Aftermarket Update 2012

Denise Rondini September 18, 2012

The aftermarket is seeing some growth, but it is happening at a slow pace and economic and political uncertainty are keeping things from really taking off.

By Denise L. Rondini, Executive Editor


While everyone in the aftermarket will take today’s market conditions over those of just a few years ago, no one is jumping for joy over the current situation. Conditions in the U.S. economy, the economic situation in Europe and the upcoming elections are all casting a pall over the industry.

The year started out on a high note for many in the aftermarket, with distributors, dealers and repair garages seeing strong sales in the first quarter. However, many business owners saw sales fall off in the second quarter.

“It’s been spotty,” says Tom Stewart, president of Carolina Rim & Wheel. “We had good runs in certain things and then it would fall off. There just does not seem to be a lot of rhyme or reason for it.”

Many cite the unseasonably mild winter as one of the causes for the drop-off in sales.

“Those breakdowns that don’t happen, don’t repeat,” says Don Reimondo, CEO of HDA Truck Pride. “Cold temperatures, freezing roads, ice, sleet, they ruin our surfaces and they cause wrecks. Cold weather breaks things, and when you don’t have it, things don’t break. They are not repeatable so it has a profound impact on consumption.”

Walt Sherbourne, director, field sales, Meritor, Aftermarket, says, “The lack of a winter season not only impacted winter product sales, but it eliminated the spurt in spring brake season (shoes, hardware, slacks). Fleets were able to perform regular maintenance, which would normally have been held off in the winter.”

Overall, the market has seen growth, although not at the rate experienced in 2011, according to Terry Livingston, general manager, Aftermarket U.S and Canada for Meritor.

“We have noticed that growth is not spread evenly over all markets and vocations. We see some markets performing well — refuse and construction — and others that are sluggish — linehaul and pickup and delivery,” he says.

Stu MacKay, president of MacKay & Co., says, “The brightest geographic spots are where they are drilling for natural gas whether it is in North Dakota, Ohio, Pennsylvania or wherever. I think that probably is the strongest area of performance at this point simply because there is so much brand new economic activity and brand new truck activity.”

Additionally, since most aftermarket businesses cut costs during the recession, they have been able to see higher operating margins even if their sales have not gone up, according to Kumar Saha, industry analyst, automotive and transportation for Frost & Sullivan.

Balancing inventory in uncertain times is a challenge as well. “It is very difficult because you get runs on stuff and you are scrambling to get product,” Stewart says. “Then you get product in and sales fall off and you are sitting with product on your shelf. We crystal ball gaze as best we can and sometimes we are good and sometimes we are not so good so we run out of product or we look around and say ‘Who do I have so many of that?’”

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