While truck owners and buyers have many different needs, uptime is the big thing that ties them all together, says Trey Mytty, president and CEO of Truck Center Companies and 2019 ATD/HDT Truck Dealer of the Year. “If their trucks aren’t rolling, they are not making money.”
“A big piece of uptime is technology and the transparency that goes with it, which allows the customer to know where the dealer is in the process of fixing a truck,” he adds, noting that technology in general has led to people wanting information faster. “We have a saying that we use often and that is, ‘Tell me more, tell me faster, and fix my truck right the first time.’ Basically customers want us to provide them with information they need so they can make an educated decision about how to handle a load,” he says.
Terry Minor, president and CEO of Cumberland International Trucks and Truck Dealer of the Year finalist, says he sees customer expectations increasing when it comes to communication, transparency, and faster service. However, he believes that “we are still in the infancy stages of getting fleets to agree to let go of their data so manufacturers and dealers can see it,” which would help speed the repair process and even help predict failures.
David Kriete, president and CEO of Kriete Group and one of this year’s nominees, says the complexity of today’s trucks plays into fleets’ quest for uptime. He believes dealer network continuity is essential if the OEMs are going to deliver on their uptime promises.
“There is a drive on the OE side to consolidate dealers from small, single-point operations into larger groups with multi-points,” Kriete says. “Our customers, specifically larger fleets that cover a lot of territory, really buy into that. They get a lot of benefit in the continuity of a solid consolidated network, including consistency and parts pricing.”
Of course, uptime isn’t the only thing on the minds of fleet owners and managers. Lack of availability of trucks is another thing that nominee Kim Mesfin, president of Affinity Truck Center, hears from customers. “They are trying to confirm when they can get their hands on the trucks they’ve ordered, and I think there are quite a few people unable to answer that question.”
Nominee John Nichols, CEO of Palmer Trucks, says his customers “are amazed at the business they are getting. They are busy and freight rates are pretty good. They always have driver issues, but overall they are a pretty happy bunch.”
He adds, “The concerns are, how long is this going to go on? But overall they are just saying, ‘let’s get on to the next load.’”
The challenge of future technology
Not only are fleets dealing with trucks that are technological wonders, but there also are disruptive technologies on the horizon that will affect both dealers and fleets.
When it comes to electric vehicles, Kriete says, “I don’t have many concerns, especially if there is some assurance from the networks that there is supply chain availability and reliability in terms of components that relate to a new powertrain.”
Mesfin believes that electric vehicles will come to California — the location of her dealerships — earlier than they will to the rest of the country. “Volvo is talking about three vehicles running here before the end of the year. Customers are open to [electric vehicles], and we are working with a fleet that is interested in them for its ice cream/dairy routes. They think it will be a wonderful thing for their inner city operations.”
Mytty adds, “I think the popularity and the reality of them will be in larger metropolitan areas and on the coasts and at ports. I do know from what we are seeing that the weight of the vehicles is still a challenge that has to be overcome, as well as changing the infrastructure. There is interest and intrigue, but I don’t know in the Midwest markets if there are any serious buyers at this point.”
Nichols, who says his dealership was one of the leader in compressed natural gas, believes battery electric vehicles have a place, but there are a lot of details to work out. “I don’t see them as a magic pill. I think there are going to be a lot of different solutions for fleets to choose from. We will embrace what makes sense for our customers, and we are going to be geared up for whatever comes along.”
Minor says his customers are aware of electric trucks but “see them as too far off. I think everybody thinks [electric vehicles] are going to come, especially in our school bus and city delivery applications.” However, he notes, there are challenges, such as the charging infrastructure and a limited supply of lithium for the batteries.
“From the dealer standpoint, we have a lot of conversations around what our business model will look like for some of these disruptive technologies.”
The other disruptive technology is autonomous vehicles.
“Customers are talking about autonomous trucks,” Mytty says. “It is an exciting technology, but an actual truck driving down the road without a person, is a long way away.”
Kriete says as with electric trucks, when it comes to autonomous trucks, “customers will want to see a return on investment, and they will want to make sure it is safe.”
Nichols says that although “we are getting close on the technology part,” he has concerns about what happens in the event of an accident. “Now if there is an accident, you either have a driver or someone who worked on the truck to take the blame. When you have an autonomous situation, who is going to take the blame? If I sold the truck or built the truck, will I be the one blamed? I think that is more of a challenge than the technology piece.”
Nominee Harry Moyer, president of Lowe & Moyer Garage, says more development is needed before autonomous trucks are a factor in the trucking industry. “All this new technology means we have to make sure our technicians are all trained so that we can keep up with everything that is going on.”
