The following is part two of Truck News’ interview with Paul Vikner, president and CEO of Mack Trucks Inc.
TN: Mack recently made the decision to stick with EGR in meeting the federal diesel emission regulations for 2007. Can you explain why you feel this decision is right for your ASET engine lineup?
Vikner: Jan. 2007 is not that far away. There are a lot of issues still on the table. We have been offering EGR engines since October of 2002, and while all of us selling these engines have experienced challenges, we feel we have made a lot of progress. There are issues related to SCR (selective catalytic reduction) that are still unanswered, including the distribution system for the urea solution used in SCR systems. So, on balance, we felt that an advanced version of EGR was the best solution for our customers at this time. But we have SCR technology at our disposal, and we are prepared to use it if we determine there is a market where it makes sense for us to do so.
TN: How soon do you expect to have engines with EGR-based EPA ’07 technology in the field?
Vikner: We are doing our own testing right now. And we plan to have a representative number of these engines available for customer testing in mid-2005. One of the challenges we face is how to manage the test data in a way that gives a level of comfort to the marketplace. We realize the big problem with the Oct. ’02 deadline was that there was not enough testing and we need to avoid that. The ball is very much in our court to develop a level of comfort for the marketplace so we do not experience the kind of cliff event we saw in ’02.
TN: You have about 55 dealers in Canada. Is that number where you want it to be or is there room for growth?
Vikner: We are not looking to grow the dealer network. I think we cover the markets quite well. I know our dealer ownership group today is better than it has been in a long time. And frankly, the fact that some of them have also taken on the Volvo line as well and treat it as a separate franchise makes their business models even better. They now have a much larger vehicle population for their parts and service businesses. Many have gone 24/7 to support the increase in volume resulting from the ability to sell and support two separate brands.
TN: How does the dealer have to evolve?
Vikner: I think dealers will need to invest in those kinds of services that customers are going to be looking for in the future. Exactly what those are will evolve over the coming years, but certainly it seems that truck operators and fleets are going to look to the manufacturer and its network to provide a broader, unbundled range of services. I think dealers and manufacturers are going to have to be flexible enough to tailor the range of support they provide to the specific needs of the individual customer. I think most dealers, generally speaking, are not structuring their business in this way now. They are selling a truck, selling a part, fixing a truck in their shop – the majority of their business is still structured around that kind of operation. But I think, in the future, they are going to have to evolve their operations so that they are fixing trucks at their customer’s location, or being open longer hours, or providing different types of services such as competitive contract maintenance work and preventive maintenance work. Dealers can no longer be just independent business people. They are going to have to be part of a network providing consistent, national support.
TN: How do you bring the smaller, less aggressive players into this kind of thinking?
Vikner: Some of the smaller guys that have not been as successful as they might have been are more likely to be willing to sell their operations to a neighboring dealer. That’s already been happening. Just as Mack has to be part of a larger organization to thrive, our dealers have to be larger and have the base of business to invest in the technology, people and training needed for the future. We are going to end up with fewer dealers in North America.
In the U.S., it wouldn’t surprise me if we ended up with 30 or 40 dealers controlling 80per cent of the market place, but with a higher number of outlets to provide expanded service. Dealers of that size will have the profits necessary to invest in the future and provide the expanded menu of services the market is demanding.
TN: I’ve noted that Mack has taken several steps over the past year to help boost the online presence of its dealer network. What role do you envision the Internet playing in your dealer sales strategy?
Vikner: It’s one of those investments dealers will have to make, and it’s one of the biggest things we debate with our dealers. It’s costly, but it’s going to be an important part of how we manage every level in every aspect of our business. The only way dealers can afford to be with us on this is if they have the size and kind of revenue to invest in the systems and attract the kind of people to operate and manage it. Frequently, that means young people, and I think that’s another important issue. Attracting young people to our industry that want to make this a career is something we have to work on. We are not attracting enough people to this business, and that’s a challenge we have to deal with. If we don’t, we are not going to have the kind of people we need to manage the services the market is looking for.