After a year and a half of uninterrupted market softening, business confidence finally rebounded for aftermarket companies in the first quarter, reported responders of the Trucks, Parts, Service quarterly MarketPulse survey last month.
Dealers weren’t as fortunate. Market condition assessments in that sector continue to fall. Dealers rated business conditions in Q1 at the lowest level seen since the MarketPulse survey was created in April 2022.
Aftermarket responders’ assessment of Q1 wasn’t particularly strong, historically, but was a welcome uptick for a market which had continuously rated every recent quarter as weaker than the preceding one since the MarketPulse survey debuted.
Overall, aftermarket responders rated business conditions in the first quarter at 6.04 on our 1-10 scale where 1 is the worst quarter ever and 10 is the best. Dealers rated the quarter slightly lower at 5.54. That was a flip from our previous survey, where dealers had rated the fourth quarter of 2023 as nearly a point higher than the aftermarket (6.40 to 5.70).
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Within the channels, successes were mixed. Nearly a third (31%) of dealers rated service as the strongest segment of their operation, with new truck sales and parts sales following at 23% apiece. Aftermarket success was strongly weighted toward parts, which was the best segment for 70% of responders in Q1.
On the flip side, used trucks remain a thorn in dealer operations but are no longer the only weight on dealer businesses — the 38% of dealers that stated used trucks was the weakest segment of their operation was the lowest total for the used truck sector since July 2022.
Aftermarket operations also expect more success in the months ahead.
Only 8% of dealer responders predict business conditions to be stronger year over year on a seasonally adjusted basis over the next six months. Within the aftermarket, that number jumps to 30%. And only 30% of aftermarket responders expect the next six months to be down from 2023 while among dealers that number jumps to 77% (including 15% who expect business to be down at least 5% from last year).
Aftermarket responders also predict business conditions will continue improving in the second quarter. Dealers do not. Aftermarket responders predict business conditions to rise to a 6.35 on our 1-10 scale this spring; dealers expect a near repeat of the first quarter at 5.54.
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One aftermarket responder traced their recent success to a pair of factors. “Overall, our business is doing well, and we are continuing the growth with additional business. The competition is making it easy based on their lack of concern for customer service,” the responder said.
The good news is both channels remain averse to layoffs or downsizing. No responders to our Q1 survey indicated any intent to reduce workforce and more than half said their operations are still considering facility expansions.
Barriers to that growth, however, are slightly mixed.
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Aftermarket operations remain flummoxed by inflation. Current economic and business conditions like inflation remains a top concern for 70% of aftermarket responders.
Dealers also are challenged by inflation but do not view rising prices as their only barrier to maximizing profits. Regulatory influence on trucking actually was the highest ranked concern among our dealer responders in Q1 at 38%, with business conditions following at 31% and technician recruitment at 23%. Regulations also are a top five concern for 86% of dealer responders with political influence on trucking being a top five concern for 62%. In the aftermarket, those totals drop to 37% and 28%, respectively.
Said one dealer responder, “CARB is paralyzing diesel truck availability in California and less than 5% of customers know it is happening already.”
TPS will conduct its 2024 second quarter MarketPulse survey in July and publish a brief synopsis of the data after it concludes.
Want to read more insights from our first quarter survey? Or participate in future surveys? We’d love to hear from you.
All truck and trailer dealers and independent aftermarket businesses are encouraged to participate in the TPS MarketPulse survey, and only businesses who choose to participate will receive complete survey results each quarter. For more information, and to register, please email [email protected].
