SEMA News—December 2020

BUSINESS

Navigating the New Normal

SEMA Council and Network Leaders Share How COVID-19 Has Changed the Landscape of Their Respective Marketplaces

By Chad Simon

The entire world was thrown a curveball called COVID-19 in 2020. In order to survive, businesses have had to adapt by using various techniques, including implementing social-distancing measures or going completely virtual. SEMA’s councils and networks are no exception. We spoke with leaders of each organization to find out what initiatives they are working on, what’s currently trending in their markets, and the challenges they face in navigating today’s new normal heading into 2021.

Ben Tucker

Automotive Restoration Market Organization (ARMO)

Chair: Ben Tucker, Camaro Central/Firebird Central/Muscle Car Industries/Muscle Car Central

As I came in as the new ARMO chair in June of this year, our council’s agenda changed quickly due to COVID-19. In-person events such as ARMO’s Hot Product Showcase, Builders Panel, general meeting and reception were all cancelled, making way for virtual-experience discussions for each. With the official notice of the 2020 SEMA Show being cancelled, our council switched gears from our current task forces to begin the process of building virtual events. SEMA hosted several virtual meetings and events with success recently using Zoom and other platforms.

The restoration industry as a whole seems to be doing great. Manufacturers and retailers with an e-commerce outlet are steady if not up from this time last year, while others in the industry that mainly relied on walk-in traffic, swap meets or car shows have seen a decline. The pandemic set the stage for e-commerce to handle car-show clientele as well as mail-order customers. One thing is for sure: The restoration industry is alive and strong.

Over the next year, I see the restoration marketplace continuing to be strong and even show growth. With spring stay-at-home mandates, consumers came out of the woodwork. If a classic car was hiding under some tarps in the backyard, there was a good chance that it got pushed into the garage for restoration. Several retail companies saw healthy growth in April and May when several thousand new customers simply found time to start a project. Those customers will continue to help fuel the restoration segment of our industry over the next year. Consumers who usually waited for car shows to pick up their parts are going to become online customers with the dwindling car-show schedules.

The restoration side of the industry seems to be doing well as a whole. Many companies have implemented strategies to not only survive but also grow in the new normal. From remote employee systems to new e-commerce websites, the restoration industry is shaping up to handle business post-COVID-19.

Additional challenges for our market include material shortages and an increase in demand. Industry-member companies will have to forecast for longer lead times.

Honestly, one of my personal reasons for joining the ARMO select committee was to help the youth programs grow. Without the next generation getting introduced into the hobby/industry, we might miss out on the next Vic Edelbrock, Chip Foose or Marla Moore. Youth initiative programs in our industry are key to promoting future enthusiasts and employees. We’ll wait for the SEMA Board to announce any new youth programs and then see how ARMO might integrate those programs into the restoration segment.

Ian Lehn

Emerging Trends & Technology Network (ETTN)

Chair: Ian Lehn, BOOSTane

COVID-19 has impacted two of our largest initiatives, which were focused on sharing. The Vehicle Sharing Program—designed to be an exchange of sorts for businesses and their fleets for testing and development—was put on hold during the pandemic to avoid unnecessary exposure. The Student Competition Program is for student engineers competing in Formula SAE and member companies. The goal was to create a pipeline for those innovators into the automotive aftermarket. However, we had to pivot our approach with schools and competitions up in the air, but we’re still optimistic with our progress.

I think we will see some business practices carry through over the next year. For instance, virtual meetings will take the place of expensive in-person meetings; offices will downsize; and more people will work from home, etc.

Industry sales seemed to stay on target throughout the pandemic, and I even anticipate an uptick as businesses continue to reopen. That will probably be followed by a little bit of a longer lull than usual, as folks will be pretty well stocked on products and parts.

ETTN’s goal is to continue to deliver value to our members, even from afar. One way we have been successful at that is through our Live Chat. Instead of individual speakers presenting on unrelated topics, we’ve capitalized on our more captivated audience to offer a Live Chat Series, which is focused on explaining the steps toward developing a new product and taking it
to market.

The biggest concern that we are experiencing and foresee continuing to be an issue is the availability of raw materials. With shutdowns and delays, the accordion effect of supply for certain raw materials has continued to be an issue. Larger raw-material purchases cause longer delays.

Jeff Major

Hot Rod Industry Alliance (HRIA)

Chair: Jeff Major, Bedwood and Parts LLC

Although some companies were adversely impacted by COVID-19, many reported significant growth. Waiving any negative impacts of 2020 being a presidential election year, I expect the growth trend to continue over the next year.

