LAS VEGAS. Just as truck fleets have been sorely tested by the upheaval in the economy, so have new and used truck dealers. Brian Chapman, gm of Las Vegas Freightliner-Sterling-Western Star, for one will tell you that 2009 has been one of the worst years he’s ever experienced as a truck dealer. (View a photo gallery of the Las Vegas dealership)

Two years ago, construction trucks comprised 75% of the dealership’s new truck sales; there were dump trucks and concrete mixers rolling out of the showroom to serve the then booming housing sector. Back then, demand for truck maintenance service ran at a fever pitch, with technicians jumping from job to job as dealerships fought over staff to help unclog their crowded bays. (View video of Brian Chapman, GM of the dealership)

Today, that’s all changed. New and used truck sales have dried up completely, along with much of the Vegas dealership’s maintenance service business. Chapman’s been forced to reduce his staff of technicians from 44 to 15 in the face of the firm’s revenues plunging 40% across the board from the heady days of two years ago.

“This recession is hitting everyone, from the richest of the rich to the poorest of the poor,” Chapman told FleetOwner at his dealership here. “We’re not singled out – we’re not in this alone; everyone is in the same boat.”

That’s a view echoed by many dealers, regardless of the brand of trucks they sell, according to Kyle Treadway, president of West Valley City, UT-based dealership Kenworth Sales Co. and chairman of the American Truck Dealers Assn. “This is a cyclical industry and always has been,” he told FleetOwner. “Now, the current valley may be the deepest we’ve ever experienced, but nevertheless, it’s another cycle all the same. We’ve been here before.”

Treadway – whose company operates 18 dealerships in Idaho, Montana, Nevada, Oregon, Utah, Washington and Wyoming – noted that how dealers are surviving the downturn is fairly simple-- paying close attention to the “back end” of the operation and diversifying as much as possible on the parts and service side of the ledger.

“You get through these downturns by focusing on the aftermarket, the parts and service side of the business,” Treadway explained. “Veteran dealers have also broadly diversified as much as possible so they can service every make and model of vehicle, from Class 8 tractors to buses, motor homes, medium-duty trucks, trailers, etc. That way, when one segment of the economy begins to recover, dealers can benefit.”

For example, he said his dealership is seeing more maintenance business from public works fleets of late. New truck and used truck sales are also bumping up across the U.S., though unevenly, as part of a mini “pre-buy” of sorts.

“There are bright spots in the sales picture, but not consistently and not in all regions of the country,” Treadway said. “There’s a little bit of a pre-buy going on as fleets try to avoid the premium for 2010 emission compliant equipment, as well as to replace aging equipment.”

Data from San Antonio, TX-based Peterbilt dealership chain Rush Enterprises mirrors that trend, with the company reporting its Class 8 truck deliveries increased in the third quarter over the second quarter of 2009 as several large fleet customers took delivery of trucks.

That helped mitigate the effect of continued depressed U.S. Class 8 retail truck sales, which were down 33% over the third quarter of 2008, while Rush truck sales were down only 24% for the same time period, noted W. M. “Rusty” Rush, president & CEO, in the firm’s third quarter earnings report.

Rusty Rush believes this “pre-buy” trend does not have legs – meaning dealers must focus on other areas to maintain revenues. “We do not anticipate a significant truck pre-buy to occur in the fourth quarter of this year as lingering depressed conditions in the overall economy and tight credit continued to negatively impact freight movement, causing continued excess capacity and depressed trade values,” he said. “These factors have forced both vocational and fleet buyers to lengthen their replacement cycles beyond historical norms, most likely extending any substantial upturn in new truck purchases well into the second half of 2010.”

Rush Enterprise’s truck segment recorded revenues of $289.8 million with parts, service and body shop sales revenue at $96 million in the third quarter of 2009, compared to $392.5 million in truck sales and $116.3 million in parts, service, and body shop sales in the same period last year. The company delivered 1,030 new heavy-duty trucks, 637 new medium-duty trucks and 760 used trucks during the third quarter this year, compared to 1,350 new heavy-duty trucks, 919 new medium-duty trucks and 936 used trucks in the third quarter of 2008.

Rusty Rush also noted that aftermarket parts, service and body shop sales are being negatively impacted as many customers are using excess truck capacity to delay vehicle repair and maintenance expenses – resulting, in part, in a 21% decline in parts, service and body shop gross profit for Rush Enterprises in the third quarter.

“The months of November through February have historically been the slowest months for parts, service and body shop sales industry-wide,” Rush stressed. “Without a significant pre-buy and as we move into the traditionally slower season for parts, service and body shop sales, we anticipate that the next six to nine months could be a very challenging market for truck and aftermarket sales.”

“Repairs are down because fleets parked a lot of equipment and trucks aren’t running as many miles now – so if something breaks, they just switch over to a parked truck,” added Las Vegas’ Chapman. “Another problem is that with so many experience technicians laid off, fleets have been able to hire them and do more of their own maintenance – that’s a double whammy for us.”

Still, Chapman believes that these tough times also allows his dealership and others like it to retool their operations so they can become more efficient when better economic times return.

“I believe in not wasting a good recession – it’s a chance to finally make the changes that we were always going to do but never had time to do; it’s an opportunity to reinvent the dealership,” Chapman stressed. “We built a huge house on a rocky foundation so now it’s time to smooth that foundation out so that when sales take off again, we’ll have solid people and processes in place to handle it.”