Dealer Demand Tests Aftermarket

Q&A with Ed Nelson, president and CEO for Rotary Corporation

Q: Most dealers have reported strong parts and service business as customers have opted to squeeze more life out of existing equipment. Have you also witnessed this trend?

Both consumer and commercial parts sales have increased in the past year, with the consumer segment of our business up more due to economic conditions. Consumers are looking for smart ways to save money and keep their outdoor power equipment running. The best way is to repair and maintain equipment with competitively-priced aftermarket parts.

Our commercial business has been strong in the past and we continue to see a gradual increase in sales, which is encouraging.

Q: Many OEMs report strong parts sales over the past year or two, but has this trend also helped the sale of aftermarket parts?

OEMs still hold a larger portion of the overall parts business, but the aftermarket industry is continuing to grow. Quality and price are two factors that influence a buying decision. I think we’re beginning to see more and more people choosing aftermarket parts because they are durable and value-priced. Just as the automotive aftermarket parts industry has grown over the years, we will see that in the power equipment industry, too.

Q: Explain why Rotary’s overhaul and tune-up kits were created.

We are always looking for ways to help our dealers when business is slow. The idea behind the emphasis on overhaul and tune-up kits is to help our dealers obtain service and tune-up work prior to the mowing season. It’s a simple and profitable kit for dealers who are looking for ways to increase off-season sales. It’s also a great value for their customers who want an engine tune-up for more efficiency and better performance. (See page 20.)

Q: What are some of the other things Rotary has been doing to help its dealers increase parts sales?

We have increased our parts inventory while supplying customers with a 95% fill rate on all our parts orders. We provide easy online ordering for dealers and have made our website and sales catalog more user-friendly.

We are offering extended dating terms that allow them to free up more working capital. In addition, most of our orders are processed and filled the same day they are received, ensuring next-day delivery for most customers. Servicing dealers can order the parts they need, when they need them, without having to tie up their money in inventory.

Q: Are you seeing increased sales activity from smaller dealers, bigger dealers, both?

We have seen real sales growth from both small and large dealers. We have not experienced any growth in areas of the country that have been affected by droughts.

Q: What are some of Rotary’s other fast-movers as of late?

We have seen a large increase in trimmer line sales, especially Rotary’s Vortex Trimmer Line. This trimmer line requires less power and it’s also more durable and quieter, which gives customers more value for their money. Once people try it, they see the difference and make the change.

Rotary’s blade line has also done exceptionally well this year. We take pride in the fact Rotary has what we think are the sharpest blades on the market. Our customers are noticing that Rotary blades stay sharp longer. Another selling point is that all Rotary Blades are American-made in Tattnall County, GA.

Q: Given the trend of consumers looking for more equipment life, has Rotary seen increased sales in any other areas, such as internal engine components?

The trend we have noticed is that most of your smaller engines are “throw away engines”. In many cases, it costs more in labor and parts to fix one of these than to buy a new engine. Internal engine part sales have been decreasing over the past five years, simply because many people are choosing to purchase a new engine or new equipment.

Q: What are you anticipating for 2010?

I always want to be optimistic, but I do realize that in tough economic times, we also need to also be realistic. I’m no economist, but I do know that it takes time for the economy to recover. I do see the parts business continuing to do well.

We’ve enjoyed another successful year, but our business is always in the hands of weather. If we have plenty of rain then we can expect strong sales in 2010.

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