A LOT has changed since we published our last annual Buyer's Guide 12 months ago. That is particularly the case in the medium-duty truck market where, by our count, 23% of the brands that were available to customers last year aren't being manufactured today.
Last year, 13 different brands competed in the Class 3-7 market. Those brands had retail sales in at least one of those five GVW classes. Today Sterling is out of the market. And with GM dropping the C4500 and 5500 models, the Chevrolet and GMC brands will occupy only the lightest end of the spectrum.
Let's look at this loss of truck brands on two levels — production and product selection.
From a production standpoint, we aren't feeling the results — at least not yet — as these brands leave the market. Inventories of discontinued vehicles are still in the pipeline. Plus, the remaining manufacturers certainly are capable of absorbing the production that GM and Sterling are leaving behind, at least in the near term. According to retail sales reports published by Wards Communications, Chevrolet and GMC dealers combined had an 11% share of the Class 3-7 market last year, and Sterling had 1%. If the medium truck market finishes down 44% as ACT Research predicts it will, manufacturers such as Ford, International, Freightliner, and Dodge will simply get a bigger piece of a smaller pie. Barring supplier issues or other surprises, the remaining medium-duty truck manufacturers should be able to meet demand at today's levels — and well into the recovery — without breaking a sweat.
From a product standpoint, however, the impact on the truck equipment industry has been immediate. Some in the truck body and equipment business have made significant investments in chassis pools, ship-through programs, and other special marketing programs that are tied directly to brands that have been discontinued. Those are real losses for which no substitute is readily available.
Truck equipment distributors that do not have pools or ship-through operations also stand to feel the effects as GM leaves the medium truck market — especially if they have worked closely with truck-savvy GM dealers in their areas.
The late George Carlin used to say, “for every silver lining, there's a dark cloud.” It's pretty easy to see the dark clouds in our industry right now. Less apparent are the silver linings.
Are there silver linings in today's dark clouds? We think so. Some of them may not be sterling, and the lining may be thin. But looking for silver linings usually is more profitable than contemplating the dark clouds.
Short term, there may be opportunities for distributors to upgrade their sales staffs. With GM dealers not having medium-duty trucks to sell and with other dealers trimming back, there should be some talented, knowledgeable truck people out of a job right now. Distributors who have the ability to hire today and who — like some we know — are seeing signs that the market is beginning to turn around could make their sales team stronger for years to come.
Secondly, distributors often criticize truck dealer salesmen for not adequately knowing the commercial truck market in general and the truck equipment market in particular. With the loss of these medium-duty truck brands, that knowledge base just got smaller.
Who will step up to fill that gap? Why not the local truck equipment distributor? Now might be a good time for distributors to position themselves as the place their customers and prospects look to first for truck expertise.
But a little self evaluation might be in order first:
Does the current sales staff need to beef up its product knowledge? If so, in what areas?
Are the sales skills of your sales team as strong as they need to be?
Can you think of any new services or programs that you could add that would set your company apart from its competitors? Maybe a new use for the technology that you already have in place?
In short, at a time when sales are weak, where can you find low-cost ways to strengthen your position in the market?
A few distributors are reporting upticks in quoting activity. Increasingly, signs are indicating that that we may be bottoming out. As we start what probably will be a long climb out of this deep hole, being known as the company that knows trucks certainly will make the climb easier. Will you be the place where customers turn first when business begins to turn around?
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