Complex Engines Can Help Dealer Profits, ATD Says
By Jonathan S. Reiskin, Associate News Editor
This story appears in the May 5 print edition of Transport Topics.
GRAPEVINE, Texas — The increasing complexity of diesel engines represents a major opportunity for profitability in dealership maintenance shops, said the departing chairman of American Truck Dealers.
Iowa-based Peterbilt dealer George Grask told his membership in farewell remarks here April 26 that with new trucks selling at a slow pace, dealers should seize the chance to increase revenue through service and parts work. He also said dealers should insist that manufacturers serve as a single point for processing warranty claims.
“Proprietary products — especially engines with their complexity — excite most dealers because these products can enhance our parts and service business. They could help boost our profitability and provide long-term service opportunities — two things we love and need to have,” Grask said.
Diesel engines have changed in response to federal emissions regulations in 2002 and 2007, and are scheduled to do so again in 2010. Beyond engine emissions, Grask cited diesel-electric hybrids and telematics communications as additional examples of complexity in trucks.
Grask’s successor for a two-year term, Cincinnati-based Sterling dealer Gary Gibson, said at the convention’s close that he would continue Grask’s policy of opposing federal mileage standards on medium- and heavy-duty trucks, and that he would like to work with original equipment manufacturers to lobby Congress on areas of common interest.
In a joint interview, Grask and Gibson said they want truck makers to handle warranty claims for the entire truck, including the engine.
“The warranty should be processed and paid for by the manufacturer,” said Grask.
Currently, Gibson said, there are times when a dealer has to pursue a claim through an engine maker such as Caterpillar or Cummins, or a major system vendor such as ArvinMeritor, Dana or Eaton.
With a German corporation and a Swedish one owning five of North America’s eight major truck brands — Freightliner, Sterling and Western Star by Daimler, and Volvo owning Mack — Grask said he anticipates European business models expanding to the United States.
“In Europe you see cradle-to-grave maintenance programs run by the manufacturers through the dealers. You purchase a service contract with fixed costs for a certain period of time or mileage. I expect that to come here,” Grask said.
As for the technicians who do the work, they said it takes continuing investment to keep personnel up to date.
“We’re paying to train — it’s about [$,7,000] per person” as a result of the new 2007 engines, Grask said. Gibson said his dealership increased labor rates in mid-April.
The two dealers also said they were eager to work with truck makers in opposing mandatory federal Corporate Average Fuel Economy rules, or CAFE standards.
They said truck manufacturing is different from the automotive industry in that while most car owners would like to get more miles per gallon, truck owners are obsessive on the issue. Therefore, they said, there is no reason to regulate on what industry is already pursuing seriously.
“This is unnecessary,” said Grask of mandatory CAFE. “Engine manufacturers understand the competitive environment.
“Look at 2010 and the SCR-EGR debate,” he said of competing engine technologies, selective catalytic reduction and exhaust gas recirculation. “This is so serious that if there is a clear winner on this, that company could own the market. Long-term relationships between truck buyers and manufacturers could be broken.”
Both men said they are making plans to sell urea in their respective dealerships. The chemical is a necessary additive for SCR engines in 2010.
Although the truck and engine makers are some of the nation’s largest companies, Gibson said ATD — and its parent organization, the National Automobile Dealers Association — can bring a lot to Washington in terms of lobbying presence.
“We want the manufacturers to have closer cooperation with ATD. There are more truck dealerships than manufacturers.
“NADA is very sophisticated, and we can put at least one local dealer or more in every congressman and senator’s office in Washington,” Gibson said.
“There will always be differences of opinion between manufacturers and dealers,” Grask said, “but right now, we have far more in common with each other than in previous years.”
This story appears in the May 5 print edition of Transport Topics.
GRAPEVINE, Texas — The increasing complexity of diesel engines represents a major opportunity for profitability in dealership maintenance shops, said the departing chairman of American Truck Dealers.
Iowa-based Peterbilt dealer George Grask told his membership in farewell remarks here April 26 that with new trucks selling at a slow pace, dealers should seize the chance to increase revenue through service and parts work. He also said dealers should insist that manufacturers serve as a single point for processing warranty claims.
“Proprietary products — especially engines with their complexity — excite most dealers because these products can enhance our parts and service business. They could help boost our profitability and provide long-term service opportunities — two things we love and need to have,” Grask said.
Diesel engines have changed in response to federal emissions regulations in 2002 and 2007, and are scheduled to do so again in 2010. Beyond engine emissions, Grask cited diesel-electric hybrids and telematics communications as additional examples of complexity in trucks.
Grask’s successor for a two-year term, Cincinnati-based Sterling dealer Gary Gibson, said at the convention’s close that he would continue Grask’s policy of opposing federal mileage standards on medium- and heavy-duty trucks, and that he would like to work with original equipment manufacturers to lobby Congress on areas of common interest.
In a joint interview, Grask and Gibson said they want truck makers to handle warranty claims for the entire truck, including the engine.
“The warranty should be processed and paid for by the manufacturer,” said Grask.
Currently, Gibson said, there are times when a dealer has to pursue a claim through an engine maker such as Caterpillar or Cummins, or a major system vendor such as ArvinMeritor, Dana or Eaton.
With a German corporation and a Swedish one owning five of North America’s eight major truck brands — Freightliner, Sterling and Western Star by Daimler, and Volvo owning Mack — Grask said he anticipates European business models expanding to the United States.
“In Europe you see cradle-to-grave maintenance programs run by the manufacturers through the dealers. You purchase a service contract with fixed costs for a certain period of time or mileage. I expect that to come here,” Grask said.
As for the technicians who do the work, they said it takes continuing investment to keep personnel up to date.
“We’re paying to train — it’s about [$,7,000] per person” as a result of the new 2007 engines, Grask said. Gibson said his dealership increased labor rates in mid-April.
The two dealers also said they were eager to work with truck makers in opposing mandatory federal Corporate Average Fuel Economy rules, or CAFE standards.
They said truck manufacturing is different from the automotive industry in that while most car owners would like to get more miles per gallon, truck owners are obsessive on the issue. Therefore, they said, there is no reason to regulate on what industry is already pursuing seriously.
“This is unnecessary,” said Grask of mandatory CAFE. “Engine manufacturers understand the competitive environment.
“Look at 2010 and the SCR-EGR debate,” he said of competing engine technologies, selective catalytic reduction and exhaust gas recirculation. “This is so serious that if there is a clear winner on this, that company could own the market. Long-term relationships between truck buyers and manufacturers could be broken.”
Both men said they are making plans to sell urea in their respective dealerships. The chemical is a necessary additive for SCR engines in 2010.
Although the truck and engine makers are some of the nation’s largest companies, Gibson said ATD — and its parent organization, the National Automobile Dealers Association — can bring a lot to Washington in terms of lobbying presence.
“We want the manufacturers to have closer cooperation with ATD. There are more truck dealerships than manufacturers.
“NADA is very sophisticated, and we can put at least one local dealer or more in every congressman and senator’s office in Washington,” Gibson said.
“There will always be differences of opinion between manufacturers and dealers,” Grask said, “but right now, we have far more in common with each other than in previous years.”
