Building a Modern Diesel Parts Platform: Strategy & Growth with ATL Diesel’s Ken Clinchy

In this episode of Know to Grow: Light to Heavy Duty, host Chandler Kohn sits down with Ken Clinchy, President & CEO of ATL Diesel, to explore how a specialized diesel engine parts company scales in today’s evolving aftermarket. Ken shares insights on distributed fulfillment strategy, offshore sourcing and quality control, e-commerce innovation, product development, and long-term industry trends shaping heavy-duty trucking. The conversation offers a practical look at pricing strategy, customer value creation, and building a resilient supply chain in a competitive market.

Chandler Kohn: Hi everybody and welcome back to another episode of Know to Grow, a Light to heavy Duty podcast hosted by Chandler Kohn. Today we have on Ken Clinchy, president of ATL Diesel, President and chief executive Officer, I believe. Great to have you on, Ken. Look forward to jumping into this discussion. Tell us a little bit about yourself and ATL Diesel.

Ken Clinchy: Yeah, absolutely. Thank you for having me on. Appreciate the time. So my background is in the heavy duty parts space. I spent 11 years with FleetPride in a variety of roles, from pricing to category management to marketing. And then about 13 months ago I joined ATL Diesel to come on as the President and CEO. So it’s been a lot of fun over the last year learning the ATL Diesel business. The original founder, Dan Bendever, built a phenomenal business. He’s been in the business since 1973 and really has built ATL into what it is today. ATL, which stands for above the line Diesel. A lot of folks confuse that for Atlanta. We get that a lot. But it’s above the line Diesel. And we’re a premium aftermarket engine parts distributor and manufacturer. We started as a machine shop, as a family owned machine shop working on remanufactured diesel engine parts and really have evolved into becoming a distributor and manufacturer of majority of new parts. We do reman today. We have our own remand facility, but we really focus on new parts. It simplifies supply chains and honestly the core process, which we’ll talk a little bit about, is a challenge for everyone. And so where we can avoid it, we do try to push for new product. We’re based in Dallas, Texas. We have a large distribution facility in Springfield, Missouri and then additional shipping points around the country to help support our vast customer base, which is in all 50 states, but mainly focused on the lower 48. And we cover everything from cylinder heads to oil pans and everything in between. So if it touches the engine, we likely sell it. And we really try to stick to what we know, which is engine parts. And so we try not to be a generalist. We try to be a specialist in selling diesel engine parts.

Chandler Kohn: Excellent. And how many employees do you have?

Ken Clinchy: Yeah, so we have just over 40 employees, including our remanufacturing facility which is in Chillicothe, Texas.

Chandler Kohn: Okay, that’s between Amarillo and Dallas, right?

Ken Clinchy: Yep, yep, exactly. Yep. It’s a very small town out on. I think it’s 285, but yeah, very, very small town between Dallas and Amarillo.

Chandler Kohn: Okay. And so the audience knows we’re going to get into Some, some detailed questions today. Not going to try to keep it too generic. I really kind of want to do a deep dive in on atl. To help, you know, the listeners really kind of understand what you guys do and how you think through really the strategy behind your growth, your distribution network, what you’re manufacturing, what you’re not manufacturing, that type of deal. So this first section, let’s talk about supply chain and distribution. So you basically run a 3 PL distribution hub in Springfield, Missouri and then you ship from seven locations, I think Texas, Cleveland, Indiana, Georgia, Florida and California. How did you develop this distributed fulfillment model? What’s your average delivery time?

Ken Clinchy: Yeah, so really the model is built around the delivery time. So we try to keep our transit times to about two days to any customer in the US and we ship a good mix of LTL and parcel. And so that’s why we have multiple ship points leveraging different vendor facilities, some of our own, some of theirs. And that keeps us in that sort of two days of transit time. And so it’s intentionally designed to be centralized in nature so that we can complete the job all in one order, but distributed enough that we can reach all parts of the US within two days. I can also say that we’re continuing to expand that distribution network as we, as our customers have grown, as we’ve grown, we’re constantly looking for additional locations that can close the gap right there. There are portions of the country where it’s a little harder to hit that two days. And so we’re constantly looking to invest in additional facilities where we can keep that two day commitment to our customers.

