SEMA News - June 2009
RESEARCH

By Jim Spoonhower

Industry Leaders Continue to Mine the Markets

There have been eight rough patches in the marketplace since the automotive specialty-equipment industry began back in the ’30s. Each one had its impact on the marketplace, but the entrepreneurs running industry companies managed to weather them and, in some cases, found opportunities. The most recent is probably the harshest of the group, but there is no reason to think that industry leaders will not be able to find their way through it. So what made this time different? The following were a number of contributing factors.

• New-vehicle sales dropped from 16.1 million units in 2007 to 13.2 million in 2008.
• Gasoline prices peaked at more than $4 a gallon in 2008.
• The Dow Jones average dropped 33.8% in 2008.
• The U.S. housing market bubble burst in 2008.

The compact-performance market, which is dominated by young enthusiasts who are not so affected by the stock market or swings in the housing market, grew more than 5%.

But the one thing that really makes the current tough economy different for our industry is the presence of mainstream consumers in the customer base. Historically, the vast majority of industry product consumers have been enthusiasts. But over the past five to 10 years, a lot of mainstream consumers have purchased industry products just because it was “cool” to modify the family SUV or pickup, and they had plenty of cash or credit to spend.

When consumer confidence began dropping, mainstream consumers did not have the motivation to continue buying industry products the way enthusiasts do. That’s why the industry is feeling the effects of the tough market this time around more than ever before. The good news is that enthusiasts are still buying industry products!

Market Size

In 2008, U.S. retail sales of specialty automotive products generated $31.85 billion. That’s a decrease of 16.4% from 2007.

As we look over the recorded history of industry numbers, we find only three periods of soft sales growth. The first was in 1991, when the industry was hit doubly hard—a soft economy combined with the first Gulf War. Consumers at home weren’t spending or were glued to CNN, and a significant portion of industry enthusiasts were otherwise occupied. The second came 10 years later in 2001, and now the third six years later, officially beginning in 2007. Of those, only 1991 and 2008 resulted in negative growth for the industry. The question we have to ask is, should we plan on an economic slowdown every five to 10 years?

As we look over the recorded history of industry numbers, we find only three periods of soft sales growth.
In 2008, U.S. retail sales of specialty automotive products generated $31.85 billion.

Market Segments

Traditionally, we group industry products into one of three market segments: specialty accessories and appearance products; racing and performance; and wheels, tires and suspension. These segments are made up of groups of products that serve similar functions and are generally added for the same purposes.

Specialty accessories and appearance products include interior trim and accessories, restyling and appearance products, specialty waxes and chemicals, graphics and decals, sunroofs and others. This segment has a broader range and larger number of products than the other two. Often, these products are the non-enthusiast’s initial contact with the specialty automotive industry. As a result, this segment was the hardest hit when the economy got tough.

Racing and performance products include internal engine parts, drivetrain, exhaust systems, fuel systems and ignition components designed to improve performance through increased durability, capability or dependability. This segment is where the industry had its beginnings.

The second wave of parts to carry the automotive specialty-equipment industry was wheels, tires and suspension products. As off-roading became more popular and as increasing numbers of consumers used custom wheels to dress up their vehicles, this segment increased in size. Wheels, tires and suspension components include specialty shocks, struts, lowering packages, lift kits, custom wheels, performance tires and performance brakes.

2008 Specialty-Equipment Market

Accessories and appearance products took a big hit in 2008 after dramatic growth over the previous 10 years. The segment lost more than 10% of its market share, while the other two segments actually grew. In large part, that is a testament to the continued buying habits of enthusiasts while mainstream consumers sat on the sidelines.

Market Niches

It has been said that the automotive specialty-equipment industry is composed of a large number of smaller niche markets, and that is very true. Each of these niches is centered around a vehicle type, how the vehicle is used or the type of components involved. In fact, industry concentration on individual market niches is probably one of the factors that has sustained and grown the industry so well over the years.

As mainstream consumers stopped spending on industry products, the light-truck products market dropped. In some cases, firms that had targeted the light-truck market diversified into trailers and trailer products. Some shifted to serving the fleet market exclusively, while others went after restoration work.

On the other hand, the compact-performance market, which is dominated by young enthusiasts who are not so affected by the stock market or swings in the housing market, grew more than 5%.

When consumer confidence began dropping, mainstream consumers did not have the motivation to continue buying industry products the way enthusiasts do.

 

Accessories and appearance products took a big hit in 2008 while the other two segments actually grew.

As new-vehicle sales dropped and franchise dealers began disappearing, the restyling niche began to decline. In some cases, firms in this niche shifted to compact performance, while others specialized in portions of the restoration market. One interesting twist in restylers’ response to the market was the shift to doing preventative maintenance for car owners and mixing in some customization along the way.