How truck specs are changing
When it comes to vehicle specs, the Dealer of the Year winner, finalist and nominees shared their thoughts on trends and developments. Moyer spoke for all when he said, “All trucks are going to have automated manual transmissions. Everybody wants them due to lack of drivers [with experience with standard transmissions]. Automatics are here to stay, and they help with fuel mileage as well.”
Safety is another big concern for fleets. According to Mytty, “about 70% of our customers are adopting advanced safety systems, which has doubled in the last five years. In fact, we are also now seeing that our vocational customers are interested in it as well.”
He adds, “I think as people have become more comfortable with the technology, it has transformed into spec’ing it on vehicles because the technology works and it saves lives.”
Nichols says he is encouraged by the number of customers that are spec’ing for safety. “There is hardly any pushback on safety-related items, and it’s more that customers are asking questions abut how effective the safety systems are vs. what they cost.”
For Kriete it is “an even split of us bringing safety solutions to our customers, and the other half saying ‘you don’t have a chance of bidding on our trucks this year unless these safety solutions are included on the trucks.’” He adds that in about 60% of the cases, there is “absolutely no questions asked, they have to have the full safety set.”
Minor’s team was going after fuel economy with the Cumberland C10, a dealer-spec’ed truck optimized for fuel economy — the truck has reached 10 mpg and up to 11.2 mpg in several instances — but it also includes safety systems. “After we put the truck in the customers’ hands and let them experience it, that is when we started to see acceptance of the safety systems.”
Despite fuel prices being relatively low, the nominees report that fuel economy is still important to fleets. Moyer says his customers are taking steps to improve fuel economy by investing in things such as trailer skirts, air fairings, and wide-base single tires, and encouraging drivers to use cruise control and watch their speed.
Kriete says fuel economy is still the biggest area of focus for customers when spec’ing trucks and making purchasing decisions. “In some cases they are spec’ing smaller cabs or more steeply sloped hoods, which are not necessarily the most ergonomic for the driver but are going to allow them to capture a lot more fuel economy.”
Mesfin says even though her customers “have their own means of fueling and counting what is good for them when it comes to fuel use, fuel economy is still a discussion point.”
Mytty believes part of the increase in spec’ing automated transmissions is that fuel “is still a hot spot. AMTs are a part of that because they take things out of the driver’s hands and let the engine and transmission work as efficiently as possible.”
Used trucks good now; troubling later
The white-hot nature of new truck orders and sales, which has pushed delivery dates out, has been a boon to the used truck business.
Minor says the used truck business “is strong and we see it staying strong for the next six to 12 months. Late model trucks remain the strongest.”
Kriete adds that used truck pricing is “amazingly strong right now,” but says that “the epic amount of new trucks entering the market, combined with fleets continuing to shorten their vehicles’ life cycle, means there is going to be a flood of similarly spec’d used trucks that will hit the market three to four years after the productive selling years. At some point fleets are going to flip their trucks, and the network is going to have to absorb all these trucks. It is going to be interesting to see what happens when that hits.”
Mytty says it’s currently difficult to find late model used trucks with less than 400,000 miles. “If we do find them, we have a long list of buyers for them, but I think that will change. There are going to be a lot of new trucks delivered in the next six months, so it will be interesting with the intake of trades coming into the market how trade values will be affected.”
He adds, “My guess is that the values of the 2015, 2016, and maybe even 2017 models that are coming back are going to be stretched because there are going to be so many of them.”
What’s ahead for 2019?
We concluded our conversations with the Dealer of the Year winner, finalist and nominees by asking them what their customers are predicting for 2019 and what they are seeing.
Mytty says, “I think sales are going to remain steady for next year. The fourth quarter could be interesting, and a lot of that is going to be based on the fact that we will have an election year coming up in 2020,” which can bring economic uncertainty.
Minor says, “Right now we do not see anything slowing down in 2019. And that is kind of the mindset from our customer base. We are expecting 2019 to be as good as 2018.”
Kriete explains that his customers are “pretty bullish on 2019.”
“There is strong anticipation for 2019, at least for the first half of the year,” he says. “I keep it limited to the first half of the year, unless a huge infrastructure bill passes, and that would be monstrous in terms of how many trucks are going to be needed.”
While Mesfin anticipates 2019 to be similar to 2018, she has some concerns for certain market segments her dealerships serve. “I do have dairy and cattle populations here that are struggling with some bankruptcies. We have our fingers crossed on the final adoption of the new NAFTA agreement to stabilize some of the pricing.”
Moyer’s customers “have high hopes in the economy, especially because foundries and steel mills are starting up.” He says he has a lot of trucks on order and “a lot of quotes going on, so we see good things moving forward.”
Nichols believes the first three-quarters of 2019 are going to be strong. “The political environment can change things, but my customers feel like 2019 will be another strong year. There might be a correction at the end of the year, but I have been telling folks that a 10% or 15% correction would still make it a good year in the history of our company.”