April 2014 - AKMI Corporation

Monthly Archives: April 2014

Aftermarket Trends over the Years

The heavy duty aftermarket has seen many changes over the last 30 plus years. These changes have affected not only the sales of heavy duty truck parts, but the overall quality of the parts as well.

Commercial Trucks–1982:

  1. There were an estimated 3.6 million commercial trucks on the road.
  2. Two-Thirds of them were medium duty classification.
  3. Of the heavy duty trucks on the road, 50% of them were Class 6.
  4. Class 8 trucks only ran an average of 50,000 miles per year.

Commercial Trucks–2012:

  1. There is an estimated 4.4 million commercial trucks on the road.
  2. Class 8 trucks make up 65% of this number.
  3. Class 8 trucks run an average of 76,500 miles per year.

One would think, with significantly more heavy duty trucks on the road, replacement parts would be in high demand. As technology has improved, the quality of parts has improved.

Expected Parts Mileage:

  1. In 1982 an alternator would last an average of 132,000 miles, clutches an average of 171,000 miles and a Class 8 engine would be overhauled at around 276,000 miles.
  2. Today, an alternator would last an average of 278,000 miles, clutches an average of 369,000 miles and a Class 8 engines would be overhauled at 680,000 miles.
  3. Technology has increased the life of heavy duty truck parts, so they do not need to be replaced as often. Most truck owners today may never replace a clutch or overhaul an engine.

Federal emissions regulations have also impacted the Aftermarket industry. Over the last 5 years, new regulations are being enforced on trucks to have cleaner emissions. More often than not, it’s more prudent to buy a new truck that already meets these standards, then try to convert the older truck.

It has been noted that there is a “sweet spot” for the aftermarket when a Class 8 truck is 7-8 years old. This is when major components of the truck may need to be replaced, or an overhaul of the engine may need to be done. Any extended warranties would be ended by this time, and truckers/fleets would be looking at aftermarket sources to fill their heavy duty truck parts needs. Besides overhauling the engine and replacing parts, the only other options would be to purchase a new truck or glider kit-built truck.

Heavy Duty Aftermarket (Class 6-8)-1982:

  1. $9.3 billion dollar business
  2. The percentage of heavy duty truck parts being sold in the aftermarket – power generation-40%, power transmissions-23%, undercarriage business-18%, electrical-11% and other parts-8%

Heavy Duty Aftermarket (Class 6-8)-2013:

  1. $22 billion dollar business
  2. The percentages of heavy duty truck parts being sold in the aftermarket – power generation-34%, undercarriage-21%, power transmissions-14%, cab/chassis-13%, electrical-8% and other parts-10%.

The aftermarket industry is crucial to keeping transportation & shipping industries on the road today and for many years to come.

Used, Reman or New Aftermarket – Which do you use?

Diesel engine spare parts in the aftermarket is a growing need in today’s market place. In some instances, OEM suppliers do not have the needed parts available, with no expected time frame as to when they will be available. In these circumstances you have alternative choices – Used Parts, Remanufactured or New Aftermarket. Each option has their benefits and drawbacks.

Used Diesel Engine Parts

These are parts that are salvaged from used engines and are usually OEM in nature. Most of the time, the truck itself was damaged in such a way the only thing that can be salvaged is the diesel engine and the used spare parts.

As these parts are from OEM engines, mounting issues are not generally a problem. Used parts though do not have as long of a life cycle as other parts since they are “used parts”, and there is no guarantee how long they will last and usually do not come with any warranty.

Remanufactured Diesel Engine Parts

These are parts that have a main housing (core) that is still in good shape, but the rest of the parts may not be. In this case, the part is dismantled and the core of the part is rebuilt using newer parts. There is no guarantee that the internal parts are from OEM suppliers, which can lead to problems with parts “meshing” properly and working the way they should.

This option usually requires a core exchange when purchasing a remanufactured part, otherwise the part will cost more. Also, the part being purchased could have a core from an Aftermarket part, which could cause problems on the rebuild.

Remanufactured parts are less expensive than OEM counterparts and should last longer then used parts. Most remanufacturers offer limited warranties, whereas used parts have no warranties.

New Aftermarket

These are parts that are meant to replace OEM parts. Aftermarket parts are brand new items, unlike used parts and have not been used then rebuilt. These parts are generally less expensive than the previous options, and would not require a core exchange like remanufactured parts.

The term aftermarket generally has the consumer thinking the quality is not as good as the OEM, and in some cases this can be true.

There are Aftermarket suppliers though work hard to provide best quality possible for the prices the market demands. Some of the products offered can be comparable in quality with its OEM counterpart.

Unless your budget is really tight, used parts generally are used as a temporary fix until the truck is due for a major overhaul. Remanufactured parts and New Aftermarket parts can be just as equal to one another, but be diligent in researching potential new suppliers in either field. New Aftermarket parts commonly have a longer warranty along with being “new” parts.

No matter your diesel engine or spare parts needs, there can be a right time for all three options.

Glider Kits – Making old Trucks New

First time that I heard the term “Glider Kits”, I thought it was in reference to flying machines, not trucks. Hang gliding and motorized gliders were the first things to come to mind. Engines from commercial trucks and even some parts themselves can be heavier than most simple power gliders that I know of. Also picturing a heavy duty diesel engine powering a glider in the air was pretty funny.

Then I learned that it has a different meaning in reference to the trucking/automotive industry.

“Glider Kit Built Truck” – New trucks/tractors that are built using 2 or more of the key components from an older truck such as transmission, rear axle, or engine. These components would be “donated” by the purchaser from a donor truck.

A remanufactured engine may be used, but the engine would have to be the same year or newer. Besides the donated parts from an older truck, glider kits include new cab, dashboard assembly, new front axle assembly, front wheels & frame along with many other new commercial truck parts.

As company fleet vehicles get older, the cost of constantly repairing older trucks and replacing the commercial truck parts throughout the year can become expensive. The cost of purchasing a new truck can influence how long a company tries to continue repairing their aging trucks.

Here are some advantages of purchasing glider kits:

  1. Completed Glider Kits (purchase price, labor (build), parts) must be 75% or less than the cost of a new vehicle. This also referenced as the “Safe Harbor Rule”.
  2. Gliders can be sold without the 12% Federal Excise Tax, as minimum of 2 major components are being supplied by the customer and used in the build. The IRS has hinted that changes to this may occur and you should look into Ruling 91-27 on the IRS website
  3. Full factory backing with all new components, 1 year/100,000 mile warranty is standard, with optional extended warranties. Full engine warranties may vary by engine manufacturer.
  4. New Truck “financing rates” – often the value of the older components that are ‘donated’ for the build can be used against the down payment of the purchase of a Glider Kit.

During my research, I came across an interesting question. Will the glider kit-built truck be considered “new” or “used”? Glider kits can be certified as if they were new, given a new model year & VIN, which are deductible and would depreciate as a new asset.

The National Highway Traffic Safety Administration (NHTSA) regulates to be considered “Used”, a truck completed with both new & used commercial truck parts, including new cab (such as a glider kit) must incorporate a used engine, used drivetrain and used rear axle – and at least two of these components must come from the same “donor” truck. If the build meets these requirements and maintains a “used truck” identity, then no certification labeling is required.

Otherwise the truck is considered “new” which means documents need to be filled out for the builder to certify the truck in its final stage.

If you are tired of constantly repairing your truck and replacing varying commercial truck parts just to keep your rig running, then maybe a “Glider Kit Built Truck” is something worth looking into.