Chandler Kohn: Good. Now let’s, let’s jump to this kind of, this ground shipping item that I wanted to talk about. You know, that can be a pretty big hit on margin, especially in the automotive space when some of these components are, can get quite heavy. Is this a big cost burden to you guys? And at one point does it maybe become unsustainable or require a bump in pricing?

Ken Clinchy: Yeah, so it is definitely a major cost to the business. We offer it really because we try to give our customers upfront pricing and no gotchas. Right. So they get to check out, be it on the web or they’re working with one of our sales reps. We want them to know, hey, the price is the price and it’ll get to you regardless of shipping costs. Now the challenge is costs continue to go up, be it inflation, tariffs, labor, everything that everyone’s experiencing. Freight is a piece of that too. We see freight go up every single year. So it’s something we keep a really close eye on and understand One, our customers appreciating the value that they get from free shipping, which it is. Right. As I mentioned, a good portion of what we ship is LTL and so you’re looking at, call it $250 minimum to move that pallet and that can really eat into profits. So it is something we’re constantly looking at, we’re monitoring and it’s a significant line item. But we feel like the value that it brings for our customers is just really important. And so it’s at least for now, for the foreseeable future, it’s something that we’ll keep and we’re able to offer. Going back to kind of your question on distribution network too, it’s also something we factor into our distribution network as we continue to expand it. Part of that is helping to reduce those obviously ship times, but also cost. The closer we can move it to the customer, the less freight that we have. So we definitely are trying to minimize it wherever we can, but we do think it’s an important piece of the value that we deliver to our customers today.

Chandler Kohn: Good. And then I know you source from international suppliers, including some, maybe some vendors in Brazil. How do you balance your cost of goods sold advantages from offshore sourcing against quality consistency that, you know, customers know your brand as?

Ken Clinchy: Yeah, it’s a really good question. And you know, I’ve been doing offshore sourcing for a really long time, back to my days at Fleet Pride and often it’s not always about a cogs advantage. So of course, yes, in certain instances it’s absolutely less expensive to produce overseas. But in a lot of cases there just isn’t capacity to handle the needs, especially in larger parts to manufacture them domestically. And so that, that leaves you with, you know, with different options you need to explore. And so we really look at it, you know, if there is a US manufacturer that can handle it and can do it in a cost effective manner, we’re happy to do that. But if not, then, you know, we’re going to look overseas. I think the other piece our industry has, and I think Covid really changed this is overseas doesn’t necessarily mean that it’s a different quality level. Right. And if you put in the same quality quality control, the same engineering control, the same inspection that you do domestically, you can get a very, very good product in, you know, all over the world. And so we do, we leverage manufacturers all over the world and it’s really about the process that we put them through on verifying their, you know, their in house quality control. Are they using, you know, our engineering resources? Can they maintain that quality consistently? Like it’s one thing to test one in every thousand pieces and say it’s good, it’s another thing that you are delivering every single time you ship to us. And so we do inspection here domestically as well. So it’s really about making sure that they can live up to the quality that’s demanded of the ATL brand and assuming that they do, we feel very confident in the product that they deliver. And to be frank, whether it’s aftermarket or oe, a lot of that is produced overseas today. And so we feel very confident in our manufacturing partners. I’d also say that it takes a lot of time, a lot of effort and a lot of investment to vet those suppliers. Right. And so it’s a pretty small list that we have that are vetted, but there’s a lot of people who would like to be on that list. But it definitely is a very high hurdle for us to trust a supplier with the ATL brand.

Chandler Kohn: It sounds like you got that nailed down. I noticed that the E Comm storefront looks like it’s running on Shopify. Not sure that’s overly common kind of where you are in the space. What drove that decision over just a traditional ERP integrated kind of B2B E commerce solution?

