According to Commercial Motor Vehicle Consulting (CMVC), its Parts Aftermarket Leading Indicator (PLI) measure decreased slightly in January to 97.71 from 97.76 in December. What’s more, stated the research/analysis firm, the PLI has been trending downward since August 2012 implying that fleet business conditions have been softening. On the other hand, the PLI “appears to be stabilizing” and remains above the “critical” value of 95.
“CMVC views 95 as an inflection point as a PLI figure below 95 implies fleet cyclical factors have weakened to levels causing fleets to make substantial changes to operations, such as the temporary idling of trucks that decrease parts aftermarket sales,” explained CMVC president Chris Brady.
“Changes to fleet operations in response to weak fleet business conditions implies adjustments to truck capacity, such as temporary idling trucks, returning leased trucks prematurely, reducing truck capacity and other strategies that indirectly slow the rate of depreciation of the truck population resulting in lower parts aftermarket sales,” he continued. “A PLI figure above 95 implies truck utilization remains at relatively high levels resulting in normal depreciation of the truck population.”
Brady pointed out that when the truck population is relatively stable and depreciating at normal rates, parts aftermarket sales are largely influenced by vehicle demographic factors, including the population of trucks by vocations/application and age. “Vocations/applications determine rates at which parts depreciate, since part stress differs by vocations/applications. For example, brake parts depreciate at faster rates in refuse applications than on-highway applications due to the constant stop-and-go environment,” he related.
“The age distribution of trucks within vocations/applications also influences rates at which parts depreciate, “ Brady continued, “since newer model trucks within a vocation/application operate at higher utilization rates as measured by annual miles driven than older model trucks within the same vocation/application.”
According to Brady, cyclical factors related to the fleet business environment as measured by the PLI imply trucks are depreciating at normal rates and the vehicle population will remain relatively stable in the near term. “Since PLI is relatively stable and above 95, fleets are making moderate adjustments to operations to improve profitability,” he advised, “so vehicle demographic factors are playing a larger role in influencing parts aftermarket sales.
“The truck population has shrunk in response to lower freight volumes/business sales as a result of the recession and newer model trucks make up a smaller share of the population than before the recession, so vehicle demographic factors imply a soft parts aftermarket sales environment as compared to past periods when the U.S. economy was expanding,” Brady added “During past periods, a growing U.S. economy stimulated growth of the vehicle population that ultimately stimulated parts aftermarket sales.”
The PLI measure is designed by CMVC to serve as a short-term forecasting indicator of U.S. commercial vehicle parts aftermarket sales by signaling peaks/troughs and inflection/turning points in parts sales due to changes in fleets’ business environments as a result of cyclical change due to expansion, recession and recovery.