Due to the restraints imposed by COVID-19, HRIA held its long-range planning meeting virtually and recently held its first virtual open meeting. Both were successful. We are finalizing a searchable HRIA member-company buyer’s guide for use by the hot-rodding public. We are also preparing a book on the history of HRIA and are working on having a presence at an event on the East Coast in early 2021.

The trend in our segment of the industry continues to be the proliferation of trucks. They are the fastest-growing segment in the aftermarket.

Rob Fisher

Motorsports Parts Manufacturers Council (MPMC)

Chair: Rob Fisher, E3 Spark Plugs

COVID-19 caused us to move our long-range planning meeting to a remote (Zoom) format. Without the 2020 SEMA Show, we have obviously had to put some reception plans on hold. Finally, we are creating a Plan B for the Media Trade Conference (MTC), should we need it, so we are being very proactive.

As for the industry as a whole, it literally stopped for several weeks when COVID-19 stalled much of racing in this country, but we started to see some real momentum as states began to reopen. Many of our council members are reporting better-than-average sales over the last several months. During that time, we focused on getting our council members up-to-date information regarding local rules and track reopenings. The SEMA Show and PRI Trade Show were a tremendous help in accomplishing that.

Over the next year, I believe we will see a surge in the demand for motorsports—particularly at the local or grassroots level. The pandemic forced many major-league sports to curtail or cancel their events, and that created a pent-up demand from consumers for fun/distracting activities. That pent-up demand can be satisfied by motorsports. It’s up to us to market ourselves to potential new fans.

With the MTC on the horizon, the council is building a series of webinars that will be directed at both exhibitors and the media attendees alike. In 2019, we began bringing “new media influencers” to the MTC with much success. We are building on that success by creating webinars that will help maximize everyone’s experience with the MTC.

I think one of the bigger trends in our market is the accelerated adoption of digital technology, not only to host virtual meetings but also its integration into daily business activities. Properly utilized, I think new digital platforms and software will revolutionize the way our industry does business and goes to market.

One of the underlying challenges that our market could potentially experience relates to the sales increases many of our council members are currently experiencing and how to keep momentum rolling. The concern would be what to do if demand wanes. Being proactive in addressing the “what-ifs” will better prepare our members for the future. Through education and communication, the MPMC is striving to do just that.

Dino Perfetti

Professional Restylers Organization (PRO)

Chair: Dino Perfetti, Automotive Concepts

COVID-19 created challenges within the restyling industry, much as it has in many industries. Currently, new- and used-car sales demand is strong; however, inventory levels on new cars and trucks are at an all-time low due to manufacturer shutdowns in March, April and May. Parts shortages exist in all areas of the industry. We will slowly see inventories increase over the next several months as parts shortages begin to diminish.

As a council, we have been working on best practices when selling to dealerships during this challenging time. Consumer safety is the focus in all industries.

PRO held a town hall virtual event that discussed procedural changes for interacting with consumers. It is apparent that more and more vehicle purchases will be done online, with many consumers taking delivery of their purchases either at home or at the office. This creates challenges in consumer awareness of aftermarket products that are available for their new vehicles.

At SEMA360, PRO hosted a seminar discussing the challenges and offering strategic plans for increasing sales for restylers during these changing times. Restyling shops were joined by selected dealer groups in discussing improved ways they could bring aftermarket product awareness to consumers during the current
buying process.

A trend that we are seeing in vehicle restyling in recent months is the desire for more in-vehicle entertainment. With travel restrictions to other countries in place, more families are hitting the road for a much-needed getaway. This is apparent by the huge uptick in the RV industry. Products such as rear-seat entertainment systems that can interact with all passengers have been hot sellers in the past couple of months. On the off-road side of the business, overlanding product demand has increased. The idea of traveling off the grid for a few days at a time while enjoying the great outdoors has enticed many consumers to get outside the four walls in which they have been restricted.

Lana Chrisman

SEMA Businesswomen’s Network (SBN)

Chair: Lana Chrisman, Lions Automobilia Foundation

COVID-19 eliminated our in-person gatherings and is challenging us on how to engage with our membership and be impactful. As a network, our most successful event is Gear-Up Girl, so we are working on creating a virtual version. We are exploring a similar option for our SBN reception at the SEMA Show, turning our physical world into a virtual one to continue to support women in the industry. Our goals are to continue to explore opportunities to reach our segment and provide resources for career advancement.

