart was that if you’re going to offer a private label product, you need to have the breadth and depth in the line [the PartSmart line did not offer this]. If a customer wants to do a brake job you want to make sure they can buy all the components they need to complete that brake job from your value line product,” he says.
Those value line products typically can save customers 10% to15% with equivalent functionality to OEM and branded product lines, Cancelliere says. “Customers are looking for value. They are looking for ways to make their money go further. But they also want quality. We want to have an offering that meets OE specifications yet also offers customer a greater value at a lower price point. We did not want to sacrifice quality, because anybody can sell anything for cheap.”
Ray Addison, manager of aftermarket marketing communications for Daimler Trucks North America, creator of the private label Alliance Truck Parts, agrees that quality is key. “In the bewildering array of aftermarket parts, the source and quality of what comes out of the box can mean a significant difference in performance and durability.”
He adds, “When a truck is down, it’s costing the owner more than just the money to repair it.” Alliance, formed in 1998, focuses on frequent-replacement parts that drivers need to keep their trucks in service. “Fleet owners know that lower quality parts have shortened lifespan and therefore require frequent replacement.”
Do you know what you are getting?
Many in the independent aftermarket believe that private label programs are not necessarily good for fleets.
“We see many instances in these programs where they represent a part as being the same as [a branded part] but they are not,” says Steve Crowley, president of Vipar Heavy Duty. “Because it is a private label, the product in that box can change at anytime.”
What this means is fleets may not know what to expect in terms of performance or life cycle. “They may not even know if the part is suitable for what they are trying to do,” he says.
Crowley believes the Great Recession caused a lot of fleets to depart from their standard operating procedures “and do things they normally wouldn’t do looking for ways to lower their operational costs.” However, he currently is seeing “a pretty hard rush back to known brands.” In fact, many fleets are telling Vipar Heavy Duty distributors “we do not want substitutions on our parts orders. And we would consider changing sources if you start making substitutions or telling us it is the same as.”
Crowley acknowledges that in some situations fleets may be drawn to private label parts. “If a fleet is trading in a bunch of tractors and has to replace brakes before the trade, they are going to look for an economy brake. They are suitable for that tractor, but if the fleet is not going to be running that truck for another three years, it might choose a different product than the fleet or operator who has to make a living with it tomorrow.”
His advice to fleet maintenance managers is to make sure they know the actual source of product that is in the private label box.
“Make sure you know what you are buying. Make sure you are buying from what you know is a trusted source. Make sure you get all your questions about the part answered before you install it.”
He adds, “I don’t care what you save on a part, that savings is gone if the part caused downtime for the driver, caused a CSA violation or just caused the truck to go out of service early.”
Tina Alread, director of sales and marketing at HDA Truck Pride, reminds fleets of the old adage, “quality, price, availability; pick two because you can’t have all three.” She encourages fleet managers to ask themselves “are you more concerned about the risk, the quality, the price or vehicle downtime.”
She adds, “I know fleets are always looking for ways to save money. Their fuel costs and tire costs have done nothing but go up so they try to save money somewhere else. But to save a little money, is it worth the risk of the product not performing to expectations?
“I don’t think it is worth it. But fleets need to do a risk-cost-benefit analysis and figure it out for themselves when deciding if they want to go the private label route.”
Bill Wade, managing partner, Wade & Partners, stressed the importance of the fleet’s relationship with its supplier in the parts buying decision, “I think more and more people are reluctant to give up an extra five here or five there. As a friend of mine says, ‘It is easy to find products at 20 off, but what happens when you’ve got a truck down on a Saturday night? Try and find the guy who sold you the part at that price.’”
He says fleets are looking for real value from the parts they buy and the suppliers they buy them from. “Real value is a product of a quality part, quality service and a reasonable price. Fool’s value is just dependent on the price.”