For the last decade we have written the yearly Aftermarket article. In this article we chose to look back over the last ten years to decide what major changes we have seen in the lift truck aftermarket.
Most readers will recognize that over these ten years there has continued to be a slow decline in gross profits on the sale of equipment. In point of fact, huge numbers of dealers continue to keep their internal parts and service margins low in order to artificially inflate their equipment margins. This, of course, benefits the sales department at the expense of the parts and service departments.
Manufacturers' continuing demand for increased market share (see May's cover story by Garry Bartecki) certainly indicates that we will see little change in this over the coming years.
One of our first articles indicated what we believed was an important area that all equipment dealers and manufacturers should attempt to develop. This is the knowledge of the actual potential of their aftermarket and the aftermarket of their dealers. To pinpoint it even further, what is the actual yearly value in parts and service dollars for the lift trucks the dealership is selling. We have always believed that without this knowledge the equipment dealer (and the manufacturer) will fail to visualize the tremendous opportunities available through their aftermarket.
Years ago we had the opportunity to do business with a swimming pool association. To our surprise this association's dealers (for the most part) had a fair idea as to what a pool (by gallons) was worth in chemicals, accessories and repairs over a period of a year. So that industry recognized that if a customer had a 20 thousand gallon pool, the customer would spend a specific number of dollars per year on dealer services. Therefore, the successful pool dealer, in their own individual markets were able to focus on specific customers and their aftermarket requirements. Believe me, these dealers had the same seasonal problems; hard use problems, user abuse problems, and warranty problems that we hear about every time we mention the need to know the numbers from lift truck dealers.
For a time the farm, trucking, and construction industries made significant attempts to define their dealers' aftermarket opportunities based upon units sold. In the past seven years the tracking of this information has declined. It is almost as if manufacturers' do not care to average the yearly upkeep on their equipment.
In the late seventies, one lift truck manufacturer ran an extensive survey of their dealer's rental fleets and came up with average dollars produced for parts and for service by truck class. The company actually advertised these numbers in national magazines. Those numbers have long been forgotten, except by your writer.
When we look at dealers' goals, budgets and plans for their aftermarket, we still find that most goals and budgets are based primarily on a percentage increase over the previous year. By the way, this is also the method most manufacturers use.
Projecting a 5%, 6% or 10% increase over the previous year is unimaginative. It has little to do with actual opportunity based upon the quantity of lift trucks placed in the dealers' market over the years. If one were to consider manufacturers' yearly price increases you can figure that your parts manager gets a "free-ride" on a 5%+ increase in sales.
Today we know of several manufacturers working to develop specific numbers relating to their dealers' opportunities for aftermarket sales. We applaud these manufacturers for their continued efforts in that area of endeavor and they can be assured the results will be well worth the effort.
We have witnessed many lift truck dealers who have listened to our harassing them about knowing their aftermarket potential. These dealers have now begun surveying their rental and lease with maintenance fleets to pinpoint their dealership's aftermarket potential by class of truck in operation.