The North American commercial fleet industry faces rising fuel costs, new vehicle-related legislation and mounting service demands. Currently, the industry’s practices are incapable of dealing with the mounting workload.
New analysis from Frost & Sullivan, Maximizing Opportunities in a Challenging Service Industry, finds that the commercial fleet industry faces several challenges with severe implications for the market. How commercial fleets choose to deal with these issues will affect their profitability and service effectiveness.
An economy that depends heavily on the movement of goods requires a reliable on-road transportation system. Efficiency has gained greater importance as freight volumes have grown. In the near term, freight volumes likely will grow at an annual rate of six percent, and profits will continue to be squeezed. The increasing demand for replacement services and maintenance support strains the aftermarket service industry. This presents numerous challenges and several attractive opportunities.
“The North American heavy-duty truck aftermarket currently offers tremendous growth opportunities to both the product and service segments,” says Mary-Beth Kellenberger, senior consultant for Palo Alto, Calif.-based Frost & Sullivan. “The distribution structure faces changes to the competitive landscape and market dynamics, while the product side must adapt to pressures emanating from increasing vehicle electronic content and the introduction of proprietary technologies by truck makers.”
Proactive and innovative service companies can turn this situation to their advantage by creating new structures that better manage rising operating costs, technology complexity, inventory management issues and the rising influence of original equipment manufacturers.
The decline in the number of fleets performing on-site repairs and complex system maintenance has increased opportunities for independent repair facilities and dealers. Central to this repair equation is the availability of qualified technicians. Even though the overall number of technicians likely will increase, industry participants remain concerned about the decreased skill level and quality of technicians available in the commercial vehicle industry. Low wages, a dirty work environment and lack of resources continue to deter workers.
The industry has to stop relying on market forces to provide technicians and must make concerted efforts to procure the necessary talent. Participants must devise viable and cost-effective talent retention strategies as repair services become increasingly competitive.
“The service industry must look at the ways in which it can secure as well as foster existing talent to support the growing repair demand,” Kellenberger says. “The time is right to test the waters with new strategies for talent retention, technician development and service delivery.”
Maximizing Opportunities in a Challenging Service Industry is part of the Automotive & Transportation Growth Partnership Service program, which also includes research in the following markets: North American light-vehicle automotive and North American heavy-duty trucks. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
