Market Snapshot

ADAPT YOUR BUSINESS MODEL TO SUCCEED IN TODAY'S SHIFTING MARKET


Stillen displays its front lip spoiler on the 2008 Nissan Altima coupe.

The planned shutdown of SUV and truck plants and the increased shifts at small car factories by both domestic and foreign-based automakers indicate a dramatic shift in popularity from large vehicles to fuel-efficient cars. Businesses within the specialty-equipment industry are bracing for the impact, but increased sales at Stillen, RKSport and Extreme Dimensions prove that if a company adapts to the market's changing conditions, not only can it survive this major overhaul, it can profit. 

For Stillen, a manufacturer of performance parts based in Costa Mesa, California, double-digit declines in SUV and pickup sales by the major automakers has impacted sales of related products by a 10% fall off over the past six to eight months. At the same time, it is seeing an increase in purchases for small cars.

While Stillen’s business is traditionally based on the Nissan and Infiniti sports car series, a good portion of its recent growth has been built on the new Nissan Altima coupe.

“We made a decision during the middle of last year that we wanted to really focus on the Altima,” Stillen General Manager Chuck Howlett said. “We thought Nissan’s new platform would really jump, because the Altima is a lot more sportier than normal. A large part of our growth seems to be in that car this year. It seems we made a really good decision.”

The company is still developing products for trucks and American performance vehicles, but is now taking a closer look at smaller cars.

“We are emphasizing building body kits for cars such as the Sentra, Versa and Altima, which normally we wouldn’t do,” said Howlett. “They aren’t historically the vehicles people would modify, but the younger generation has really embraced the high-mileage, smaller vehicles, so we are providing more products for those cars than we would have in the past.”

Stillen is also extending its small-car focus to its advertising.

“We do a lot of PR for new products, and since we spend a much larger share of our time developing products for smaller vehicles, we are increasing the time spent advertising that we have products for these smaller cars,” Howlett said.

Howlett observes that, as a whole, business has gone up approximately 5% this year. He attributes Stillen’s resiliency to the company’s foresight in preparing for the market change that was inevitable due to steadily rising gas prices and listening to customer input.

“We actually started looking at the Altima back in August of last year, and as fuel prices started shooting up the first quarter of this year, we decided we needed to put more emphasis on fuel-efficient vehicles," he said. "If you went to SEMA last year, you would have seen the Sentra and the Altima, which was a project car. We started looking at this stuff late third-quarter, early fourth-quarter of last year, and from what I am hearing, we probably saw the trend a little bit earlier than others."

Howlett also doesn’t overlook the fact that Stillen’s operation is diversified.

“We have a broad base with trucks, American performance and smaller performance car products, as well as good OEM relationships,” he said. “Our customers give us great input and we manufacture 60% of the products we sell. We had a good base and the ability to move very quickly.”

RKSport, a manufacturer of body kits, wings and spoilers has also observed the growing popularity of small cars, which has led to a double-digit jump in purchases within this segment. The Murrieta, California-based company did not view this shift as a temporary occurrence and responded to what was being witnessed in the market.

“What we were trying to do last quarter was launch several new products for our new trucks, such as the Ford F-150, Chevy Tahoe and Chevy Silverado,” said RKSport Marketing Director Trevor Medina. “But once gas prices went up, we noticed that products for fuel-efficient vehicles became more popular.” 

As a result, RKSport decided to direct more of its efforts towards its higher-mileage vehicles, such as the Ford Focus and Toyota Camry.

“We actually have plans to aggressively promote our Ford Focus during this year’s SEMA Show,” Medina said. “We have three other project vehicles that we will reveal at the Show. Two of those are midsize and one is a sport-compact."

Like Stillen, RKSport has restructured its advertising campaigns. For its fullsize ads in SEMA News magazine, the company has moved most of its truck product line to a less prominent position and instead has featured its smaller, more economical cars.

Not only is RKSport modifying what vehicles it is promoting, the company is reformulating its product pitch to address concerns over high gas costs, especially when targeting drivers who have recently purchased a high-mileage car.

“We are promoting not only performance, but the fact that functional items such as ram-air hoods, spoilers and wings can create less drag for the vehicles, which promotes higher fuel-efficiency," said Medina. "We also advertise that the body kits we manufacture can lower the weight of the car."

Extreme Dimensions, a Fullerton, California-based manufacturer of car aerodynamics, has also experienced stronger activity in the small-car segment compared to SUVs and pickup trucks, which has led to an increase in total sales.

"We do produce a number of different body kits for SUVs and trucks and certainly those numbers have plateaued over the past few months, while sales for the small cars have gone up," said Extreme Dimensions Marketing and Sponsorship Coordinator Geoffrey Brown.

He lists the Chevy Cobalt, Honda Civic and the Honda Fit as steady performers and notes increased activity amongst the new Scion XD and XB.

Brown credits the company’s expansive product base for the durability of Extreme Dimensions during the market transition.

"We do offer a number of products for a wide range of vehicles and offer over 6,000 products," he said. "The effect of people not buying SUVs anymore is not having an impact on our company because these people are still looking to do things for their vehicles, and when they transfer their SUVs to small cars for fuel-efficiency, they are still coming to us to put a body kit on it."

Brown also notes that business has benefited from government-issued stimulus checks.

The company has also undergone budget cutbacks to sustain it during this "drought," as Brown defines it. While certain areas such as travel and trade show participation will see a hit, he affirms that Extreme Dimensions will never cut back on product material costs. Brown declares that their long-term prosperity relies on the quality of their products.

"We will continue to use the same materials that we have become famous for," he said. "We will never shortcut ways in getting our products to the end users."

With their shared success in today’s tough market, Stillen, RKSport and Extreme Dimensions demonstrate that keeping abreast with the times does not involve only awareness of fluctuating conditions, but the willingness to initiate changes once the necessity for them has been recognized. As all signs indicate that this latest market shift is settling in for the long-term, the opportunity for change remains viable.

Howlett advises companies that are struggling with their SUV- and truck-based business to explore different ways to address fuel economy if only for the short-term to help them get over the bump.

“If I were in their shoes, I would look for ways to help fuel economy and cosmetic changes such as body kits vs. high performance products,” he said. “If they have the technology and it doesn’t take too much work, that’s what I would be looking at.”

To view original SEMA market research, click here.