Learn about the OEMs strategy and how it will impact aftermarket heavy-duty parts manufacturers, distributors, and independent repair centers.
Episode 85: In this episode, we discuss the OEM parts strategy and the effect that it is having on the aftermarket, as well as some opportunities that are arising for entrepreneurs in 2021 and beyond. Our guest is John Adami and he is the Co-Owner of Northwest Heavy Duty.
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The Original Equipment Manufacturers (OEM) of commercial trucks and engines have been battling against aftermarket heavy-duty parts manufacturers, distributors, and independent repair shops for decades. We are living through a time where things in the industry are changing very rapidly and the OEMs are now focused on capturing more market share than ever before. This is creating challenges and opportunities and, in this episode, we wanted to better understand both so we turned to John Adami and Northwest Heavy Duty to provide us with insight into how the OEMs strategy affects the aftermarket.
Northwest Heavy Duty
Northwest Heavy Duty is a manufacturers rep agency based in the Pacific Northwest, in Bellevue, Washington. Generally, manufacturers reps are the ones who go out to dealers, out to distributors, and to fleets and are hired for the relationships they have. Northwest Heavy Duty does all those things, but what makes them unique is that their mission is specifically to the truck OEMs themselves. This means they are working very closely with Paccar, Daimler, Volvo, and Navistar.
OEM Strategy and the Effect on the Aftermarket
John talked about how the OEM strategy can be looked at in three perspectives; historical, current, and future.
“Just because they have been doing something historically, doesn’t mean it isn’t important… To be successful in the aftermarket, OEMs in both automotive and heavy-duty support their dealerships. They are always looking for ways to make their dealers more effective.”
There is a lot of work that goes into making a successful dealership, and it is not all local, much of that success is driven from the corporate level as well. However, the most influential factor is the historical trend to add proprietary content to integrate the vehicle. Many large companies over the last few decades have been driving that proprietary content, and vertical integration, which captures a lot of heavy-duty parts business.
The competition level between aftermarket parts companies and the OEMs continue to grow every year. With this competition for 2nd,3rd, and even 4th vehicle owners, there is a big opportunity for the OEMs to capture more market share on parts than ever before.
Opportunity for Entrepreneurs
Even though 2020 has been very disruptive on a personal and societal level, there is light at the end of the tunnel. Entrepreneurial people and innovative companies have an opportunity to thrive.
“I absolutely believe there is a ton of opportunity… We have such an incredibly dynamic landscape right now. I think it’s a fantastic opportunity for entrepreneurs. Out of turmoil comes opportunity,” John Adami commented.
In 2020, many businesses have failed because of the effects of the global pandemic. However, there are also many tax ID’s being applied for. There are entrepreneurs looking around seeing that there are new needs and are taking advantage of this unique time in history. Entrepreneurs that can come into the heavy-duty industry with a new approach that addresses a problem have a fantastic opportunity.
OEM truck manufacturers have to view their trucks as a whole system. Each truck has many intricate parts that all work together to form the final product. However, because of having to view the truck as a system when designing and manufacturing, they inherently cannot be an expert in absolutely every area of the truck. For this reason, if an entrepreneur has a niche area that they’re an expert in and has an idea that can greatly impact the industry for the better, they can become successful.
If the aftermarket is going to survive it is essential that as a group they adapt to the changing landscape and to embrace innovation and change. The OEMs are going to continue to vertically integrate and they are focused on expanding their presence in segments of the market that historically have been serviced by the aftermarket and independent service channel. Therefore, the aftermarket must find ways of bringing value to the fleets and owner operators throughout the life cycle of their commercial vehicles or run the risk of continuing to lose ground to the OEMs.
Disclaimer: This content and description may contain affiliate links, which means that if you click on one of the product links, The Heavy-Duty Parts Report may receive a small commission.
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