Ken Clinchy: That’s a good question. So a couple of things for us. One is we wanted to make sure that we deliver a leading experience in addition to B2B functionality and all the things that our customers expect. What I would say is what you find is on some of the, I’m not saying all of them, but on some of the B2B platforms, you’re sacrificing the customer experience for the functionality. Right. It ties into the rp, which is great. The functionality is there, but the, the experience and the UI and the front end is not as intuitive as we would like it to be. Shopify does an excellent job. You know, thousands of thousands, hundreds of thousands of merchants on Shopify. There’s a look and feel to it. People are comfortable with it. And so we felt comfortable, you know, entrusting our business to Shopify. The other thing that we try to look at is from an IT strategy is really a best of breeds. And so instead of trying to use a single piece of software to solve all of our challenges, we do actually employ a best of breeds where we’ll go out and find who do we think is best in that space. And Bolt that on and figure out how to integrate that. Of course, it creates some challenges from an integration standpoint and keeping everything in sync. But we think that that’s actually an easier way or a better way to serve our customers because we’re giving them the best of both worlds. And then also, you know, honestly, it helps in this day and age with, you know, outages. Right. Like, we see software go down being that we’re not all tied to our erp. Like, we have backup options. We can, you know, we can leverage Shopify if the ERP were to go down. There’s some optionality there that we wouldn’t have if everything was tied into to our erp. And then of course, you know, when it comes to contract negotiations, it gives you some additional leverage because you’ve got multiple options. You’re not all locked in with one software supplier. And, you know, when you’re a smaller business like ours, you have to take advantage of those things. You know, we’re not signing these great big enterprise contracts where, you know, it’s. It’s different dynamics.

Chandler Kohn: That’s helpful. I appreciate the overview. Let’s go to some of the kind of this go to market strategy and customer acquisition. I have a couple questions around here. So you mentioned you have 40 employees. How many are at the machine shop again?

Ken Clinchy: So, yeah, we’ve got. It varies depending on workload, but it’s four to five employees in the. In the shop in Texas.

Chandler Kohn: Yep, I got it. And. And if you had. I mean, it’s a very small town, right? It’s like less than a thousand people. That’s hardly anything. Has that ever been a problem, being located kind of in the middle of nowhere? Have you ever thought about moving that small machine shop somewhere else? I mean, or have you not really had any strategic issues with it?

Ken Clinchy: Yeah, I would say, honestly, the biggest challenge is probably moving freight. So. So you don’t have major 3 PL or you don’t have major, sorry, trucking hubs in Chillicothe. It’s one town over in Vernon, so it’s not terrible. But I would say that’s probably been the bigger challenge as far as having retaining team members out there. So one, we have really talented manager who runs that shop. He’s really ingrained with the community, and so he’s able to find the type of team members we need out there and maintain them. You know, I would say that the turnover is relatively low and we haven’t had major issues, but definitely, you know, if we were new in that market or just walking in that market, I would be very nervous about being able to recruit, you know, team members out there. But what I tell you is it really comes down to the manager out there and his connections locally that he’s able to find the type of talent talent that we need. And honestly the, the workforce out in Chillicothe fits with, with that type of machine work. And so there is, there is a decent talent pool out and out out until coffee.

Chandler Kohn: Interesting. Yeah, my, my. My wife’s family is from a small town in Texas called Grand Saline. It’s between Dallas and Tyler. About 3, 000 people. I say one stoplight, she says there’s two. It doesn’t look like there’s a whole lot of talent in this industry. So I can imagine what a, what a town, a third of the size would be like. But anyway, I appreciate that overview there. I want to talk about the channel strategy a little bit. So you have like a, I think a trust mechanics referral network and a become a distributor program. That may suggest your strategy is kind of beyond the direct to end user. Talk about the revenue per channel, directory, commerce, distributor wholesale, even directly over the phone. Kind of help the audience understand that breakdown a little bit.

