Trends for 2012

SEMA’s Council Leaders Look to the Future

As the automotive specialty-equipment industry moves into 2012, SEMA News put out a call to the leaders of the association’s councils and networks to seek their views about what might be in store during the coming year. Their responses are instructive and should provide helpful insights for companies in every segment of the marketplace.

Automotive Restoration Market Organization (ARMO)—Alex Tainsh, Parts Unlimited Inc., Chair-Elect

The restoration market is always evolving. As some of the classics become harder to find or reach a higher price point, the years and models of cars and trucks being restored expands. The downturn in the economy also changed our market. Many restorers were building cars to flip them at auction, but the recession brought prices down. Still, most of our members report that they expect to see growth beginning in late 2011 and through 2012.

The challenge for many of our more traditional members is learning to adapt to the changes, including electronic marketing. While restoration marketing has in some ways remained traditional for years, our younger members and customers have moved quickly to electronic marketing, and some members now get the majority of their business from the Internet. Television has also grown dramatically as a marketing tool for our members, and restoration-based magazines remain a large part of our marketing, though, they are often read online.

The younger people entering our hobby are less concerned about “pure” restoration, choosing instead to use some non-original parts while keeping the soul of the car. This trend toward restomods seems to be the future of our market, though, pure restorers will always be a part of it.

ARMO has put a major effort into expanding our educational programs, including a number of sessions at the Hotrod & Restoration Show to help our members grow and face the challenges of the future.

Hot Rod Industry Alliance (HRIA)—Rick Love, Vintage Air Inc., Chairman

Our average customer today has changed. Most of the people that we dealt with years ago tended to be fabricators and mechanics. Many of our customers today are enthusiasts, and they want bolt-on products rather than having to buy something from a junkyard or fabricate and adapt it. If you can provide products or systems that bolt on and save the customer two hours, he’s willing to spend a little more for them. Most of the manufacturers in our segment are working toward making their parts more user-friendly and easier to install. They’re making complete kits rather than selling one or two components so that the customer gets everything he’s going to need to do an installation in one box.

But even though our segment continues to be fairly strong because our customers have some disposable income and restoring or rebuilding a car at this point may be a better investment than a savings account or the stock market, it still all comes down to customer service. You cannot be just an 8:00 a.m. to 5:00 p.m. access point for your customers anymore. You need to have information available 24 hours a day—when it is convenient for the consumer—which is why electronic marketing and websites have become essential. Even in these days of e-mail and websites, though, it is still a people-driven business, and the personal touch is the most important.

Truck and Off-Road Alliance (TORA)—George Lathouris, Keystone Automotive, Chairman

Salespeople sell what they are most comfortable with—and training provides that comfort. TORA, in conjunction with the SEMA Education Institute, is launching a standardized training website to help us reach that goal. TORA will pay for the upfront creation of training templates, and participating manufacturers will pay a small fee to populate the site and expose their products to train various salespeople. A 15-minute module that could be watched by thousands costs approximately the same as a one-person out-of-town training session. This new centralized repository for industry training will be a one-stop shop for retailers, jobbers and warehouse distributors (WDs). It’s a win-win for all of us!

Electronic stability control (ESC) is also a significant trend for TORA members. On September 1, 2011, the National Highway Traffic Safety Administration required ESC systems on all new passenger cars and trucks. Working with the SEMA Vehicle Technology Initiative, SEMA-member companies have made great strides in understanding how aftermarket vehicle modifications (suspension, brakes, wheels, tires, steering, etc.) may interact with ESC systems. Many TORA manufacturers, along with Ford Motor Company, have contributed resources and guidance to this effort. Clemson University’s International Center for Automotive Research has enabled the support of academic expertise and facility availability. An opportunity to learn about the status of this initiative and understand its capabilities was provided at the Vehicle Dynamics Forum at the SEMA Show, led by SEMA’s Vehicle Technology staff. I hope all interested parties were able to attend.

