As global interest in and demand for automotive customization grows, so does the opportunity for increased business for SEMA-member companies. That is the reason why SEMA sponsors international business-development programs and connects SEMA members with potential buyers in emerging markets such as China, Russia and the United Arab Emirates (UAE).
We think most SEMA members would agree that we’ve arrived at an interesting time for the automotive industry. Supply has outpaced demand for oil; the dollar is one of the stronger currencies internationally; and automotive manufacturing is in a growth mode.
That’s very different from 2009, when new-car sales were down, the dollar was weak and oil prices were $100 a barrel and climbing. SEMA members had to adapt, be innovative and efficient, and had to look for alternate sources of revenue. It also sparked some of our members to recognize significant opportunities in expanding to overseas markets.
Media Giant FB Life Provides Insight
The specialty-equipment market in China is booming, with perhaps no sector growing more rapidly than the off-road market. SEMA News recently talked about the off-road scene with Baokun LV, co-founder of FBLife.com and executive general manager of FB Life, a Chinese media giant and a platform for off-road enthusiasts and service suppliers.
Good News for Worldwide Enthusiasts and U.S. Specialty-Equipment Manufacturers
SEMA manufacturers know that the Ford Mustang is one of the most customized vehicles in the marketplace. This year marks the pony car’s 50th anniversary, and now it comes with a larger-than-ever attraction to those who wish to develop and market products for the highly accessorized musclecar,“ noted SEMA Vice President of OEM and Product Development Programs Mike Spagnola.
Demand Is Strong; Will Laws Be Updated Soon?
Seventeen SEMA-member companies presented their products in a two-city visit to China during the September 2014 SEMA China Business Development tour. The SEMA delegation had the opportunity to exhibit both in Beijing and Shanghai. The group was briefed by the U.S. Embassy and participated in networking events in both cities, where members had the chance to meet with buyers from throughout the country. Buyers attended the SEMA events from 23 provinces located throughout China.
SEMA members that have taken advantage of a 2011 Market Development Cooperator Program (MDCP) grant of $500,000 awarded to SEMA have reported $52.68 million in export sales. The funds provided by the U.S. Department of Commerce through this program have helped support projects aimed at increasing U.S. exports to key markets overseas.
Nearly 25% of buyers attending the SEMA Show reside outside the United States. Show attendees are invited to participate in three interactive sessions regarding emerging international markets where top specialty-equipment distributors and retailers will discuss business challenges and opportunities and identify the best-selling products for street-performance, off-roading and other growing niches.
In the past, the creation of an Interest-Charge Domestic International Sales Corporation (IC-DISC) has allowed U.S. manufacturers from a number of industries to greatly reduce the amount of tax paid on their exports—and the automotive industry has been no exception. For example, tax specialist alliantgroup recently helped one company that produces LED lights for a variety of motor vehicles receive $235,600 in tax savings on their exports. Another company that creates fabrics and composites for automotive applications was eligible to receive $539,000 in tax dollars for its IC-DISC.
An Increasingly Popular Regional Destination for U.S. Automotive Specialty-Equipment Products
With an estimated population of 42 million, Central America is an increasingly important regional market for U.S. goods. The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) eliminates trade barriers among the seven signatories, which include the United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. Before this regional trade pact, tariffs on U.S. autos and parts to the region had averaged from about 4% to 9% and even up to 30% on certain products. Most of these import taxes disappeared immediately with CAFTA-DR approval, and the rest will be eliminated by 2015.
SEMA's International department has worked with the U.S. Environmental Protection Agency to gain approval for another a year-long waiver for members to measure and test fit products for the Toyota HiLux.