Heavy Duty Opportunities in Light Truck Exhaust

In a product segment where terms like “flat market” and “hyper competitive” are commonplace, the light truck niche of the exhaust aftermarket is manifesting itself as a greater opportunity every year.

There has been a particularly strong increase in the performance part of the exhaust market, though disproportionate growth has not been restricted to that portion of the light truck business.

According to a 2001 Insight Report by research firm Frost & Sullivan, “With all the prognosticators and industry participants forecasting softening demand for almost every segment of the automotive parts aftermarket, there is one segment that continues to exceed expectations: Performance Exhaust. This market has experienced robust revenue growth since the mid 1990s. In fact, performance exhaust products have experienced a percentage revenue growth in the double digits in each of the last three years. To truly understand and appreciate this accomplishment, consider the OE replacement exhaust market; it has declined by almost the same amount in terms of percentage points as the performance exhaust market has grown.”

There is little evidence that this trend has done anything but strengthen.

“The biggest part is the performance side with dual conversions,” says Jim Fox, account manager, ArvinMeritor Light Vehicle Aftermarket. “That’s why we’re there with the Vortex and Supreme Performance lines. You’re finding new vehicles right off the dealer lot getting systems.

“That is the biggest trend I see in light trucks. It is a real growing market.”

“The light truck side of things has been good from a sales standpoint,” says Rob Addie, owner of R.P.G. Supply in Oshawa, Ont. The RPDL associate says that it is a very competitive market for him, though. “We have gone after the economy side.” He says that improvements among the short line suppliers from a fit standpoint have caused more service providers to accept this product.

He says that he tries to support major suppliers where he can, but his focus is primarily on being able to provide his service provider customers with every possible advantage in the repair segments they can still tackle.

“Our main customer base is into replacement; they don’t want to mess around. It is becoming one of the main things that they can do. It’s not a glamorous job, but with all the electronics, they’re becoming general repair shops. Without criticizing them, I have to try to get them to do everything they can to stay alive.” He says that jobs such as exhaust replacement that in the past some shops would subcontract out are now being kept in house. “I firmly believe that it is still a market, but it is a changed market.”

Albert Mammarella, Jr., of Uni-Select Auto Parts Plus outlet Albatross Automotive in Woodbridge, Ont., says that he too has noticed a great degree of price competition, with short line suppliers coming out of the woodwork.

“Pricing is all over the map. It’s pretty volatile. I get guys calling me looking for 100 piece orders. It seems like everybody in his backyard is bending pipe. Who the hell are these people?”

Mammarella, whose business is located in a light industrial zone, calls the light truck a real positive factor.

“That’s what is really driving the business, the light truck. Especially the light industrial and commercial users.” He says that the late model vehicles are seeing replacements well before they would be expected to be due for exhaust work.

“I think they’re wrecking them rather than wearing them out, running over things and bending them,” says Mammarella. “Let’s be honest, they’re built of stainless steel so you’ll still get seven, eight, 10 years out of an exhaust. We have delivery vehicles from 1996 that still have the original exhaust on them,” he adds. “You never used to get that before. Thank God for guys running over things.”

Whether due to the carefree, or careless, driving habits of those on the job, or just the massive growth in the popularity of the light truck and SUV, the opportunities have not gone unnoticed.

“We have identified that as a potential growth area,” says Mark Atherton, national sales manager, Tenneco Automotive. “A lot of the younger new car buyers are buying the S10s and Sonomas and then customizing them, for lack of a better term, for their personality.”

This opportunity includes a variety of accessory categories, of course, but the exhaust market is a strong part of the mix.

“The younger buyers are looking for performance, which dovetails with our Dynomax line,” offers Atherton, adding that the strong light truck populations in Western Canada are showing growth in kind. There are some sub-segments, however.

“With the smaller pickups and the younger buyers, it is more of an upgrade market. We see them taking off a perfectly good system and retrofitting with a performance product. Whereas with the full size we see a certain amount of that, but by virtue of the numbers they are more of a traditional replacement business.”

In the replacement market, says ArvinMeritor’s Fox, OE replication is becoming an increasingly important selling point. “Part of our strategy, our design criteria, is to be as close to OE as possible within the limitations of the aftermarket. Big Body falls into that by providing the same cross-section size. It gives us an advantage over short line manufacturers,” and he adds, over other full-line suppliers as well, since the company currently has an exclusive.

He says it is an expensive tooling process to get that large a muffler size–it has an 8-1/2 x 11-1/2 inch cross-section–one that is not easily made by smaller players. “That’s why we invested the money, to be there first.”

Atherton hesitates to make sweeping statements about the full-size truck customer, though, saying that there is a degree of customizing and upgrading being done, and it certainly outstrips most of the passenger car business in this regard.

“We are having to explore different options–whether it is the performance side or the tuner market–rather than just the day-to-day ‘I have a hole in my muffler’ market.”

He says that one battle in the marketplace is getting service providers to recognize the opportunity and go after it.

“The more aggressive ones are accepting it with open arms. They are looking to increase their business,” says Atherton. “The opportunity is there, more so than the traditional passenger car market, because of the potential for upgrades. And it seems like the studies indicate that we are seeing the stainless steel impact starting to level out. It doesn’t rust, but it does get brittle and break.

“Overall we’re relatively positive on the entire market,” Atherton continues, “but if you segment that out, we see light trucks specifically as an opportunity.”

Considering the fact that light trucks and SUVs make up such a large proportion of the vehicle population, maybe it isn’t right to call it a niche. Perhaps it is better described as a fleet waiting to be plundered.

In any case, there are millions of them, and therefore no shortage of opportunity.