All industry attendees at Wednesday’s Heavy Duty Manufacturers Association (HDMA) and MacKay & Company Pulse webinar said they anticipate growth in their aftermarket sales business this year. Almost 90% expect the market to grow by at least 5%, and 15% say they could see their aftermarket business grow by more than 15% by the end of the year.
Among dealers and distributors surveyed by MacKay & Company in April, dealers said their business was already up 8.1% year-to-date; distributors grew 7.2 percent. John Blodgett, vice president, sales and marketing for MacKay & Company, says his company’s updated annual forecast is even stronger. The company predicts that the aftermarket (Class 6-8 trucks and trailers) will show total sales of $ 33.3 billion in 2021, up 11.8 percent from last year and up to $ 500 million. dollars more than in 2019.
So that’s the good news.
The bad news is supply chain issues plague OEM production lines have also hit the secondary market. And among those in the know, Richard Anderson of HDMA says market sentiment indicates things will continue to get worse until they get better.
âDelays are becoming universal. They have become the norm, âsays Anderson, director of market research and analysis at HDMA.
Referring to HDMA’s ongoing Pulse survey efforts, Anderson claims that 100 percent of suppliers responding to HDMA’s most recent survey indicated that they face delays in arrival for raw materials and semi-finished products. Outbound delays were a little better at 95%, although that number is an increase from vendor sentiment last month and two months ago.
The latter is becoming the trend, Anderson says. Every time he polls suppliers to find out when things are going to change, the results he receives are more pessimistic.
It happened on Wednesday too. Almost half of those attending HDMA’s Pulse webinar in May said they expected the current prevalence and duration of the delays to end by the end of the fourth trimester. When that same question was asked on Wednesday, the number predicting the end of the fourth quarter fell to 21%, with 48% extending their forecast until the end of the first quarter in 2022.
âEvery time we ask this question, the horizon seems to stretch further for our members,â says Anderson.
Electronic subcomponents remain the biggest problem in the supply chain, Anderson says, but very few segments of the supply chain are performing well. âThe bottlenecks in the supply chain are not yet resolved,â he says.
And MacKay & Company economist Bob Dieli worries that the first quarter of next year may not even be the point where the channel is corrected. He says that currently component availability dominates supplier concerns for obvious reasons, but other issues such as labor and freight availability exist on the sidelines. He says the supply chain is slowly normalizing, expect suppliers to pay attention to these other expenses and areas of concern.
Dieli says America is going through a global structural recession. The business practices that emerge on the other side of the recession will be “significantly different” from what they were at the start of the recession.
But that’s not to say that the good news from Blodgett shouldn’t be overlooked. The demand for equipment is very high and the parts arriving at their points of sale are moved. All of the dealers and 78 percent of distributors surveyed by MacKay & Company say they are experiencing execution delays from their suppliers, but that hasn’t forced anyone to make a negative forecast for the year at this point. .
Asked about the biggest long-term concern about the dysfunctional supply chain, Dieli pointed out the price. Prices are rising everywhere and eventually, when the chain stabilizes, the impacts of these changes will be felt. Dieli says companies are now absorbing increases quite well due to the unique circumstances – when availability is almost non-existent, companies are willing to pay more to get what they need. But he says that may not stay the case in 2022 and beyond.
âThe choices made over the next few months will affect many years to come,â he says.