Ken Clinchy: Yeah, absolutely. So ATL’s founding was really as mostly an E commerce business. So that’s how the business started. And I say an E commerce business, but really E commerce in the sense of leads. Most of the conversion and selling is still done over the phone. Right. People need that level of trust that they’re getting the right part even when they’re providing an engine serial number. And so it was really a digitally first business in terms of how the leads came in and then converted via phone or quotes and where that’s transitioned over the last four to five years is going. And with the ability to serve everything from an owner operator to a large fleet. Diesel repair facilities, resellers, even OEDs. And so really the business has diversified from being majority E commerce, if you will, to much more into the distributor wholesale model. And that’s really what drives the business today. We still support a large number of owner operators. That’s the backbone of our industry. We will continue to support them, but we’ve also been able to find some great partners on the distribution side with our ATL product. And that’s been really successful for us. And that’s probably the biggest, you know, that’s the biggest growth area of the business today is really around, you know, your larger diesel repair facilities, your resellers and like I mentioned, your OEDs.

Chandler Kohn: How, how intentionally are you targeting or, you know, intentionally at all the performance sector in the space? Just not quite sure what that breakdown looks like for you.

Ken Clinchy: Yeah, so it’s something that’s been really unique to ATL from the get go in that we, we really try to supply a variety of parts and across the spectrum of OE equivalent to very high performance. And so it’s not, it’s not necessarily a huge piece of our business. But what I’d say is depending on the situation and the customer, someone might want to upgrade, you know, to a stage five or stage six cylinder head. They may not be running, you know, a race truck, but they’re trying to get another120,550 horse out of that engine and they want parts that can do that. And so we’re able to offer them, hey, take a fleet. So a fleet is typically not trying to increase the performance of their vehicles. They want an OE equivalent. We’ve got that in what we call our fleet tough line. And then we have our performance high end line, which is Patriot. And people may buy that for increased horsepower, they may buy it for longevity. But we do offer across the spectrum whether you want to go performance or OE equivalent. And so we also support in the truck racing community, we have a truck actually that we’ve been helping to build, which is a 2000 horsepower, it’s a Detroit diesel truck. And so we do get involved in that space as well with our products. And it helps us to really test the upper limits of our products when we do that. And so it’s as much a testing ground as it is, you know, customer to give, giving customers options, even though you’re kind of more on that OE side of things.

Chandler Kohn: Does that create any like, just from an optics standpoint, you know, the website and our branding and marketing, does that create any brand positioning tension there or do you not worry about that at all?

Ken Clinchy: It’s a good question and it’s really why we, we focus on our, what’s really a good, better, best strategy. So we have three different branding strategies inside of Atlanta, depending on the product line. So as I mentioned, we have Patriot, we have heavy haul, and then we have Fleet Tough. And that’s really what helps us to define the positioning so that you don’t have that tension. Right. If it’s all atl, how do I know what’s for performance? How do I know what’s for just OE spec to get me back on the road? And so we Divide it between those three brands. And that’s what helps us to go to market in unique ways depending on what the needs of the customer are.

Chandler Kohn: You have a, basically a credit application drop down on the website, buy now, pay later for financing, up to 12 months interest free. How has this offering impacted your average order value and basically customer lifetime value?

Ken Clinchy: Yeah, so the reality is engine parts are really expensive. Whether you’re buying OE or aftermarket, they’re just expensive. They’re, they’re one of the top spend categories for any fleet. And so we try to give our customers options on how they could buy. And I will say, you know, offering financing, we definitely see customers have the ability to then buy the whole job versus hey, I’m only going to buy this, this one part to get me back on the road. Oh, hey, there’s a financing option I can now buy, you know, the, the entire, say a platinum kit or a full kit to just replace everything. And so we definitely see an increase in AOV and to be frank, an increase in customer lifetime value as well through offering that financing. Because it gives folks options. Right? You’re talking about, hey, today I can afford to pay 4,000. Over time I can afford to pay say 12,000. And so being able to have those options gives our customers the ability to decide how much do I want to do and how much work do I want to put in that engine. So I would say financing has definitely been a big unlock and something that’s been really helpful in driving the business.

Chandler Kohn: Is that overly common in the space?

Ken Clinchy: I would say it’s becoming more and more common. We see it across our competition set. The other thing that we offer that’s unique is we also have a partnership with a company called Credit Key. So they’re a buy now, pay later platform, but they focus only on B2B. So instead of affirm Klarna, all the ones that everyone’s heard of, we also have ones that are focused in B2B because at the end of the day, every customer we serve, even in owner operator, is still a business. And so to be able to take advantage of that business credit line and that business credit, we offer that as an option as well. And that’s been, we’ve seen a lot of success with that as well. Good.