Manufacturers’ Rep Council (MRC)—Wade Cobb, HAPCO, Chairman

Business now requires more in-depth cultivation to secure the same sales as in the past, putting a larger burden on WDs to be faster on delivery and manufacturers to supply stock orders quicker and, in some cases, more frequently. Reps are covering larger amounts of real estate to train both retailers and WD salespeople on products and displays. With the expansion of road construction across the United States, there seems to have been a bump in demand for utilitarian truck accessories and equipment accessories, such as grille guards, lighting, LEDs, etc. This trend seems to have been initiated by construction companies’ upfitting vehicles as well as the workforce modifying its personal vehicles.

Electronic information is key to assisting sales by giving retailers the ability to quickly determine availability, added features, pricing and other information for a customer. In fact, electronic media continues to be a focus for our manufacturers and customers in both the business-to-business and business-to-consumer worlds, and they will become even more dominant in providing customers with research before they make purchase decisions. The greatest opportunities will come from providing the best electronic and brick-and-mortar marketing along with in-depth training.

In general, the presidential campaigns and the election will bring about some economic uncertainty that directly affects the spending of discretionary dollars. But while it’s a tough market, there are pockets of success if you dig for them. You just have to be willing to scratch different patches of dirt to find the worms!

Motorsports Parts Manufacturers Council (MPMC)—Kyle Fickler, Weld Racing, Chairman

The most significant trend that we are seeing is doing more with less, and it is probably going to continue. Better-managed companies understood long ago that the economic downturn was going to last a while. “The new normal” is a tired phrase by now, but it is also accurate.

Economic conditions are on the minds of everyone, and it seems that any momentum we create is quickly challenged by another socio-economic crisis that results in our consumers becoming cautious and sitting on their wallets again. Many of our companies that are growing are also having trouble hiring good people at all levels, including experienced machinists, engineers and salespeople. They are also hiring production and management talent, but they’re doing so with a focus on increasing efficiency and bottom-line value.

Overseas markets are very strong right now for many of our member companies, and we anticipate seeing continued growth in both new and existing overseas markets for the foreseeable future. Of course, new products have proven to be the key to companies creating growth in a down economy, with courageous business owners who are willing to invest in research and development being rewarded for their efforts.

On the other hand, counterfeit products are a huge concern to our member companies. In fact, intellectual property issues of all types are a common topic of discussion among our member companies, and the conversation is quickly becoming a public dialog, with manufacturers searching for common but effective answers.

Professional Restylers Organization (PRO)—Eldon Bracken, Graphic Mart, Chairman

Car dealers continue to search for ways to build profit, squeezing more and more out of each sale. That opens the door for restylers to help them achieve their goals.

The biggest obstacle to business coming into 2012 is changing one’s thinking. Things that worked at one time don’t work now. We need to extend the view of our marketplace and understand our demographics and what they want as consumers. Restyling companies should make sure that their websites continue to change with technology and remain on the leading edge of content.

The integration of technology in car dealerships and onboard vehicle electronics are the most significant current trends. The use of social media, quick-response codes (QRC) and smartphone apps are driving the way cars are being taken to market today. There is a large opportunity for accessory manufacturers and savvy restyling companies to utilize QRCs by having them displayed on parts and cars in dealer showrooms.

Keep yourself educated. Utilize the free education that SEMA offers through webinars and the SEMA Show. Use your suppliers to identify what their hottest sellers are, or find out what other markets their parts are being marketed in. Niche markets will be a growth potential for 2012. Searching through your business area and finding other areas that you can market to will result in growth for the year.

SEMA Businesswomen’s Network (SBN)—Marla Moore, Hypertech, Chairman

Business opportunities in today’s economy range from steady markets to new distribution channels, but the group that offers the greatest growth opportunity is women! Women such as Lauren Fix (the Car Coach) and Jody DeVere of Ask Patty are leading the way to educate and advise women about their cars. The SBN is planning a 2012 national marketing campaign to educate women about customizing their rides with aftermarket parts and make it a lot less intimidating and a whole lot of fun.

