I have been pretty busy the past few weeks and hadn’t been paying close attention to the calendar, so I was a bit surprised that we rolled into October this weekend. Where did summer go? Actually it went by so fast I think that is actually a sign of a good summer. Although I do miss living in Southern California, where I didn’t really have to worry about enjoying the window of summer like we do in Chicago (as proof - my wife asked to turn the furnace on yesterday).
So we are in October – what do we know to this point on parts aftermarket performance so far this year and what is the outlook? At MacKay & Company we forecast the size, composition and outlook for the parts aftermarket for Class 6-8 trucks and trailers in U.S. (as well as many other related markets). We also track aftermarket performance with a number of indices and surveys to help monitor what’s happening.
So what are they telling us?
Component manufacturers (a select group of 19) tell us their parts sales are down, on average, 7% compared to last year. They represent a good portion of the aftermarket; we estimate 10%, but not a majority. Heavy duty distributor organizations (corporate companies and buying groups) tell us their parts sales (first six months) are down a bit over 1% compared to last year. Truck manufacturer’s parts sales (first six months) to their dealers down a little over 2%. A monthly survey of truck dealers and heavy duty distributors has their parts sales to end users down 3% & 2.5%, respectively, year-to-date through August.
So the theme in a word is negative, which is good if you are having a test for a life threating disease, but not so much if you make your living in the parts aftermarket. MacKay & Company’s aftermarket outlook for the year (2016) is up .8% (I pushed for .9%) compared to 2015. We do anticipate the second half of the year to outperform the first half of the year (the bar is set pretty low), in part based on a better trucking economy activity (what we call TEA®) so the end result may be closer to our forecast… stay tuned.
So you are up to date on what we know, so what are you going to do? Stay in bed tomorrow (if you have tomorrow off – that is allowed)? I hope not, this is not 2009 and while I shared a lot of negative numbers, they are not hugely negative and they are averages. You and your organization don’t have to be average.
Most of you reading this article were probably hired based on your above average skills and past performance of knowing and addressing the needs of your customers in the parts and service aftermarket (statistically this will not apply to all of you - sorry). The index information and performance averages I provided are interesting and a good reference to the parts aftermarket in general, but they don’t define what your businesses performance has to be in your local market.
Listen to your customers, evaluate and use the best tools you or your management provide (they are not all bad) and make sure you make the time to escape the day-to-day activities to ensure you and your team are on the track you want.
Truck Parts & Service October, 2016 Article by John Blodgett