Chandler Kohn: Let’s jump into product development a little bit. So you mentioned the Patriot brand. You’ve expanded, you know, the Patriot brand beyond cylinder heads, into camshafts, turbochargers, fuel injectors. What is the internal decision framework when you know, product category Graduates from this kind of sourced or white label to your proprietary.

Ken Clinchy: Yeah, great question. So we go through a number of different steps as we look at it, because as you said, product development is very expensive. It’s a big, it’s a big capital investment. And so the, I mean, the first thing is really is the engine population large enough to support the development? And so, and I should say caveat with just not just the engine population, it’s also the age of the engine. Right. So we being aftermarket, we’re looking in years, really three to five, depending on the warranty of that engine. And so we want to look at, excuse me, what’s in circulation right now, what’s coming up on circulation, what, you know, what was launched three years ago and is about to come out of warranty. And you know, is the addressable market big enough for us to launch a product that’s specifically for that engine? So that’s kind of step one. Step two is really looking at what are we selling today and what are the options that are on the market. Is there anything that we can add to that product to improve the value of the customer? And it doesn’t necessarily have to just be on the product itself. It could be, can we kit it in a unique way that makes it easier for the mechanic to install? Do we add, hey, you’re always going to need these two extra gaskets, so let’s put those in the kit or let’s include those with the product. And so we look for those opportunities and if they exist, because we want a right to win, we want to make sure that we establish that right to win for that product. And then the third one, which is just as important, and you asked the question earlier around vetting manufacturing partners is can you find a manufacturer that can do it to the quality standard that you need? And we do have, you know, we do have a, a number of pre vetted partners, but we have to go to them, explain, you know, the engineering challenges, this is what we’d like to do, and then get them to produce samples, test the samples, do they meet our standards? And so that’s really the third piece of it. And if something meets all three of those, then we’ll absolutely invest the money and, and launch an ATL branded product, typically with something unique to it, be it an improvement OE design or as I mentioned, like we may be kitting something that the OE doesn’t kit today that makes it that much easier for the mechanic to install.

Chandler Kohn: Yeah, that’s helpful, thank you. I’m gonna jump to a kit question here. You know, you mentioned this. Some of the kits bundle multiple ATL components into a single rebuild sku. How do you manage the. Like maybe just build off that previous question, but how do you manage the engineering risk of integrating parts from different manufacturing origins?

Ken Clinchy: Yeah, great question. And really comes back to the quality and the inspection process of each of those components. Right. We have to be comfortable with all the components that are going into that kit and every manufacturer that produced for that kit. And so they’re really all going through the same rigorous process, the same standards. And that’s how we get comfortable with it. The other thing I’ll mention from a warranty standpoint that’s, that’s interesting is, you know, depending on the kit that you’re talking about, but when we talk about engine rebuilds, you have platinum kits which, which you’re replacing more components than just a standard overhaul. We actually find the warranty rates to be lower when someone is buying a full kit because they’re replacing almost every component on the engine versus piecemealing it together when you know this part might fail in three months because it was already on there, whereas your brand new part has got two years of warranty. And so we do find that the kitting also actually leads to lower warranty because you’re putting more new product into that engine and so less likely for it to fail. Got it.

Chandler Kohn: And then in terms of R and D priority between the OEs like Cat, Cummins, etc. I think you touched on this a bit ago, but how do you kind of look at like what the margin opportunity, the, the volume demand looks like in kind of expansion?

Ken Clinchy: Yeah, like I mentioned before, it’s really about the engine population, but then also how those engines are, are transitioning into the aftermarket. Right. So great example of that is CAT hasn’t made an over the road engine in a very long time. But the aftermarket support and the demand for aftermarket CAT parts is still incredibly strong. You know, probably only if not on par, but you know, call it second to Cummins. And that’s incredible considering there are new, no new engines coming into the marketplace. But there’s a lot of respect and market demand for that Caterpillar engine. So it really is understanding that dynamic of yes, the population of engines, but then also what are your customers asking for and what are we hearing where there’s gaps in the market today? And so while it seems strange to develop anything for Caterpillar because it’s been so long since they made an engine we get so much customer demand, that’s still a top selling category for us.

