Updated:
9/1/2009 8:10:00 AM
Aftermarket Revenue to Fall by 10% This Year, Industry Analysts Estimate
By Frederick Kiel, Staff Reporter
This story appears in the Aug. 31 print edition of Transport Topics. Click here to subscribe today.
The heavy-duty aftermarket industry, which had passed through the previous two recessions relatively unscathed, has been hit hard this time, with one analyst saying revenue will be down 8% to 10% this year compared to 2008, which itself suffered a 4% drop from 2007.
“The aftermarket started to decline when the financial crisis hit last October and continued to fall through all of this year, though it has now stabilized,” Jeff Wallace, general manager of parts, sales and marketing for Daimler Trucks North America, told Transport Topics.
DTNA, a subsidiary of Germany-based truck maker Daimler AG, builds Freightliner and Western Star trucks, plus Detroit Diesel engines.
“Much of the decline was tied directly to the macroeconomic situation of both collapsing credit and sales, which was a global phenomenon,” Wallace added. “The current repair behavior and current macroeconomics have really distorted demand.”
He said that with freight tonnage going down, fleets responded by downsizing the number of trucks or parking unused ones.
“Fleets have been reluctant to spend money on repairs and have been cannibalizing vehicles for parts rather than buying them,” Wallace said.
Wallace estimated that the truck aftermarket had been a $15-billion-a-year industry in retail sales and service before the recession.
Stuart MacKay, president of MacKay & Co., Lombard, Ill., said it was the worst market in 20 years.
“The good news in the aftermarket is that it is not anywhere as bad as the new-truck market,” MacKay told TT. “In the past two recessions, the aftermarket didn’t experience a drop in revenue — just a flattening out — but for the first time in 20 years, we have seen a drop.”
MacKay & Co. is a research and consulting firm in trucking and other heavy equipment, which also focuses on the aftermarket.
Class 8 new truck sales in the United States have been down 33.3% through July, compared with the first seven months of 2008, according to WardsAuto.com. New truck sales fell 11.6% for the entire year of 2008, compared with 2007, which also was a down year, Ward’s said.
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