Independent garages gaining market share in used-truck repairs
In the aftermarket, truck dealers have a high market share of the repair work performed for owners of new trucks, primarily because warranty coverage helps dealers maintain their relationships with owners after they buy new trucks.
When it comes to repairs for used trucks, however, the FLEET OWNER Aftermarket Monitor shows an increase in work performed by independent garages and a decline in repair work performed by truck dealers. Independent garages gain market share as a repair source for used trucks because warranty periods have probably expired and used-truck owners may not have relationships with the dealers.
Used vehicles can be purchased from a number of sources, including independent multi-location used-truck distributors (e.g., Arrow Truck Sales, Kansas City, Mo.), fleets, leasing companies, OEM dedicated used-truck outlets, auctions, and OEM truck dealers. Since many used trucks are not purchased from dealers, the dealers don't have that formal relationship to build on, which means they must expend resources if they want to establish relationships with used-truck owners.
Demographic factors in the Class 8 truck population suggest that there will be a large increase in repair volumes performed by independent garages over the next several years. The number of trucks in this class that are between six and ten years old increased from about 468,000 in 1992 to approximately 503,000 units in 1997. These numbers indicate that the Class 8 truck population in this age category expanded at a compounded average annual growth rate of 1.5%, or by nearly 7.5% between 1992 and 1997.
The Class 8 truck population between six and ten years old is expected to increase to 718,000 in 2002. This means a compounded average annual growth rate of 7.4%, or nearly 43% between 1997 and 2002. Since trucks in this segment are likely to undergo major repairs to either the engine, drive axle, or transmission, they have a large impact on the aftermarket.
In addition, the aftermarket is undergoing a large number of structural changes that will impact where trucks are repaired. Since OEMs are passing along warranties to second truck owners, truck dealers are more likely to form closer ties with owners of used trucks.
OEMs are also trying to increase their market share of used-truck sales by expanding the number of dedicated used-truck outlets they have. When used trucks are purchased from OEM dedicated used-truck outlets, dealers have the opportunity to build relationships with the new owners, particularly if vehicles are still under warranty.
For their part, leasing companies are trying to gain share in the aftermarket by providing service contracts to fleets that own their vehicles. More and more fleets are outsourcing repairs that were once previously performed in-house.
The FLEET OWNER Aftermarket Monitor measures behavioral changes taking place within the aftermarket by major component group. Since each group will react differently to the structural changes discussed in this article, the "Aftermarket Monitor" will serve as a scorecard by which to measure the success of the various repair-source strategies.
The Aftermarket Monitor divides components into 15 major groups and sends out more than 4,000 questionnaires each month to commercial vehicle operators. Parts categories covered are diesel engines; gas engines; electrical and lights; air brakes, wheel seals and bearings; hydraulic brakes, wheel seals and bearings; manual transmissions and clutches; automatic transmissions; drive axles, universal joints and drivelines, and PTO drives; exhaust components and engine cooling systems; front suspension and shock absorbers; rear suspensions and springs; engine oil and filtration systems; tires; electronics, wheels and fifth wheels; seats, mirrors, tanks, and leak detection equipment; and paint.
For more information on FLEET OWNER's Aftermarket Monitor, call Chris Brady at Martin Labbe Assoc., 904-672-4413.
The following individuals recently received prizes for participating in last month's survey: James Causa, Greenview Products, Miami, Fla.; Ray Matney, Town of Rural Retreat, Rural Retreat, Va.; and Larry Young, Frank Joy Co., Bladensburg, Md.
[Ed. Note: To view charts mentioned in story see page 105 of FLEET OWNER's December 1998 issue.]