Although they aren’t the first dealership to do it, Steve Dupuis, COO of Summit Truck Group, believes dealers partnering with suppliers is likely to gain traction going forward.
Late last year, Summit announced a strategic partnership with Fontaine Fifth Wheel. Under the terms of the partnership, Fontaine will be the exclusive supplier of fifth wheels for all stock trucks ordered by Summit, and will also be the standard fifth wheel on retail sales, “unless the customer specified another brand,” Dupuis says.
The dealership’s management decided to “take a look at how we go to market and how we could leverage scale with Tier 1 vendors that share the same customer service philosophy and approach to business we do.”
He says the dealership decided to “strike a relationship that was a little more formal than the typical dealer Tier 1 vendor relationship.” Typically, Tier 1 suppliers have relationships with the truck OEMs, but not with the dealers themselves.
Dupuis says the dealership looked at how it could work with Fontaine to leverage economies of scale “to get better pricing, better warranty and some type of service agreement.”
Summit customers benefit from discounted prices with better service. “We have parts stocked at all our locations and have a preferred service agreement with Fontaine whereas if a fleet has a unit down, Fontaine will overnight parts, components and even a whole fifth wheel to us or the customer to get them up and running again.” Summit operates 27 full-service locations and five parts and service locations in eight states.
Basically the customers get “a better product, at a better price with better service,” Dupuis says. “Once we tell them the story, I think the vast majority of customers are going to see the benefit of these kinds of relationships.”
The benefit to Fontaine is more sales and increased market share. “It’s a win-win-win,” Dupuis says.
While the Fontaine partnership is the first one the dealership has with a Tier 1 supplier, it is not likely to be the last. Three to five additional partnerships are in the works, and Summit expects to make announcements about them later this year. “We want to partner with premiere vendors. We are not looking for cheap aftermarket solutions from lesser brands,” he says.
Dupuis, who began selling trucks in 1986, says that while dealerships have always had to adapt to change, he has never seen a time when there were so many potential changes coming to the market. In addition, the trend has been for dealers to get larger. He believes the industry is on the cusp of seeing more dealership mergers in the next three years. “OEMs have it on their radar screens, and we are about to enter a period of a lot of transfer of dealership ownership.”
The growth of fewer but larger dealership groups could be the catalyst for more of these dealer-vendor partnerships. As vendors realize that certain dealer groups control large portions of an OEM’s sales, Dupuis says, “vendors will be saying things like ‘This dealer controls 4,000 trucks and this dealer controls 10,000 trucks. I should talk to these guys.’”
Will fleets accept these types of relationships? Dupuis points out that in recent years, customers have adopted and accepted more vertical integration from OEMs. It could be that fleets will start seeing dealers as product experts as well and be accepting of these strategic partnership arrangements. Time will tell.