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Analyst: The State of the Heavy-Duty Aftermarket

We've just been through a brutal couple of years; 2008 and 2009 weren't kind to trucking or its suppliers. Trucking activity was down an estimated 15 percent during that period, and that took a lot of industry-related activity down with it. Fewer trucks ran fewer miles, so they required fewer repairs. The aging schedule of existing equipment changed too, and that will have some downstream implications. Where does that leave heavy-duty aftermarket parts and service suppliers

Jim Park
Jim ParkFormer HDT Equipment Editor
Read Jim's Posts
September 29, 2010
Analyst: The State of the Heavy-Duty Aftermarket

 

3 min to read


We've just been through a brutal couple of years; 2008 and 2009 weren't kind to trucking or its suppliers. Trucking activity was down an estimated 15 percent during that period, and that took a lot of industry-related activity down with it. Fewer trucks ran fewer miles, so they required fewer repairs. The aging schedule of existing equipment changed too, and that will have some downstream implications.

Where does that leave heavy-duty aftermarket parts and service suppliers?

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John Blodgett, a trucking industry analyst specializing in on-highway vehicles and related components with Chicago-based McKay and Co., says aftermarket sales were down 8-9 percent based on combinations of the above factors.

"We saw things we had never seen before or had not seen in a long time. The quantity of parts trucks was at levels we hadn't seen in a while. We saw a lot of un-used or under-utilized assets. Used truck prices fell to extremely low levels. We saw parts cannibalization, that is, fleets pulling parts off of parked trucks to use on working trucks," he said. "Those are all negatives for parts suppliers."

Speaking at The Technology and Maintenance Council's fall meeting in Raleigh, N.C., earlier this month, Blodgett noted that 2010 is pointing in a positive direction, but he cautioned that we'll see more dips between now and 2014.

"Our aftermarket index -- that's 12 components manufacturers who provide us with their monthly sales numbers -- saw several positive months this year. Overall they were up 18-19 percent YTD compared to last year," he said. "But a number of factors are going to slow the aftermarket recovery over the next four years."

Those factors include:

* Fewer in-service vehicles, and those tend to be newer vehicles requiring fewer repairs.

* Component durability has continued to improve, so they'll last longer.

* Generally, the fleet is getting older, but trucks have fewer miles on them. They may remain in service a year or two longer than normal.

* Better asset management will mean fewer trailers in service, but they'll be used more efficiently. Average annual trailer miles will go up.

Looking forward, Blodgett sees 2010 being up 8 or 9 percent, and slightly better than that for 2011, but he warns of a pending drop off between 2012 and 2014.

"Fleets have not added a lot of trucks since 2007, so when those trucks start coming up for their first major service activity, there just won't be as many of them as we've seen in previous years and trade cycles," he cautions. "This isn't permanent, though. If we return to normal beyond that, it won't take too many customers asking for a part that had been dropped from inventory to make distributors see that it's time to start ramping up again."

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