LAS VEGAS, Nev. – The heavy-duty aftermarket parts business in Canada is growing at a faster rate than in the US, but that’s mostly because parts are becoming more expensive due to the exchange rate.
The value of the US heavy-duty aftermarket parts business grew 1.5% in 2016, but growth in Canada was a more robust 7.4%. While unit demand was up slightly, most of the growth in the sector’s value was due to the exchange rate and the fact aftermarket parts are costing fleets more. That was a message from John Blodgett, vice-president of sales and David Kalvelage, manager, IT and database services, both working for MacKay & Company. They were speaking at the Heavy Duty Manufacturers Association’s Heavy-Duty Dialogue today.
About 4.5% of the industry’s growth by value was due to higher pricing.
Canada has an operating population of 1,113,300 commercial vehicles, including more than 347,000 Class 8 trucks. In the US, there’s an operating population of 9.2 million vehicles, including 2.9 million Class 8 trucks, according to Blodgett and Kalvelage.
Presenting a 2016 Aftermarket Index, they indicated demand in OE channels was down 14.8% in 2016, while independent shops saw a 3.1% increase in demand. The index is compiled with feedback from 20 component manufacturers who represent about 10% of the total aftermarket.
In Canada, MacKay & Company reports fleets are more reliant on dealers and independent shops to conduct repairs. Only 58% of fleets do their own service work, Blodgett explained, a lower rate than in the US. Original equipment dealers get about 21% of the work, while independent garages capture 14%. Where are Canadian fleets buying parts? Blodgett said about 50% of aftermarket parts are bought through the dealers, while heavy-duty distributors get 17% of the business and independent garages 14%.
MacKay & Company is expecting truck sales in Canada to continue to worsen before improving. There were only 23,100 Class 8 trucks sold into Canada in 2016, down 22% from 2015 volumes. MacKay & Company expects this figure to fall another 25% to 17,400 units in 2017. It predicts Classes 6/7 truck sales, which fell 6% last year to 7,800 units, to drop another 12% this year to 6,900 units.
Blodgett also said the total population of Class 8 trucks in Canada is likely to shrink about 6% to 327,000 units within five years.
As for the aftermarket itself, MacKay & Company is projecting the value of the Canadian industry to grow 6.5% this year, about 4.2% of which will be due to higher parts prices. The market will represent about $4.9 billion in value, with slow growth forecast to 2021 when it’s projected to be worth about $6 billion.
Presenters also noted the aftermarket landscape is changing. Emissions-related components are now the fastest-growing parts segment, increasing by 254% since 2010 and projected to grow by another 42% by 2021. MacKay & Company also noted: a shift to aluminum radiators, which is affecting serviceability; an increase in the use of factory remanufactured diesel particulate filters in favor of cleaning; and a shift from remanufactured starters and alternators to new replacement parts from offshore suppliers, which are offered at a comparable cost to reman’d components.
James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at firstname.lastname@example.org or follow him on Twitter at @JamesMenzies. All posts by James Menzies