Forecasting future activity of the specialty-equipment industry can be a tricky thing, especially in an environment where economic uncertainty continues to affect consumers' prospects of spending in the near future. SEMA's latest Performance Parts and Accessories Demand Index (PADI) attests to the possible tightening of consumers' budgets. The latest index shows that the overall PADI score for January dropped by 51% from last year's reading.
Adding to a possible downturn in the specialty-equipment industry is the fact that overall new-vehicle sales for 2008 are forecasted to reach around 15.8 million, nearly a 2% drop from 2007, according to AutoPacific data. The light-truck segment is expected to take a bigger hit than the car segment, a 2.7% drop versus 1.0%.
The good news is that starting in 2009, overall vehicle sales are expected to climb back to around 16.1 million and grow steadily thereafter. The housing market is also predicted to pick up next year as well, according to data from the National Association of Home Builders, which right now, may be a contributing factor to consumers' feeling less bullish about their future specialty-equipment spending.
As a result, consumers may be looking less at dressing up their cars and trucks in 2008 and shift toward more functional upgrades that improve their vehicle's performance, utility and comfort. Much of the drop experienced by the PADI resulted from fewer consumers saying they plan on purchasing wheel, tire or suspension products. Year-over-year index values for this segment dropped 65%, whereas both the accessory/appearance and racing/performance segments dropped around 30%.
SEMA will continue to track consumers' specialty-equipment spending outlook in the coming months. For more information, visit www.sema.org/research.
Source: SEMA Research & Information Center