MacKay & Company Heavy Truck Aftermarket 2021 Recap
Hard to believe that we are already in December. I won’t say this year has passed, but the pace picked up dramatically in the second half of the year, largely because a lot of the country was getting back to normal and we all apparently wanted to buy stuff, a lot of stuff. stuff, and it got everyone busy.
My concern today is that this pace may be slowed down by the new COVID variant; but as I have learned over the past 20+ months, I will probably change my mind tomorrow.
I have noticed that some TV channels do not mention the names of criminals who commit heinous crimes so as not to give them the extra attention they may need. I am taking the same route with the COVID variants in the hope that they will and will stop. I’m going to give omicron a break as it doesn’t look as bad as the other variations. If it gets any worse, I will ban any mention of it. Unfortunately, I think this will be as effective as the COVID policies we have in place in Illinois.
MacKay & Company started the year with a positive outlook for the aftermarket. Admittedly, 2020 was not a good year, but it rebounded strongly in the second half of the year, and in January we estimated that 2020 was down a little over 9% from 2019. That was good by compared to some of the more negative outlook for April. and May 2020.
We knew the vaccines would arrive in early 2021, and I think that contributed to the positive outlook. Our initial forecast for 2021 predicted the aftermarket to grow by almost 12% from 2020, essentially returning to 2019 levels.
The vaccines not only arrived, but they arrived early and in the summer just about anyone who wanted a vaccine could get one. All of this good news has helped fuel an already strong demand for everything, which has made it difficult for supply chains to get used to this new normal. Vehicle manufacturers, dealers, distributors and fleets have had to contend with shortages, price increases, labor shortages and a continuous and extensive forecast that these issues will end.
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I would have loved to write down all the examples of crazy stuff happening this year, but here are a few quick examples. A fleet selling trailers three years for more than it cost them to buy new ones. An automobile manufacturer agreeing to purchase a product at an unknown price, which will not be delivered for several months beyond the historic delivery times. A mobile service provider needing to redesign their mobile service vehicles for a Class 3 chassis vehicle because the provider was told they did not know when they would get the Class 5 vehicles they wanted.
Despite this, truck dealers and independent parts distributors have reported higher parts sales every month since the start of the year compared to last year, and our component manufacturer aftermarket index is also up. increase since the beginning of the year to more than 15%.
At this point it hasn’t been canceled, just checked it online. Inflation is a concern, COVID will never go away and how we deal with it is a concern. Double and triple orders of products by manufacturers, distributors and retailers in all industries could also have a disastrous result at some point in 2022. On the positive side, all the various forms of stimulus brought to market and the savings that people are racking up by not doing much during the pandemic looks to land and there is also a small percentage of money in the infrastructure bill is for real infrastructure projects that could start hitting in 2022.
Our most recent forecast, which will then be updated for Heavy Duty Aftermarket Dialogue (HDAD) in January (register here!), Indicates that the aftermarket for 2021 has grown by over 17% compared to 2020 at $ 35.4 billion and 7% in 2022. Inflation has not been transient, the forecast may be slight with the impact on prices.
John Blodgett has worked for MacKay & Company for over 20 years and is currently Vice President of Sales and Marketing, responsible for customer contact for single and multi-client projects. He can be reached at [email protected]