Truck Dealers

Truck Dealers
The leading manufacturers of light- and medium-duty
passenger trucks are General Motors and Ford, which
together account for over half of the passenger trucks
sold in the U.S., as shown in the following chart:
Industry Overview
2005 Passenger Truck Sales
Truck dealers are either traditional automobile dealers
carrying passenger trucks and sport utility vehicles
(referred to as light-duty or medium-duty passenger
trucks), or dealers specializing in selling and servicing
new and used commercial trucks and tractor-trailer rigs
(referred to as medium- and heavy-duty truck dealers).
Customers of the latter category include construction
companies, over-the-road trucking firms and other
commercial users.
An estimated 22,200 new car dealers sell light-duty
passenger trucks and cars, and approximately 2,850
dealers specialize in medium- and heavy-duty trucks
(Automotive News, "2005 Market Data Book").
Light-Duty Passenger Truck Sales
(As a Percentage of Total New Vehicle Sales)
50
40
34
36
41 43
39 40
48 49
45 47
54
51 52
56
Hyundai-Kia (258,510 units)
2%
Nissan (504,205 units) - 5%
General Motors
(2,669,560 units)
29%
Honda (624,650 units)
6%
Toyota (1,434,974 units)
15%
Ford
(2,100,516 units)
23%
Daimler/Chrysler (1,650,887)
18%
The market share leader in the U.S. for sales of
medium- and heavy-duty trucks (classes 4 through 8)
is Freightliner, which controls 24.6% of the market for
trucks in these classes, followed by International, with
20.3%, and Ford, with 12.4%.
Medium- and Heavy-Duty Truck Sales
(% Share of Market, by Manufacturer)
Other - 5.2%
Chevrolet - 3.6%
Sterling - 4.3%
Freightliner - 24.6%
Volvo - 5.3%
53
Mack - 5.5%
International
20.3%
GMC - 5.5%
Kenworth - 6.2%
Peterbilt - 7.1%
30
Ford - 12.4%
Source: Auto Exec, “NADA Data 2006,” May 2006.
0
Source: Auto Exec, May 2005; Automotive News Data Center,
January 9, 2006.
2005
2004
2002
2003
2001
1999
2000
1997
1998
1994
1995
1996
1992
1993
1991
20
10
*Other (277,530 units) - 2%
*Includes Mazda, BMW and Volkswagen.
Source: Automotive News, “2006 Market Data Book.”
Sales of light-duty and medium-duty passenger trucks
(classes 1, 2 and 3) have represented a growing
percentage of new vehicle sales at auto dealerships. In
1990, sales of light-duty trucks (including pick-ups, vans,
minivans, and sport-utility vehicles) represented 32% of
new vehicle sales. In 2005, passenger trucks represented
53.1% of all new passenger vehicles sold. The chart
below shows the level of sales for light-duty trucks
between 1991 and 2005:
60
(9,033,146 New Units Sold, % by Make)
Manufacturers sell their trucks through a network of
“franchised” dealers – like new car dealers, who are
referred to as franchises (AutoExec, “NADA Data 2006,”
May 2006).
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Issues and Trends
Medium- and Heavy-Duty Truck Dealers
(% of Total Average Sales, $39,152,832)
Sales of light-duty passenger trucks fell in 2005 for the
first time in many years, slipping an estimated 2.5%
(from 9,175,183 to 9,033,146). (Truck and SUV lovers
should take note that these vehicles still outnumber
passenger vehicles on the road, since sales have been
so robust over the past few years.) Ford and GM brands
suffered the biggest losses – falling by 8.7% and 3.9%,
respectively. Winners in passenger trucks were Honda,
Nissan, and Hyundai, increasing by 13.3%, 12.0% and
11.1%, respectively (Automotive News, January 9,
2006).
In the medium- and heavy-duty truck segment (classes
4 through 8), a different story played out in 2005. "It was
a banner year for commercial truck sales," according
to figures compiled by Wards Communications
(Primedia Insight, January 13, 2006). Driven partially
by the strength of the economy, sales increased by
18.5% – the strongest increase in many years (Ward's
AutoInfoBank, January 2006). Medium- and heavyduty trucks range from Class 4 delivery vehicles and
other commercial trucks to Class 8 trucks, which are
generally used in long-distance transportation (think
tractor-trailer rigs).
Truck Category
Weight
Up to 14,000 lbs.
(light- and medium-duty
passenger vehicles)
Classes 1 - 3
Class 4
14,001 to 16,000 lbs.
Class 5
16,001 to 19,500 lbs.
Class 6
19,501 to 26,000 lbs.
Class 7
26,000 to 33,000 lbs.
Class 8
33,001 lbs. and over
In 2005, Class 8 trucks represented half of all mediumand heavy-duty trucks sold, as seen in the chart below:
Medium- and Heavy-Duty Truck Sales
(437,987 New Units Sold, % by Vehicle Class)
Class 8
Class 4 (48,493 units) - 9.8%
(252,792 units)
Class 5 (46,278 units) - 9.3%
50.9%
$11,197,710
Service and parts sales
28.6%
$23,483,232
New-truck sales
60.0%
$4,458,732
Used-truck sales
11.4%
Source: AutoExec, May 2005.
Considering high gasoline prices and falling consumer
confidence in the economy (due largely to the
increased cost of oil, natural gas and propane to heat
their homes), the drop in passenger truck sales is
understandable. Offsetting the declines in truck and
SUV sales are increased sales of CUVs (cross-over
vehicles that drive like a car but look like an SUV),
hybrids, and fuel-efficient sedans (The Washington
Post, October 4, 2005).
