Light-Truck Market Proving that Size Really is an Issue

When the late John Candy packed his family into a wood-emblazoned Wagoneer and headed off on a cottage excursion in the memorable 1988 flick “The Great Outdoors,” it marked something of a transformation for the family vehicle.

Forever on the outs among middle America was the family station wagon, with its inexplicably dangerous back-to-back seat; it was now the age of the yet-to-be-classified SUV. It was the carefree ’80s after all, and with the oil embargo a distant memory, Candy and his family were most likely paying in the neighbourhood of 45 cents per litre, all while trying to grind to a halt on organic brake pads.

How times have changed. Not only is Candy’s Wagoneer approaching vintage status, the very idea of even owning such a vehicle is starting to come into serious question from concerned motorists, on both safety and financial grounds.

The numbers are unequivocal on this issue, and in terms of parts ordering in the brake and brake component niche, they are statistics that jobbers need to pay attention to. Consumers aren’t necessarily moving away from the truck style altogether; they are just, well, downsizing to what are now being called Crossover Utility Vehicles (CUVs), and increasingly, these are being equipped with premium brake parts.

A recent study put together by J.D. Power and Associates began: “The midsize utility segment, which includes some of the auto industry’s most popular models, is increasingly showing signs of considerable weakness, as it has been since the beginning of the year.” The study focused on average turn-over time for vehicles sitting on dealership lots, and found that the time most SUVs sit waiting to be bought is rising significantly, with some major brands sitting idle for more than 120 days. By comparison, the study mentioned vehicles in the basic compact segment sat, on average, just 35 days.

Bob Schnorbus, chief economist of global forecasting at J.D. Power and Associates, comments on falling light-truck sales.

“Concern about the midsize utility segment has been rising for some time, due in no small measure to skyrocketing gasoline prices,” he says. “However, the segment also has been buffeted by a pull-back in incentives and a flood of new models in other segments. As gasoline prices remain high, with little offset from incentives, consumers can be expected to adjust their buying preferences.”

Manufacturers are also in agreement with the researchers on that point, but their predictions are somewhat less dire. Brian Fleming, director of marketing with Affinia Canada, says, “You can see that the big SUV has definitely rounded the top of its peak, and is on the decline,” he says. “The price of fuel and even of steel production is really taking its toll on the category,” he adds.

As many in the aftermarket are aware, bad 2006 numbers don’t mean the end of SUV parts sales immediately. Ian Braunstein, vice president of sales and marketing for Satisfied Brakes, based in Cornwall, Ont., notes this important point. “There is a lag effect in the industry,” he says. “[For] an aftermarket manufacturer, any change doesn’t trickle its way through for a couple of years, because the new vehicles are still being serviced under warranty by the dealerships.”

Fleming agrees with Braunstein’s point, but notes also that change does seem to be on the horizon. “We recognize that manufacturers are definitely going after that [CUV] market with more and more models in their line-up,” he says. “But, with that said, the jury is still out on whether or not the public will really embrace it. Regardless of outcome though, there is still plenty of time, so there is no need to really overreact.”

In short, while there could be a serious parts shift down the line, don’t throw away all of your full-sized SUV parts just yet. The best advice would be to pay close attention to your ordering details, and be ready to make some adjustments as the new CUV vehicles start to work their way into the aftermarket.

Light Trucks, Light on Economy Parts

According to Braunstein, a second major issue facing this particular segment comes down to product selection, and in particular, brake material. “The composition and the quality of the brake material is going to be key,” he says. “Brake systems are obviously going to be downsized to reflect the lighter vehicles in the segment, but these lighter vehicles are now carrying more people and more cargo. So, you’re going to need pads that can handle the heat,” he says.

By way of example, the new BMW X3, which exemplifies the new crossover trend, features the characteristics of a truck, but sits on the same chassis as the 330i. The significant difference, in braking terms, comes with the added weight. Whereas your average 330i comes in at approximately 1550kg, the X3 weighs in at a hefty 1815kg, all of which needs to be brought to a stop in a timely and responsive manner. While that is lighter than the 2095kg reported for the larger X5, that vehicle also features substantially larger brakes.

In Braunstein’s estimation, looking through the history of the brake pad, the new demands only leave one option for the savvy consumer. “Years ago pads were some kind of organic material, but they couldn’t handle the heat,” he says. “Then manufacturers went to a semi-metallic material, which could handle the heat, but they were noisy, and left a lot of dust on the wheels. In the end, ceramic materials turned out to be the best of both worlds.”

Of course, top-of-the line ceramic pads are substantially more expensive than your run-of-the mill economy parts, which will still have their place in the market, seeing as Canada continues to love the lease. “Economy brakes are probably going to be the popular choice if you need to replace the pads on your 36-month lease for whatever reason,” says Fleming. “Consumers or even dealerships aren’t going to see the value in putting premium products on a car that will just go flipping back and forth.”

However, for those not enticed by zero-percent financing and dealer rebates, premium brakes seem to be gaining in both acceptance and popularity.

Brian Pyett, general manager at IMDA Automotive in Stoney Creek, Ontario, has certainly noted the shift. “We just did the numbers, and 72% of our purchases are on the premium brake side of the business,” he says. “The top service providers that we supply will simply no longer put an economy pad on a vehicle, because they want the job done right. In fact, 80% of the lower-grade brake parts we provide are sold to jobbers, because they still have to stock a full range of products to supply the garages that haven’t upgraded.”

Gently pushing your customers into some more premium products is something that all the manufacturers seem to want jobbers to start doing a little more. Understandably, such a shift in their sales would undeniably help their bottom line, but it could also help yours as well, and convincing service providers to install top-grade parts is the first step.

“A lot of garages are still very price-driven, but more and more, we’re seeing that those guys are the ones that aren’t in business anymore, or certainly won’t be in five years,” says Pyett.

But how can jobbers start to change the perspective and eventually the buying patterns of some of their customers? Well, according to Pyett, it all comes down to education.

“It’s like anything else in life: education is the key,” he says. “We spend a lot of our time and money educating our customers, and that is something jobbers can do too. Hold sessions to help them understand why installing a premium product saves them both time and money in the end, because it’s the right product the first time. As they will quickly grasp, if it’s done properly the first time, then it is not coming back to be fixed for free. So if you start providing these kinds of training sessions, as your clients become more and more educated, they’ll start making the right product decisions.”

Conclusions

From discussions with manufacturers, it is quite clear that some changes in the light truck market are on the way, and should also be encouraged. While jobbers can’t really control the impact on their sales and ordering caused by a shift from large-scale SUVs, they ought to be able to supplement, and even surpass, those sales by doing what they can to encourage their clients to move to premium parts. As has been pointed out numerous times in this publication and others, everyone in the industry wins when the customer pays a little more for a brake pad.