It’s always interesting to spend time with aftermarket suppliers and distributors and get their take on the truck parts and service business.
I did that late in January when I attended Heavy Duty Aftermarket Week in Las Vegas. One of the sessions, Battle of the Channels, featured both suppliers and fleets talking about trends, expectations and what will be needed to gain a fleet’s parts and service business in the future.
To set the stage, data from MacKay & Co. shows that dealers have 49% of the outsourced parts and service business, while independent repair garages have 19% and engine distributors 9%. OE dealers are gaining marketshare at the expense of independent shops. On the parts side, competition has expanded to include auto parts distributors and e-commerce.
Here are some of the trends the panel identified.
Expect more integration: Scott Davis, director of strategic partnerships and customer experience at Eaton, believes there will be deeper powertrain integration and vehicle systems integration. Lee Long, director of fleet services at Southeastern Freight Lines, says, “I believe in the next few years we will see replacement parts for an integrated drivetrain.” And according to Walt Sherbourne, vice president of marketing and partner, Dayton Parts, “Vertical integration is here, and it is not disrupting the aftermarket. Fleets still need parts when and where they need them.”
Technology will continue to be a challenge: According to Joe Mejaly, senior vice president and general manager, Denso, “The OEMs are not slowing down in developing technology. Independents need to be more entrepreneurial in order to catch up [to dealers].”
Training is even more important: Dwayne Haug, principal owner, Dwayne O. Haug Consulting LLC, said, “Complexity has added to the need for training.” He added, “We still have to have training and we are relying on other channels of repair like truck stops.” Doug Wolma, vice president and general manager of global aftermarket for Dana, said “suppliers are not shying away from training.” He also said he is seeing independents make investments in both diagnostics and training. And while Eaton’s Davis also sees a need for training, he said the type of training needs to change. “We need on-demand training or content relevant training directed to a specific problem.” He expects to see more “YouTube style training and videos.”
E-commerce will grow: According to Wolma, “E-commerce is a positive. It is not a threat. It is a solution to more easily get parts to the fleets. And you can run e-commerce through traditional suppliers. We are working on solutions without going direct [to the end user].”
Talk turned to who will be the winners in the battle for fleets’ business. Sherbourne said, “Whomever steps up to provide solutions will [get the business]. Companies who meet the challenges others ignore will come out ahead.”
Haug believes that fleets will continue to challenge parts and service suppliers. “Fleets have lots of competition and they can’t afford to have a truck down. If they are not competing for freight they are competing for drivers. The maintenance arm is an integral part of that fleet ,whether [that arm] is internal or outsourced.”
The session concluded with Stu MacKay, president of MacKay & Co., saying that it is not clear who is going to win and who is going to lose in the battle for fleets’ parts and service business. What is clear, according to Wolma, is that the service providers who are easy to do business with are the ones that will come out on top.