The industry segment in which I work has been closed during COVID-19. California closed all museums, so the Lions Automobilia Foundation and its museum have been closed since March. We are taking this time to add more robust contents to our exhibits, including a new gallery expansion.

I’m optimistic that our industry will respond in an upward motion once COVID-19 restrictions are lifted. In the interim, I believe our industry to be resilient because of the passion that it is fueled by and the community that makes it strong.

I’ve spoken with a broad range of colleagues in different segments of the industry, and I’ve heard a variety of responses. Some are having the best months in their companies’ histories, while others are circling the drain. The companies that meet the needs of larger demographics appear to be enjoying unexpected success during this pandemic when there’s more time and money for people to spend on
their hobbies.

The SBN is working on virtual platforms to engage our membership. We’ve added Live Chats, speaking with female influencers who share their experiences in the industry. We are continuing to promote women in the industry through our She Is SEMA campaign, and we are in the early stages of developing an online event for members to share their rides or host behind-the-scenes shop tours.

The latest trend we are seeing is greater online engagement and providing creative online content and resources to support our membership and industry. The pandemic exposed areas of business that could be improved and become more efficient. As awful as the effects of COVID-19 have been and the tragic loss of so many lives, we take what we have learned and apply it to be stronger and better.

My greatest concern is that we reach members who really need our support. We talk about turning to virtual platforms, but most of the companies in our industry are small businesses that may not have the technical resources or are not familiar with online platforms and don’t participate.

Erika Marquez

Truck & Off-Road Alliance (TORA)

Chair: Erika Marquez, Warn Industries Inc.

Over the next year, I envision many companies becoming savvy at social media and electronic platforms to promote their products. Retailers will expand from brick-and-mortar to digital and implement safer ways to deliver accessories with curbside pickups and home delivery.

Manufacturers are still trying to catch up with production delays due to business shutdowns as a result of the pandemic, but we have noticed that the demand for truck parts and accessories is on the rise since enthusiasts have more time to work in their garages and more interest in spending time with their families in a safer outdoor environment. Consumer sentiment is positive, especially in the truck and off-
road segment.

According to the most recent issue of “SEMA Future Trends,” the light-truck segment—which includes pickups, vans, SUVs and CUVs—is forecast to account for 69% of all new-vehicle sales by 2025. From 2019–2025, new-truck sales are estimated to rise 10% overall. That is great news for our segment! Also due to the pandemic, we expect more pickup commuters to get into outdoor activities, including off-roading, overlanding and RVing.

The light-truck and off-road industry segments are thriving, according to the “2019 SEMA Industry Perspectives” report, which stated that 73% of businesses expected sales to increase in 2020. OEMs are capitalizing on this trend by launching new pickups and SUVs that open a wide range of opportunities for aftermarket manufacturers to develop accessories and performance parts. New and notable vehicle launches include last year’s 2020 model-year Gladiator and Ranger pickups. This year, Ford will launch the new ’21 model-year Bronco, along with the all-new 14th-generation F-150. Jeep will debut the all-new ’21 Grand Wagoneer, and Ram will release the ’21 Rebel TRX. Looking ahead, there is an opportunity to innovate products for future electric pickups, including models from Tesla, Rivian, Bollinger and General Motors.

Additional challenges within our market include keeping up with current demand, which is definitely a good problem to have! Growth in the overlanding segment is exploding with new enthusiasts. This is an opportunity for pickup accessory manufacturers to diversify into the segment and support the high demand from consumers.

Another challenge we are experiencing now is the tight labor market. “In fact, our TORA Chair-Elect Troy Wirtz has noted that labor may be our biggest challenge. So we will be looking at creative ways to attract talent and increase benefits to our member businesses.”

Overall, this year has been a challenging one for the council due to the shelter-in-place guidelines imposed by the local and federal authorities. Four of our networking regional events for this fiscal year had to be rescheduled to a later date, and the live SEMA Show was cancelled for 2020.

One of the best ways for us to interact with our members and to create a sense of community is through networking events. Thankfully, technology has been a great support to our effort to continue our interactions with at-large membership. We have been able to host general membership meetings, upcoming virtual seminars, award ceremonies and even networking events.

We are currently working on delivering value through education. The original plan was to host seminars during the SEMA Show, but then we are moved forward with virtual events. One of the seminars, entitled “Off-Road 2.0: Performance Technology and Lifestyle Trends, Powered by TORA,” was formed with a panel of experts in the off-road and powersports segments. Another event we hosted was an off-road builders panel, featuring manufacturers and builders who will offer insights into trends and identify market opportunities.