Overall, 2008 was a tough year for many in the automotive specialty-equipment industry. But not all firms experienced declines in business. In fact, a survey conducted by SEMA in April 2009 found that 37% of responding companies had higher sales in 2008 than in 2007, thus proving that the competitive entrepreneurial spirit is alive and well in the industry. The year 2008 may have been a tough year, but industry leaders found the opportunities and took advantage of them.

Recession Definition

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on November 28, 2008. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the ’90s lasted 120 months.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

SEMA News - June 2009
Required Reading

Not open to the general public, the SEMA Show has been the premier automotive accessories trade show in the world for more than 40 years.

This month’s “Required Reading” highlights the many articles that talk about how important it is for businesses to position themselves as industry leaders. With more than 100,000 automotive professionals expected to attend this annual event, the SEMA Show gives those in attendance a great advantage for doing business. Last year, exhibitors left the SEMA Show with an average of 141 qualified business leads.

The SEMA Show was attended by more than 2,000 credentialed media from all 50 states and approximately 100 foreign countries. Here are several articles that outline how the SEMA Show helps companies stay competitive.

FSC, February 2009 “SEMA Thoughts” According to Scott Sparrow, editor of FSC magazine, the way to survive is “innovative thinking with a proactive approach.” After spending a day at the 2008 SEMA Show, Sparrow noted that most folks at the event were looking “for ways to create new business opportunities for themselves.” With more than 100,000 business people gathered in Las Vegas, it made sense that they would come to the SEMA Show to do just that.

Trucks & SUV Performance and Accessory Retailing January/February 2009 “The View From the Floor” Truck & SUV Performance and Accessory Retailing featured top industry suppliers at the SEMA Show in its January/February edition. In the magazine, these experts shared what they thought their customers’ biggest needs were for 2009 and showcased the new products that were unveiled at the SEMA Show. Like many of the other 2,000 companies exhibiting, these innovators had their fingers on the pulse of the industry and came to the SEMA Show to share their knowledge and build new partnerships.

Mustang Enthusiast, April, 2009 “Seen at SEMA, So Much to See, So Little Time” Like almost every automotive enthusiast magazine, Mustang Enthusiast featured a slew of products from the Show, and that was just “scratching the surface,” as there was so much to see and just not enough time. The SEMA Show gives exhibitors with new products plenty of opportunities to showcase their creations. In fact, in describing the SEMA Show, Mustang Enthusiast quoted the movie Field of Dreams, saying “if you build it, they will come.” This is, perhaps, a reference to the thousands of attendees who take part in the SEMA Show each year.

Performance Auto & Sound, February 2009 “SEMA Show 2008” The reporter from Performance Auto & Sound noted that the 2008 SEMA Show had more professionals and decision makers there than in previous years. On average, last year’s exhibitors were able to garner 325 booth visitors and leave the Show with 141 qualified business leads. Exhibitors were also able to spend more time with the media to explain the merits of their products in greater detail and discuss their plans for the upcoming year.

GM High-Tech Performance, April 2009 “Best New Performance Products for 2009” Reporters want to cover what is hot. The main purpose of their reporting is to get the latest information about these products out to their readers. Even during these tough economic times, the specialty-equipment industry still has a few tricks up its sleeve and is rolling out new products. While GM High-Tech Performance featured dozens of GM products, the 2008 SEMA Show actually had more than 2,000 entries included in the New Products Showcase.

Honda Tuning, February 2009 “SEMA, Only Different” Honda Tuning said that the SEMA Show seemed to be devoid of the “tire kickers”—those simply looking and not prepared to do business. It also noted that “SEMA is always about the cars. And the parts….” Those in the industry looking to discover the newest products and trends were at the SEMA Show—ready to do business.

SEMA News - June 2009
Required Reading

Not open to the general public, the SEMA Show has been the premier automotive accessories trade show in the world for more than 40 years.

This month’s “Required Reading” highlights the many articles that talk about how important it is for businesses to position themselves as industry leaders. With more than 100,000 automotive professionals expected to attend this annual event, the SEMA Show gives those in attendance a great advantage for doing business. Last year, exhibitors left the SEMA Show with an average of 141 qualified business leads.

The SEMA Show was attended by more than 2,000 credentialed media from all 50 states and approximately 100 foreign countries. Here are several articles that outline how the SEMA Show helps companies stay competitive.

FSC, February 2009 “SEMA Thoughts” According to Scott Sparrow, editor of FSC magazine, the way to survive is “innovative thinking with a proactive approach.” After spending a day at the 2008 SEMA Show, Sparrow noted that most folks at the event were looking “for ways to create new business opportunities for themselves.” With more than 100,000 business people gathered in Las Vegas, it made sense that they would come to the SEMA Show to do just that.

