Wednesday, May 2, 2012

Diesel Particulate Filters – To Clean or Not to Clean, That Is the ROI Question

“Diesel particulate filters? Aren’t they often just an afterthought?” No, not really. Last week at NAPB we hosted a small but select group of subject matter experts from the heavy truck, construction, and agriculture equipment industries. Here are the takeaways from the discussion:
  • DPFs that are removed from the engine and regenerated off-board pose particular challenges for service parts OEMs. Industry strategies on how to replace DPFs in the field range from high control at one OEM to a dealer support model at another.
  • In North America, OEMs are competing against a prolific network of third party service providers with DPF cleaning facilities.
  • Many OEMs struggle to see the value-add in offering reman DPFs, as dealers increasingly turn to those local sources for cleaning or purchase their own cleaning equipment.
  • Dealers tend to return only the worst cores to their OEM for reman, leading to high core fallout rates for the OEM.
  • Yet, even if not directly offering DPF reman, OEMs want to retain control of the process that is used by 3rd parties to ensure high quality of the reman DPFs.
  • ROI is an issue: Does the revenue from DPF cleanings per year warrant the high initial purchase price of cleaning equipment; particularly outside of the over-the-road truck segment?
  • Does this sound familiar? Customers ignore service maintenance reminders, and OEMs and dealers struggle to get customers to commit to a frequent maintenance cycle when it comes to DPFs. One attendee summed it up nicely, “At the end of the day, it’s just a filter that’s expensive.”
Bottom Line: OEMs are on the fence about the business viability of a central DPF reman model – these parts represent a customer uptime requirement, but yield little to no marginal revenue potential. Accessibility and speed of service are issues: Customers seem to prefer locally available service solutions offered by dealers or third party providers. ROI is another concern. Is the investment in equipment worth the revenue potential and more consistent customer support? Those OEMs who have added DPF reman to their services are not convinced. In fact, we already see some OEMs abandoning the central model and moving this service down to the dealer level.

No comments: