Racing Helps Promote DTNA’s Alliance Unit

HOMESTEAD, Fla. — Daimler Trucks North America wants a bigger piece of the aftermarket and is using stock car racing as a means to boost sales for its Alliance Truck Parts unit.

At a Nov. 19 press event here in conjunction with a Nascar race, DTNA Senior Vice President John O’Leary said that Alliance’s annual revenue is increasing by 19% and that the company’s business plan is to sell “middle tier” parts at a good price to secondary owners of Class 6-8 trucks.

O’Leary said Alliance parts are sold at dealerships for Freightliner and other DTNA brands, as well as TravelCenters of America and Petro Stopping Centers truck-stop chains. He said the company distributes parts for all major North American truck brands, not just Daimler’s.

“If you think of a continuum of good-better-best, we’re selling better parts at a good price,” O’Leary said in encapsulating his business plan. He said Daimler buys in such large quantities from suppliers, it gets superior per-unit prices.

O’Leary said his major competitors include the PartSmart unit of Navistar Inc., TRP Aftermarket Parts by Paccar Inc. and a line from dealership chain Rush Enterprises.

Alliance is not buying proprietary parts manufactured by rival truck makers. Instead, O’Leary said, the company is buying parts for Internationals, Kenworths, Macks, Peterbilts and Volvos that are made by suppliers for those competitors.

DTNA has annual revenue of about $2.2 billion from its parts business, O’Leary said, adding that Alliance is only a part of that. He estimated that as a 17.8% market share of the North American commercial vehicle aftermarket business.

Daimler does not break out Alliance’s revenue within its parts business.

The sharp increase in new truck sales this year has led to statements from all original equipment manufacturers about the difficulty in sourcing parts, particularly tires. O’Leary said that has not had a large effect on Alliance.

“Most of our customers are looking for replacement parts for legacy vehicles,” O’Leary said. “Our availability rate is about 98% to 99%,” he said, adding that the figure is helped somewhat by the fact that Alliance does not sell tires.

Among the items Alliance does sell are transmissions, clutches, heating-ventilation-air conditioning items, brake drums, coolant, wiper blades and charge-air coolers.

The larger difficulty Alliance faces in securing inventory to sell is not from competition from new truck makers but from aftermarkets in other nations.

“The bigger battle is from overseas, not OEMs vs. aftermarket,” O’Leary said. China and Brazil have particularly large appetites for replacement truck parts, he said.

As for the racing angle, O’Leary said market research shows that owner-operators, a major portion of his customer base, are often Nascar fans and often inclined to make purchases based on Nascar-backed endorsements.

Hence, the company is sponsors driver Sam Hornish Jr. in Nascar’s Nationwide racing series. Nationwide is akin to AAA minor league baseball, right below Nascar’s top-shelf Sprint Cup series.

O’Leary said Alliance is spending a little more than $1 million a year for its sponsorship, a more-easily affordable level compared with what the nation’s largest consumer products companies spend on Sprint Cup sponsorships. The company is sponsoring Hornish, a driver for Penske Racing, in eight races this year.

Alliance, Fort Mill, S.C., was founded by Daimler in 1998.