Chandler Kohn: Is Cat going to get back into the space that.

Ken Clinchy: I don’t know. There’s been talks about it. You know, the original thought was they got out of it because of the changing EPA standards and everything that was going and they really wanted to focus on off highway. It’s interesting. I would, I can’t predict the future, but I’d say it would probably be a welcome reunion for most customers because there’s just still so much, you know, so much popularity around those CAD engines that I do feel like if they got back into it, it would probably be a pretty popular selection. I think the challenge now is Most of the OEs are trying to vertically integrate. Right. We see a lot of paccar engines now, the MX13. And so that’s really the challenge now is that everyone’s trying to use their engine platform versus using a third party. And so the question would be, does Caterpillar start building trucks? Do they just do engines? How do they do it? Yeah, and then I think that would be the challenge of getting back into that market.

Chandler Kohn: That’s a good point. Let’s talk about some of this financial architecture and scaling the business. So you’re right, the transition from pure remanufacturers to developing proprietary branded products like Patriot obviously requires up from capital tooling, other materials, R D, inventory. How have you funded the product development pipeline?

Ken Clinchy: Great question. Honestly, it’s really reinvestment of cash flows back into the business. That’s been intentional from day one of ATL Diesel. Everyone understood that there’s a huge opportunity here. And if we really focus on capital reinvestment versus be it distributions or other usage, we’ll be able to take a market leading position. And so for quite some time that’s really been the game plan. And our capital allocation has almost been 100% back into the business. As we continue to scale it and obviously from a product standpoint, but then also from a people standpoint, continuing to build on the business and support our customers. And we look at it as the more success we see in product launches, it becomes a self propelling flywheel. The more successful launches you have, you know, you’re not sitting on dead inventory, you’re moving that inventory and that funds the next round of R and D and research and then you’re able to get more products to market. And we’re very vigilant about if the product works. We continue to invest in it, we put more inventory out there, we push it if we see the product is not working either, we go back to the drawing board in terms of R and D. Do we need to do something different or do we just kill it? Maybe we misread the market demands. And by being very intentional with that process, we’re also able to make sure that we’re smart with our working capital and our investments because we do pull back. We won’t just leave it on the shelf and hope it sells one day. Thank you.

Chandler Kohn: Let’s talk about kind of reducing customer acquisition cost by lowering, you know, purchase hesitation in the context of warranties. So your two and three year warranty programs on Patriot products seems like they’re long. They’re, you know, longer than aftermarket competitors. Just want to understand that a little bit more. Kind of how that impacts customer buying decisions.

Ken Clinchy: Yeah, absolutely. So warranty is just a reality when you’re selling engine parts. It would be great if it was zero warranty. It that’s just not what’s going to happen. So it’s going to happen. And that can be part failure driven. That can be incorrect installation. There’s a lot of moving parts that go into it. And as I mentioned, a lot of people piecemeal the rebuild together. And so you’re even trying to mix parts from different manufacturers. And so the way we look at it is we have such confidence in the engineering that’s gone into, like the Patriot line is a good example that we absolutely believe that, you know, we can extend the warranty and still profitably do so. And what it really gives is peace of mind to customers. You know, for example, let’s say an OE equivalent cylinder head is going to be $3,000. But the Patriot version, which is giving you upgraded valves, upgraded springs, actually a different casting material. It’s, it’s a proprietary casting material that you’re now going to spend, say $4,500 or maybe $5,500, depending on the cylinder head. We want customers to have that confidence that, you know, not only am I getting all this value in the head itself, but we stand behind it because we believe in the engineering and the R and D that’s gone into that product. And so we’re able to extend that warranty beyond, you know, your standard one year or six month time frame, depending on who you buy from. And we do absolutely believe that that gets customers, you know, over the hump of, okay, this is so much more than the OE equivalent. You know, why am I going to spend that? Well, part of that is, is, is the warranty Right. You’re, you’re, you’re getting an extra one to two years on that product. And so you’re not just buying the upgraded product, you’re also buying the upgraded coverage. And that gives customers a peace of mind and allows them to convert on those, those higher, higher dollar items.

