July 19, 2012
Remember that medium-duty truck owners have special needs and you will be successful in this market segment.
By Denise L. Rondini, Executive Editor
The market for medium-duty trucks is up 20 percent from last year, according to Todd Bloom, president and CEO of Mitsubishi Truck of North America, who quickly adds, “and last year was a pretty good market as well.”
Much of the growth in new medium-duty trucks is coming from the lease/rental market, Bloom says. “We have seen about 40 percent of registrations now in Class 4 going to the lease/rental business. This shows recovery, but also that the overall market is still a little hesitant to go crashing forward.
Bloom says he looks to consumer confidence as a way to gauge the medium-duty market. “Consumer confidence was going higher for a while, but as you know over the last five months consumer confidence has declined, When consumer confidence is up, our kinds of trucks tend to do better because people go out to dinner and our trucks tend to distribute food and other items that are purchased by consumers.”
The last several years also have brought changes to the vehicles themselves. Starting in 2008, medium-duty trucks faced emissions reduction regulations, which have complicated things for medium-duty truck buyers who, according to Bloom, typically do not like trucks.
“As a result the truck dealer has got to think about how he can keep the front of the truck out of the minds of his customer,” Bloom says. However the new emissions requirements mean medium-duty truck owners need to be educated about selective catalytic reduction. “It is getting harder and harder for a medium-duty truck customer to just get into truck and go,” he adds.
“Therefore it is important for the truck dealer to teach his salespeople how to properly deliver a truck, how to take care of the customer because the customer does not want to bother thinking about his truck.”
At the time of the sale, the customer must have confidence that the new systems on today’s medium-duty trucks will work as well as confidence that he can operate it. Make sure you have the customer in the truck best suited for his needs.
Bloom says, “Don’t put him in the wrong truck and it is more important than ever to hold his hand and to take care of him whether it is through scheduled maintenance or just following up and making sure the service intervals are being maintained.”
Bloom cautions dealers to remember that upfitted a medium-duty truck can cost $50,000 to $60,000 and customers who are making that kind of an investment have an expectation that they will be taken care of properly.
One way of taking proper care of the medium-duty customer is to be aware of his servicing needs. A typical medium-duty customer using his vehicles from 4 a.m or 5 a.m. until 2 p.m. or 3 p.m. “It is important for dealers to understand their habits and attune their service business to that customer.”
Bloom is famous for his banana analogy when it comes to medium-duty trucks. “Every morning the medium-duty truck owner goes and picks up banana and delivers them 100 miles away, and the next day he does the same thing. The day he breaks down, he loses his entire load of bananas, which is his business,” he says.
“The job of the dealer is to recognize that it is all about banana,” Bloom says. “It is all about the need to keep the truck doing the job it was meant to do. So the dealer has to think in terms of service hours that are in line with his customer. He has to have parts readily available and have a team of people who know how to react to the medium-duty customer and recognize that he is different than the heavy-duty one.”
Bloom adds, “The dealer who ‘gets it’ is the one who establishes a medium-duty business distinct from his heavy- or light-duty business. The needs of the medium-duty customer are different from those of both the light- and heavy-duty customer.”
Establishing relationships is key to success with medium-duty sales. “There is little spec’ing involved with a medium-duty truck,” Bloom says. “The majority of the work for a medium-duty salesperson does not stop at the point of sale. I know medium-duty salespeople who, when a customer’s truck is in for service, are advocating on behalf of the customer about where the truck is in the repair process and what is happening with it.”
They also will check back with the customer once the repair is complete to see how the vehicle is operating. “It is unusual to find heavy-duty guys who also are excellent medium-duty guys. Generally speaking, a guy who is only focused on medium-duty does better with it.”
Another area where medium-duty dealers and their salespeople need to pay attention to is alternative fuels. “There is a tremendous amount of interest in this now not just from municipalities but from other businesses,” Bloom says. “I think this is going to continue to be very important. I think the possibility of hybrid-electric vehicles is good. I think HEV technology is so close to breaking even that I think in the next couple of years we may see a real break through in HEV technology for medium-duty trucks.”
A Look At Medim-Duty Used Truck Market
According to ATD/NADA, used Class 3-4 cabovers available in the market are older with higher mileage than at this time last year. “The average Class 3-4 diesel cabover wholesales in the first half of 2012 was 88 months old, had 132,610 miles and brought $10,047,” says Chris Visser, senior analyst and product manager for ATD/NADA Official Commercial Truck Guide. “Compared to the first half of 2011, these trucks were eight months older, had 5.4 percent more mileage and brought essentially identical prices.”
He adds that Class 6 conventionals have not seen much upward movement. “The average Class 6 conventional wholesaled in the first half of 2012 was 98 months old, had 181,836 miles and brought $12,575.” These trucks were nine months older than those that sold in the first half of 2011, had 7.9 percent more miles and brought 5.1percent less money.
“The decrease in pricing is what we would expect,” Visser says, “given the increase in mileage and age.”