SEMA eNews Vol. 12, No. 19, May 14, 2009

Manufacturers Plan to Sell Directly to More Consumers in 2009

Product distribution chart
Manufacturers report a 10% increase in direct-to-consumer sales for 2009.

SEMA manufacturing members were recently surveyed about the sales channels they used most. On average, the portion of their products sold directly to consumers has grown compared to last year—from 24% in 2008 to 34% in 2009. SEMA manufacturing members range in size but are, typically, relatively small companies; the average company size of the manufacturers surveyed here was 41 employees.

Knowing where SEMA members are selling their products is just as important as understanding which products are sold. Several distribution channels exist in the specialty-equipment market today, ranging from discount-automotive chains to directly selling to consumers. The table to the right shows a breakdown of where manufacturers allocate their sales. Of the SEMA manufacturing members that employ the option of direct selling to consumers, most do so regularly; they sold an average of 34% of their products via this form of direct distribution.

In an effort to track business-practice trends, SEMA undertook an effort to reach out to members of the industry. A total of 528 responses were gathered in last month’s survey, and 37% said that they were manufacturers. Because product manufacturers have the potential to distribute parts via a multitude of channels, an analysis of what percent of products are sold through each offers a look at how specialty equipment makes its way to the final end users.

Many of the companies surveyed do not use all of the channels. Some manufacturers never sell directly to consumers. Furthermore, those manufacturers whose products go to market through automotive chains report that, on average, 18% of their products are sold through this channel. Obviously, not all manufacturers use automotive chains, so the 18% figure only represents those companies that actually use this distribution channel. In addition, many companies indicated using multiple distribution channels. For this reason, the responses in the table above exceed 100% since multiple distribution channels are often used. The percentages, therefore, represent the percent of industry product, on average, that are sold through each respective distribution channel.

The second largest percentage of SEMA-member products are sold through warehouse distributors—33%, on average, of specialty-equipment parts and accessories, according to survey results.

Specialty-equipment companies often diversify in terms of the market niches they serve, while others specialize in making or selling products for one specific niche. The averages in the table represent the industry as a whole, on average, but companies that sell primarily to one market niche will obviously direct a higher percentage of their sales efforts to their respective market. For example, the percentage of products sold directly to consumers varied significantly, depending on market niche served: compact performance, 66%; light truck, 56%; off-road, 44%; racing, 58%; restoration, 61%; restyling, 38%; street performance, 45%; and street rod and custom, 60%.

SEMA Research & Information Center

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