In general, companies are running leaner, and everyone has to do multiple jobs. Most aftermarket owners and employees have to learn to do their own marketing, research and documentation. This is one of the reasons that the SBN introduced Café SEMA at the SEMA Show. It allowed attendees to have experts—including lawyers and marketing gurus—answer their questions in roundtable discussions, and they received a list of SEMA resources to help educate them on their chosen topics.

The SBN is also concerned that more women are unable to participate in trade shows, car shows and conferences as companies cut their travel budgets. Because women can’t share a room with their male co-workers, they are forced to shorten their stays or not go at all. We hope that the connections women make through the SBN will offer a solution in which they can share the cost of a room with another SBN member, allowing them to continue to participate at industry functions.

Street Performance Council (SPC)—Tyler Tanaka, Cie Studios, Chairman

I’ve seen a distinct concern about how distribution fits with the rapid changes in consumer behavior. It is directly related to how consumers are researching and then making purchases––whether they’re researching online and then walking into the nearest low-priced retail outlet or in a store and then scouring the Internet for the cheapest price. Some people have become very successful at tapping into that new consumer demographic, but it has also been detrimental to many others.

Some people are also struggling to find their way in this economy, but the people who have been able to stay top-of-mind with consumers are licking their chops. The big trend overall in digital marketing is content: videos, articles, white papers, research reports, data, infographics––the whole variety of ways that you can reach consumers and buyers and help educate them and form a great bond.

The other big marketing phenomenon is mobile. The experts say that mobile browsing will overtake desktop browsing within two years and will include both smartphones and tablets in one big melting pot. You now have a generation that’s growing up with smartphones and tablets. To them, there is no need for laptops or desktops.

The other trend—and one that I worry about—is government regulation and legislation. SPC has always been on the forefront of this, but if regulations continue at their current pace and Corporate Average Fuel Economy (CAFE) standards get changed across OEM lines, it doesn’t look good for the aftermarket. One part of the solution is to get involved with the SEMA Political Action Committee (PAC) and local representatives and do whatever you can to make sure that the industry is well represented.

Wheel & Tire Council (WTC)—Joe Schaefer, Konig Motoring Accessories, Chair-Elect

People purchasing wheels as a fashion item have clearly steered toward cleaner, more traditional styling, and ultra-flashy products may have passed as a trend. We see wheel sizes going down instead of larger every week, which may stem from it not being socially correct to show off when times are more difficult. Most people that I speak with within our council feel that 2012 will be a challenging year that will reward the companies that supply the proper product and support.

I have concerns about government regulations and restrictions making it more difficult to remain competitive. I also find the devaluation of the dollar a constant struggle and think this will continue through 2012. Even so, people are becoming better shoppers during these more challenging times, leading them to use electronic media to do their research and be sure they are getting the best value.

There are always significant opportunities in specific niche markets, regardless of the economic climate. It is more important today than ever to run an efficient company and supply quality service in whatever segment of our industry you are in. I see evidence of this in the fact that properly run companies are growing while the others are suffering.

Young Executives Network (YEN)—Dan Kahn, Kahn Media, Chair-Elect

From industry events and trade shows to races and closed-door council meetings, we’ve been hearing senior members of the industry express fear on a variety of fronts: fear of the way digital media is changing the way we market and sell to consumers; fear that the next generation of young people won’t be interested in cars and trucks; and fear of economic instability. It is all essentially fear of the unknown, and YEN aims to quell those fears with education.

YEN is unique among the councils in that it covers a very wide swath of the industry. Most of our member companies are seeing things turn around, and a few are experiencing economic boom times—specifically those in the electronic media sector. It’s a mistake to believe that electronic media will simply change the way companies buy ads. As social media continue to dominate the American mindset and computers make way for all-in-one handheld Internet devices, the way consumers think about research, purchase and review products will dramatically change.

Obviously, the current economic instability is making everyone in our industry nervous. When financial times are tough, it becomes harder to convince consumers to part with hard-earned money for nonessential items, such as high-performance car and truck parts. The onus lands on YEN members—often the salespeople, marketers, buyers and installers at businesses—to find ways to bridge the gap. Finding creative ways to close every sale and make every lead count is our contribution to each member company.