Chandler Kohn: You mentioned the proprietary product design. Do you have any IP around that?

Ken Clinchy: No. I mean for the most part if, you know, if we, if we co develop it with some of our suppliers, sometimes the suppliers will hold ip, but we don’t, we don’t tend to go out and get protected IP for what we’re doing.

Chandler Kohn: Yeah, yeah. A lot of conversation that I’ve had on here with folks particularly at the shop level is looking at KPIs and making the operation more profitable. Do you look at any certain KPIs in your business like revenue per employee benchmarks or anything like that? Just curious there.

Ken Clinchy: Yeah, I mean we have quite a few different KPIs really focused around a number of things. Different departments in the business all have their own unique KPIs on what drives them in terms of kind of revenue per employee. We really don’t look at it in that sense outside of maybe our sales team. We’re looking at the production of the sales team. When we look at like when I talk about our customer service team, we’re looking at the number of customer contacts that they have and do we need to scale that team based on the number of customer contacts? So it’s really department driven for us, depending on the department. And what is the key KPI that drives the customer interaction is the way that we look at it. We then adjust the size of that organization based on that KPI. That tells us when do we need to add people, might we be overstaffed depending on those KPIs, but we really try to do it at more of a department level versus overall organization and looking at say revenue per employee, things like that.

Chandler Kohn: Interesting. Yeah, appreciate that question about long term strategy and navigation here with a couple key macro themes. So OEMs like Cat Cummins are increasingly, you know, restricting aftermarket access through, you know, proprietary ECM software, parts locking, dealer exclusive diagnostics. You know, what’s navigating this right to repair look like for you guys in terms of your addressable market?

Ken Clinchy: Well, you know, we continue to be big supporters of auto care and their mission around passing right to repair legislation, especially in the heavy duty markets. And so that’s really, you know, a lot of what we can do. In terms of trying to prevent customers from having limited choices when it comes to buying parts. So we, you know, that’s kind of our, the legislation piece of it. And then, you know, we support additional organizations that really help to open up the aftermarket. And so for us it’s how do we find the right partners that can, you know, go fight the fight for us, if you will, and navigate what needs to be navigated, you know, in Washington D.C. to make sure that our customers still have options on where they can purchase their parts and how they purchase their parts. And we support it both on the parts and the service side. You mentioned before around, you know, dealer exclusive diagnostics. You know, we definitely see that they’re trying to put in, you know, your fleet monitoring softwares. The OEs are trying to own that and own that data. And so we’re big proponents of where we can support our customers and their ability to choose. And so that’s kind of how we look at it. And we believe that at the end of the day the free market will continue to win out as customers want choices. Right. If Covid taught us nothing, it’s that supply chains are fragile and having only one choice could truly be detrimental to the movement of freight around the country. If only OEs can sell parts. I think is, is was the best example of that.

Chandler Kohn: Good point there. And then, you know, go forward, you know, looking, you know, maybe to between now and 2035, 2040. I know it’s kind of a long term planning horizon, but you know, as you know, I think mass production of the, the Tesla semi is supposed to be starting this year. You have some EPA emissions tightening generally OEM parts locking strategies. You know, what do you see as you know, do you have a required pivot or kind of product service expansion path that you’re looking to follow?

