If anybody wants an accurate diagnosis of the true state of health of the UK’s heavy truck market then they could do worse than talk to Keltruck. Founded in 1983 by Chris Kelly and the biggest independently-owned Scania dealer in Europe with a turnover of £139m in 2013, the West Midlands-based group operates out of no less than 21 locations.
A mixture of dealerships and vehicle maintenance units spread across the Midlands and South Wales, Keltruck has outlets as far apart as Worksop, Cardiff, Rugby and Ross-on-Wye. Keltruck’s West Bromwich head office next to the M5 was redeveloped last year and forms part of an 8.5-acre site that plays host to everything from a large service and repair workshop to a parts recycling centre.
As far as sales of new Scanias are concerned, the first few months of 2014 were hard going, says Keltruck Managing Director, Andrew Jamieson, as the impact of the switch from Euro-5 to Euro-6 made its presence felt. Demand has improved more recently however, he reports, and the company should sell 800 this year.
“Operators are getting used to Euro-6. Many of them now realise that they have hung on to their existing vehicles for too long and need to replace them and they are more positive about the future than they were previously,” he says.
“As a consequence we’re getting a lot of enquiries and we’re putting together plenty of quotations. Things are looking pretty good for 2015.”
Rigids account for around 50% of Keltruck’s sales at present with the balance made up of tractor units and Jamieson is pleased to see that demand for 8×4 tippers has picked up.
Delivery Dates
Obtaining chassis from the factory is proving to be something of a challenge at times, as is getting them built. While tight supply is a clear and welcome indicator that the market is improving, he says that some body builders are quoting delivery dates for May 2015.
Second-hand sales remain an area of concern and at an anticipated 370 units this year, will run at less than half the level of new sales. “We’re only selling 50% of the volume of used trucks we want to sell,” Jamieson says.
That is not because there is a lack of demand but because there is such a dire national shortage of good-quality stock. The paucity is the consequence of poor new truck sales at the height of the recession; a vehicle cannot be sold second-hand if it was not sold new to begin with.
Jamieson worries that today’s used drought may turn into oversupply in two or three years’ time.
“We’re seeing a lot of new trucks across the industry being acquired on three-year contracts at present,” he points out. If they are all disposed of at the same time then used prices could end up being depressed.
“As a consequence I’d like to see a lot more four- and five-year contracts being written to reduce the risk of this happening,” he says.
Long-term deals
Operators need not be wary of entering into longer-term deals, given that trucks are far more durable and reliable than when Keltruck first opened for business some three decades ago. While that is good news for customers, better reliability is having an impact on Keltruck’s aftermarket revenue. “We’ve seen warranty parts sales drop by 24% in just 12 months,” says Jamieson.
All manufacturers are attempting to shore up dealer workshop income by supplying new vehicles complete with a maintenance package, and Scania is no exception. Something else likely to underpin dealer aftermarket activities is a realisation among some hauliers that their in-house workshops may be unable to cope with the complexities of Euro-6 without a major investment in technician training and equipment; an investment they may be either unable or unwilling to make.
“Remember that every time a Scania comes into one of our workshops for an inspection or a service it receives all the latest software updates which can lead, for example, to an improvement in fuel consumption,” Jamieson points out.
“It will not receive them otherwise,” he continues. “Software upgrades are not delivered automatically while the truck is out on the road – although this may change in two to five years’ time – but instead require manual intervention.”
Testing
The company runs four Authorised Testing Facilities and is considering opening a fifth. The £300,000 or so investment that will be required is a significant one, given that an ATF cannot be viewed as a profit centre and in Jamieson’s view does not generate incremental service business either.
So why bother? “It’s about customer support and it’s about the future,” he replies.
That future could hopefully involve suitably-qualified and approved Keltruck technicians being allowed to undertake testing themselves, rather in the way that cars and light commercials are tested, as opposed to continuing to rely on employees of the Driver and Vehicle Standards Agency. That would mean tests could be carried out late at night or early morning which many hauliers would view as far more convenient. It would enable the dealership to maximise the expensive capital equipment it has invested in.
While stressing the high quality of its customer base, Keltruck is well aware that all operators have to control their costs tightly. In response, it has been marketing recycled parts for Scania trucks over several years; second-hand components that have been stripped from older trucks that are being dismantled and can be re-used without affecting safety.
“We’ll sell £900,000 worth this year,” he says. “We export some, but that side of the business is down at the moment thanks to currency movements that have not been in our favour.”
As well as ticking the environmentally-friendly box, recycled spares appeal to budget-conscious operators that need to maintain and repair older Scanias but would probably not buy new parts at a dealership if they could avoid it. As a consequence the recycling operation generates incremental revenue.
“The type of part we sell has changed over the years,” he says. “In the past we sold lots of axles and differentials but these days there isn’t the demand because those fitted originally are so reliable.
“Today around 75% of the items we sell is for R-Series while 20% is for 4-Series,” he reports.
Keltruck continues to supply recycled parts for 3-Series, too. There are still plenty of them out on the road; some in the hands of die-hard Scania preservationists, but a few still earning their living.
So, with registrations up, an increased reliability of vehicles and demand for used parts rising, the overall prognosis for the truck market is good. It’s likely we will see even more Keltruck outlets opening in the years ahead.