On the other end of the spectrum, medium- and heavyduty sales increases in 2005 were the strongest in
many years. “It was a banner year for commercial
truck sales,” according to figures compiled by Wards
Communications (Primedia Insight, January 13, 2006.)
Medium/Heavy-Duty Truck Sales Growth
• Trucking firms and commercial fleets are
“replenishing their inventory” of trucks, now that the
economy is strong and the outlook for the next two
years is bright.
• With a robust economy, freight rates remain strong
and truck production is healthy – pointing to plenty of
inventory from which truck buyers can choose.
• Manufacturers -- truckers’ biggest customers – are
continuing to expand production, and their goods
typically get to market by truck.
• Federal EPA emissions regulations will go into effect
in 2007 and push up the cost of new trucks. Many
firms are “pre-buying” to avoid higher vehicle costs in
2007.
• In the aftermath of hurricanes Katrina and Rita, a
great many used medium- and heavy-duty trucks
were purchased, decreasing the supply of used
trucks and increasing demand for new trucks.
Class 6 (60,154 units)
12.1%
Class 7 (88,858 units) - 17.9%
Source: AutoExec, “NADA Data,” May 2006.
The average dealer generates revenue of over $39
million, 60% of which is for sales of new trucks. The
remainder is generated from sales of service, parts, and
used trucks.
Sources: American Truck Dealers, www.truckinginfo.com; Fleet Owner,
January 1, 2006.
Some heavy-truck dealers are capitalizing on the
strength in the economy and expanding or enhancing
their operations. Rush Enterprises, the largest Peterbilt
dealer chain in North America, for example, acquired
American Truck Source in 2005 and has plans to
acquire others. The publicly traded Rush dealership
consists of 48 locations, many of which offer chrome
© 2006 Profile America, Inc. All rights reserved. www.profileamerica.biz
shops; well-appointed lounges where customers wait
for repairs to be completed; high-tech tools in high-end
facilities, and rental, leasing, and financing operations
(Light & Medium Truck, December/January 2006).
Some of the characteristics that are mentioned in the
advertising that is placed by truck dealers are intended
to motivate potential customers to call, or to make them
feel comfortable in doing business with the dealership.
Some characteristics can be categorized as “confidence
factors” and some as “convenience factors.”
Critical Success Factors
The parts and service departments are a highly
important part of the truck dealer’s business and have
the potential to provide the most profit for a dealership.
The following critical success factors address the role of
the parts and service departments:
CSFs for Medium- and Heavy-Duty
Truck Dealers
Confidence Factors Mentioned in Ads
ASE Certified Mechanics
24/7 Towing Service
Authorized Dealer
Size of Inventory (Large)
24/7 Dispatched Emergency
Service
All Makes and Models (Parts)
Expert Gas / Diesel Mechanics
Same Location Since (Year)
Leasing Specialist
Guarantees and Warranties
•
Parts and service should be efficiently
connected, since one functions as “customer”
for the other. The parts department should
provide easy access to retail customers, to
shipping and receiving, and to technicians in the
service department.
•
Give the sales force a refresher course on what
to ask the customer when specifying or selling a
suspension, so the customer can make the right
choice. Have them ask about the expected use
of the vehicle, the regional regulations where
the vehicle will operate, the customer's cost
preference, and how long the customer intends
to own the vehicle that he or she wants to buy.
•
Add an outside parts sales and delivery service,
to help win the customer’s business and to
provide better service once the customer is on
board.
Source: 2005 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Convenience Factors Mentioned in Ads
Business Hours/Days
“One Stop Truck Shop”
Financing Available
Multiple Locations Listed
Invitation to Visit Website
Free Parking
•
Consider running two shifts for the service
department. Extend days and hours of operation.
Special Hours for Parts/Service
Location Data/Map
•
Immediate Delivery
Opening Evenings / 7 Days
Provide "one-stop-shopping" for the customer,
including truck sales, parts, and service support,
as well as financing or insurance.
•
Stay on top of technology when it comes to
providing support and diagnostic tools for the
service department.
Source: 2005 Comparative Ad Analysis Survey, Norbert J. Kuk & Associates.
Value of Products and
Services in the Industry
The average price of most large passenger trucks is
around $30,000, although some cost much less (the
Ford F-series pick-up trucks start at around $12,000),
and some cost much more (Cadillac Escalades run
around $55,000).
In the medium- and heavy-duty segment of the trucking
industry, the average price of a new truck can be
calculated by taking $23,483,232 (average new-truck
sales per dealership), and multiplying it by 2,850 (the
number of new-truck medium- and heavy-duty truck
dealers). Using these figures, total new truck sales
(including all classes) reached $66.9 billion in 2004.
Dividing that number by the total number of new trucks
sold (431,653), derives an average value of a new
medium- or heavy-duty truck ($154,985).
Source: Successful Dealer, April 2006.
Industry Resources
AutoExec Magazine; 8400 Westpark Drive, McLean, Virginia
22102; 703-827-6871; 703-821-7230; www.aemag.com
Successful Dealer, 707 Lake Cook Road, Deerfield, Illinois
60015; 847-498-3180; www.konacommunications.com
Heavy-Duty Trucking, 38 Executive Park, Suite 300, Irvine,
California 92614; 949-261-1636; www.heavydutytrucking.com
Light & Medium Truck/Transport Topics, 2200 Mill Road,
Alexandria, Virginia 22314; 703-838-1770; www.ttnews.com
© 2006 Profile America, Inc. All rights reserved. www.profileamerica.biz
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