International Newsmaker Q&A John Blodgett

March 16, 2016
John Blodgett, MacKay and Co.’s vice president of sales and marketing, discussed the company's services program called DataMac, which profiles the aftermarket for replacement parts, tires and lubricants for on and off-highway vehicles, with Aftermarket Business World.

Presented each January in Las Vegas, an event known as HDAD, or Heavy Duty Aftermarket Dialog, is held the day before Heavy Duty Aftermarket Week gets underway. HDAD attendees include senior management from component and truck manufacturers, truck and engine dealers, independent parts distributors, buying groups, private equity firms, media outlets and other industry participants.

The one-day conference focuses on the medium and heavy duty on-highway aftermarket in North America, including Canada and Mexico. HDAD is co-hosted by MacKay & Co., a market research and consulting firm that specializes in the on-highway commercial vehicle market, and the Heavy Duty Manufacturers Association (HDMA), which is a division of the Motor Equipment Manufacturers Association (MEMA).

This year’s HDAD marked the fourth edition of the annual event. The day includes reviews and outlooks for the economy and aftermarket along with panel discussions on a variety of topics that impact the segment’s aftermarket. Speakers and panel members all have strong backgrounds and experience in the topics they address, according to John Blodgett, MacKay’s vice president of sales and marketing.

The company has an ongoing services program called DataMac, which profiles the aftermarket for replacement parts, tires and lubricants for on and off-highway vehicles. “The main source of our data comes from surveying the folks who own and maintain the vehicles,” says Blodgett, who recently answered a series of category questions asked by Aftermarket Business World:

Q: What is the scope of spending on parts and services for 2015?

A: We estimate the size of the parts aftermarket (Class 6-8 and trailers) at $4.8 billion in Canadian dollars in Canada and $3.4 billion in U.S. dollars in Mexico.

In the U.S. the aftermarket for parts is $30.1 billion; tires is $16 billion, lubricants such as engine oil and coolants is $2.5 billion. The service labor associated with this is estimated to be $58.5 billion – this is a preliminary estimate from a study we are currently completing.

Q: What trends are you seeing in the truck repair and service marketplace going into 2016?

A: More focus on downtime, how is it defined? How well are service providers doing to limit downtime? What are they doing to address this?

Focusing on Total Cost of Operation (TCO) is a more recent trend, with truck manufacturers promoting the advantages of their vehicles and truck owners keeping a closer eye on Big Data. So much information is available from trucks now; what should fleets focus on? Who owns the data?

Q: What are some of the conditions driving this marketplace?

A: What drives the aftermarket in the U.S. – and in Canada and Mexico – is the number of active vehicles, the mix by vehicle class and vocation, and where they are in their life cycle for repairs and maintenance.

The activity level of trucks and trailers is driven by the health of the economy, and specifically the portion of the economy related to products and goods that are moved by trucks.

The U.S. economy over the last several years has not been extremely robust, but it has expanded, and that has been good for trucking activity. The Canadian economy was not as adversely impacted by the recession in 2009 as the U.S., and it benefited from the oil business in the western parts of the country, although that recently has been negatively impacted by current conditions in that market. The strength of the dollar has also had a negative impact for Canada.

Mexico markets have been impacted by oil prices and exchange rates as well, but overall Mexico continues to prosper better than other Latin America countries.

Q: What are some of the spending averages for truck owners?

A: The average class 8 truck uses $11,300 worth of parts, tires and lubricants per year over a life of 15 years.

Q: How would you assess the prospects of U.S. firms providing parts and services to fleets in other nations? Do you have any tips for reaching out to these international fleets?

A: Most truck manufacturers already do this, as well as most of the major component manufacturers. More component manufacturers are exploring other markets beyond North America.

At the HDAD conference this year we had a panel of representatives who are completing business around the world. One of the main themes from these folks was you can’t have one go-to-market template for every country; you need to be flexible, and having local, native management is a strong plus.

Q: Are there differences within the repair and parts sales process for effectively reaching out to fleets vs. individual truck owners?

A: Typically the larger the fleet the more formalized the process is going to be to garner the parts and/or service business as opposed to dealing with an owner of one or two trucks.

Q: How do you assess the new parts vs. used parts marketplace in the U.S., Canada, Mexico and other nations?

A: Used, not remanufactured or rebuilt, parts are a very small portion of the overall aftermarket in any of these countries.

Q: Are there regional differences in whether fleets and individual owners conduct repairs in-house or through independent of chain repairers?

A: We have not identified any major differences by region of the country.

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