October 1, 2019 3:15 PM, EDT

Navistar Strives to Strengthen Ties to Customers

Navistar service centerNavistar

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LISLE, Ill. — Service sells trucks, and better service sells more trucks, Navistar executives said during the company’s first investor day since 2015. The original equipment manufacturer is looking to expand its brick-and-mortar footprint as well as online presence to help accomplish this.

A sustainable customer relationship is based on more than offering just a low price for its trucks, and Navistar’s focus is on becoming customer-centric rather than product-centric, Navistar International Corp. Chairman and CEO Troy Clarke told financial analysts in mid-September.

Friedrich Baumann

Friedrich Baumann by Roger Gilroy/Transport Topics

That corporate refrain comes as industrywide truck orders have plunged over the past several months compared with a year earlier as freight demand slows and rates soften. Navistar forecast a continued industry slump in the first half of next year, then a recovery in orders.

Meanwhile, Clarke said, “We continue to invest in next-generation onboard devices which can enable additional services.”

Navistar’s OnCommand Connection telematics platform enables remote diagnostics of all makes of trucks and engines.

“And we are rapidly closing in on what we believe to be the most advanced predictive diagnostics tool in the industry for our customers to use,” he said.

The terabytes of real-time data from the trucks linked through OnCommand Connection has become an important part of the truck maker’s quality, product development and warranty process, Clarke said. That data also helps in stocking service parts closer to where they are actually needed, shortens delivery times and improves uptime.

The aftermarket is seen as key to helping Navistar increase revenue, and the company will be focusing on specific “parts baskets” and pricing for key customers and segments, among other initiatives, said Friedrich Baumann, president of aftersales — the truck and engine building subsidiary of the holding company.

Baumann assumed the newly created position in March after serving as senior vice president of aftermarket sales at Daimler Trucks North America.

As part of his job, Baumann will oversee Fleetrite, Navistar’s private label all-parts business, that turned 50 in 2019. It produced $500 million in revenue and had 13% annual growth for the past year, Baumann said. It has more than 100 product lines, including clutches, filtration, fluids “and any part that is pretty much common to all the vehicles” regardless of brand.

Navistar also plans dealer-managed Fleetrite stores that will cater to customers the company normally does not reach.

Navistar OnCommand

Navistar's OnCommand Connection remote diagnostics system. (Navistar)

“Quite frankly, they avoid OEM-branded dealerships because they perceive them as being too expensive for their needs,” Baumann said.

Five such stores were launched this year, and Navistar expects to have about 50 locations by 2023.

Fleetrite parts primarily are sold through independent service outlets.

At the same time, who doesn’t like ordering things online from their couch, Baumann asked during his presentation.

“We must become easier to do business with. We must think differently, leverage technology and utilize data and analytics,” he said.

Navistar expects 15,000 customers to be ordering parts online by 2022. Its RepairLink program, intended to assist them in that online experience, will launch this month, Baumann said. It will include a system for cross-referencing the parts, which it is developing in-house.

“Our goal is to cover all of our customers’ aftermarket needs through a seamless and simple digital experience,” he said.

Navistar also is looking to improve the speed of its parts distribution.

In August, a parts distribution center opened in Memphis, Tenn., that will allow the company to make next-day deliveries to 95% of its dealer locations if orders are placed by 11 p.m. Eastern time. FedEx Corp. will make those deliveries.

The Memphis location is the company’s ninth PDC in North America, he said, and more are planned.

Navistar’s goal is to complete 80% of service needs in its network within 24 hours, Baumann said. “The closer we can get to our customers, the quicker we can deliver parts over and over again.”

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