Ken Clinchy: Yeah, so we absolutely stay on the trends that are happening in the market. You know, electrification is something that has been talked about a lot over the, really the last 11 years that I’ve been in the market. The reality is that the pace of change away from diesel engines is going to be relatively slow. Electrification will take even longer for adoption. We believe in the heavy duty markets, likely where we’ll continue to penetrate is local heavy duty trucks that return back to the same station every night and travel typically less than 250 miles. That segment of the market we’ll see, we think we’ll see a lot of electrification. The true over the road, you know, point to point, you know, one end of the country to the other. Or one coast to the other. I don’t think we’ll see electrification anytime soon. As you know, there’s still major infrastructure challenges to getting to that. So that being said, even once electrification comes out, it’s less. It’s absolutely less moving parts, but there will still be an aftermarket, you know, to support that. And then you start to look at the average age of, of vehicles, which continues to grow. I think we’re pushing 13 plus years now. So at a minimum, if tomorrow 100% went to electric vehicle. We still have, you know, 13 years of Runway before you would phase out all the diesel engines. So it’s going to be some time, you know, before we get there. The EPA emissions obviously are moving target right now. You know, they were in, now they’re out. And really we just try to make sure that whatever products and support we’re offering are compliant with whatever EPA emissions are coming out, whatever the government decides to set. And a lot of that’s driven at the OE level and updating, you know, updating designs and then what that drives in the truck market itself. Right. With what’s been really surprising is typically we see a pretty big buy ahead. You know, EPA 27 is the next one which, some of that’s been rolled back. But typically we see a big buy ahead which drops average age in the aftermarket. But we have not seen that because of the cost of capital being up so much. And so this has been a really unique transition into an EPA year in EPA 27 in that we’re continuing to see the age of trucks increase. So that’s. That spells positive tailwinds for the aftermarket for, we believe definitely at least a couple years. A couple years to come.

Chandler Kohn: Yeah, I think I saw a stat recently maybe at the end of the year that, I mean, tractor sales were down significantly. I think vocational vehicles were Maybe up like 2% T4 last year compared to the previous year. So interesting there. Let’s go ahead and wrap it up high level here. But you know, on my end, I personally see tons of different businesses from a financial standpoint in the automotive space. Some have better margins than others, to say it lightly. But you know, it’s obviously a challenge for every business, especially in a heavy tariff environment or, you know, down years after 20, 21, et cetera. But what is one key piece of advice that, that you would give to business owners looking to increase margin and lower their real operating expenses?

Ken Clinchy: Yeah, I think definitely on the margin front, the last couple years have taught us that the importance of pricing And I would say in a lot of businesses that I’ve seen, it’s an overlooked piece of the puzzle in the sense that folks assume, hey, whatever the competition is set at, that’s where I need to be. Or maybe I have a. A margin rule that I use and I sell it 30% over cost, whatever that may be. And it’s really a strategic lever to, of course, drive margin and drive profitability, but also signal to the market as to what your value is. And so it’s not just about matching competition. It’s taking into account what value do you deliver to the market and what is the market willing to pay for that value. And so I think the companies that end up with better margin profiles have found ways to deliver value to the market and then price to that value. And that can be a challenging thing. It can be a scary thing. No one wants to be higher than your competition. And we absolutely appreciate and understand that at atl, and we try to find the right balance. But a big part of it is taking the time to understand what do your customers value, how do they value it, and what does that mean for how you need to price in the market? As I mentioned before, atl, we don’t charge for shipping. Right. There’s a value to that. We didn’t talk about it, but we don’t charge up front for cores. We have deferred core billing for all of our customers. That’s another value. Those are examples where those have to play into that pricing strategy, and that can be a big driver of profitability for the business. And then add into that tariffs and all the changes that are happening, and making sure that you’re staying up to date with that is really important in today’s environment, especially where folks can very easily check online to see what are your competitors selling for. It’s a much more transparent market than it’s ever been. And so to me, what I see the most, or the number one thing, is really around pricing as you’re thinking about margins, and not just in the sense of, hey, I have to raise pricing. That may not be the case. It’s figuring out what’s the right price that the market will pay for the value that you deliver.

Chandler Kohn: Awesome. Well, I think that wraps it up. Ken Clinchy, president and CEO of ATL Diesel, based in Dallas, Texas. Appreciate you joining today, my friend. And I’ll be seeing you at work Truck Week or any of these events.

Ken Clinchy: No, we’ll be at. We’ll be at TMC and then Matt’s, which is the week after. So, yeah, it’s busy, busy show season. So very excited. Thank you for having us.

Chandler Kohn: Of course. I’ll be at all three and look forward to catching up.