The council is also continuously highlighting TORA volunteers through a Member Spotlight in SEMA eNews. We do this because we have so much support from volunteers who are not select-committee members, and this is a way to recognize their efforts. All of our volunteers help contribute to the success of our programs and our council.

Tyson Boyer

Wheel & Tire Council (WTC)

Chair: Tyson Boyer, Dill Air Controls Products LLC

COVID-19’s impact on the WTC is somewhat difficult to measure. In the short term, it has eliminated in-person meetings, including the annual Council Summit. However, online video platforms, including Zoom and Skype, are now common ground and a way to keep us all personally connected.

We are seeing mixed results on the industry side. Independent tire dealers are recovering well and, in a few cases, stronger than originally forecasted pre-COVID-19. Car dealers were able to navigate the early COVID-19 timeframe by pushing strong deals into the market. Although they are also on the road to recovery, they still have a way to go, given the unknown duration of this pandemic coupled with their fall new-model additions arriving versus overstock of current models.

For regional- and national-level tire retailers, the headlines are the telling stories. As a subsegment, they are coming back in a spotty formation. These measurements or “spotty-spots,” if you will, are more visible when dissected on geographic scales, marking the dependency on the economic situation of the local market. COVID-19, hurricanes, flooding, forest fires, etc. all play into this.

Some of the greatest divide is apparent with tire manufacturers. Tier 1s are struggling due to their premium market position. As that occurs, Tier 2s are moving in quickly to take up larger market shares. Whether this holds out this way or tilts back will not be very clear until we are well into Q2 2021 at minimum, or
even Q3.

If we look at the whole marketplace within the tire/wheel segment, the most important question business leaders should ask themselves is, “How quickly can I adapt my business to the challenges ahead?”

We are entering new and unprecedented challenges. Miles driven is an important feeding funnel. This year’s decrease may be felt for some time. Again, this goes back to your ability to differentiate your business, minimize the level of internal risk while creatively increasing your direct-to-consumer strategy. Do not shortcut or downplay your digital spend, and be sure to dial into your audience to maximize your usage.

If unsure, have a look at some markets that are exploding with business. Some have changed their approach while others are fortunate to be selling products in the channels that prosper during a pandemic. For example, RVs/trailers, trailer hitches and mountain bikes are all experiencing strong growth. Finding a perfect product recipe is not something any one of us could really have anticipated if we were all asked in January 2020.

Lastly, the product segment that is near and dear to many of us is wheels. Passenger and light-truck wheel sales are setting new records. That is true for any retailer and wheel manufacturer. I think we all have some reasons we can point to; however, with this large of a growth during a global pandemic, there are mysterious insights for which many are thankful.

WTC is continuing to find ways to communicate with members and the greater audience. At the 2019 SEMA Show, we launched The Stage’s inaugural event. The success of the videos that debuted every two to three weeks starting in the spring have shown the importance of growing digital platforms. By the time you read this, the second annual The Stage will have debuted at SEMA360. If you were unable to see the big names we lined up, visit www.sema.org/wtc.

Member spotlights and more live video streams are in the works to support the growth and focus on education, aligning with WTC’s vision.

Kirstin Stone

Young Executives Network (YEN)

Chair: Kirstin Stone, Derive Systems

The Young Executives Network (YEN) has consistently held on-site networking events throughout the country. Unfortunately, COVID-19 brought that to a near-immediate halt. Throughout the pandemic, we’ve put more focus on the Live Chat program, and we’ve been more successful than ever before, thanks to the efforts of Jeremy Headlee, who’s been running that program. We’re also starting a virtual happy hour series, and we’re looking forward to interacting more with our membership in the weeks and months to come.

I think one of the big takeaways for us is really how many opportunities we have for virtual interaction, even after the world really opens back up. There are some programs (like the virtual happy hours) that I’m looking forward to continuing.

Thankfully, much of the industry has continued to prosper despite the weird economic circumstances we’re all living in, and I’m looking forward to continued growth as we move out of this dip.

We are currently working on more virtual events and going bigger than ever on our in-person networking opportunities as soon as we’re able.

Because we’re a network, we don’t see specific segment trends, but watching networking and human communication evolve has been fascinating. While the opportunities to interact are actually more abundant than ever, it’s also shown the value of meeting people in person. While the virtual events do work, there’s nothing like seeing an industry friend in person, catching up, and making live new connections.

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