Trucks & SUV Performance and Accessory Retailing January/February 2009 “The View From the Floor” Truck & SUV Performance and Accessory Retailing featured top industry suppliers at the SEMA Show in its January/February edition. In the magazine, these experts shared what they thought their customers’ biggest needs were for 2009 and showcased the new products that were unveiled at the SEMA Show. Like many of the other 2,000 companies exhibiting, these innovators had their fingers on the pulse of the industry and came to the SEMA Show to share their knowledge and build new partnerships.

Mustang Enthusiast, April, 2009 “Seen at SEMA, So Much to See, So Little Time” Like almost every automotive enthusiast magazine, Mustang Enthusiast featured a slew of products from the Show, and that was just “scratching the surface,” as there was so much to see and just not enough time. The SEMA Show gives exhibitors with new products plenty of opportunities to showcase their creations. In fact, in describing the SEMA Show, Mustang Enthusiast quoted the movie Field of Dreams, saying “if you build it, they will come.” This is, perhaps, a reference to the thousands of attendees who take part in the SEMA Show each year.

Performance Auto & Sound, February 2009 “SEMA Show 2008” The reporter from Performance Auto & Sound noted that the 2008 SEMA Show had more professionals and decision makers there than in previous years. On average, last year’s exhibitors were able to garner 325 booth visitors and leave the Show with 141 qualified business leads. Exhibitors were also able to spend more time with the media to explain the merits of their products in greater detail and discuss their plans for the upcoming year.

GM High-Tech Performance, April 2009 “Best New Performance Products for 2009” Reporters want to cover what is hot. The main purpose of their reporting is to get the latest information about these products out to their readers. Even during these tough economic times, the specialty-equipment industry still has a few tricks up its sleeve and is rolling out new products. While GM High-Tech Performance featured dozens of GM products, the 2008 SEMA Show actually had more than 2,000 entries included in the New Products Showcase.

Honda Tuning, February 2009 “SEMA, Only Different” Honda Tuning said that the SEMA Show seemed to be devoid of the “tire kickers”—those simply looking and not prepared to do business. It also noted that “SEMA is always about the cars. And the parts….” Those in the industry looking to discover the newest products and trends were at the SEMA Show—ready to do business.

SEMA News - June 2009
Required Reading

Not open to the general public, the SEMA Show has been the premier automotive accessories trade show in the world for more than 40 years.

This month’s “Required Reading” highlights the many articles that talk about how important it is for businesses to position themselves as industry leaders. With more than 100,000 automotive professionals expected to attend this annual event, the SEMA Show gives those in attendance a great advantage for doing business. Last year, exhibitors left the SEMA Show with an average of 141 qualified business leads.

The SEMA Show was attended by more than 2,000 credentialed media from all 50 states and approximately 100 foreign countries. Here are several articles that outline how the SEMA Show helps companies stay competitive.

FSC, February 2009 “SEMA Thoughts” According to Scott Sparrow, editor of FSC magazine, the way to survive is “innovative thinking with a proactive approach.” After spending a day at the 2008 SEMA Show, Sparrow noted that most folks at the event were looking “for ways to create new business opportunities for themselves.” With more than 100,000 business people gathered in Las Vegas, it made sense that they would come to the SEMA Show to do just that.

Trucks & SUV Performance and Accessory Retailing January/February 2009 “The View From the Floor” Truck & SUV Performance and Accessory Retailing featured top industry suppliers at the SEMA Show in its January/February edition. In the magazine, these experts shared what they thought their customers’ biggest needs were for 2009 and showcased the new products that were unveiled at the SEMA Show. Like many of the other 2,000 companies exhibiting, these innovators had their fingers on the pulse of the industry and came to the SEMA Show to share their knowledge and build new partnerships.

Mustang Enthusiast, April, 2009 “Seen at SEMA, So Much to See, So Little Time” Like almost every automotive enthusiast magazine, Mustang Enthusiast featured a slew of products from the Show, and that was just “scratching the surface,” as there was so much to see and just not enough time. The SEMA Show gives exhibitors with new products plenty of opportunities to showcase their creations. In fact, in describing the SEMA Show, Mustang Enthusiast quoted the movie Field of Dreams, saying “if you build it, they will come.” This is, perhaps, a reference to the thousands of attendees who take part in the SEMA Show each year.

Performance Auto & Sound, February 2009 “SEMA Show 2008” The reporter from Performance Auto & Sound noted that the 2008 SEMA Show had more professionals and decision makers there than in previous years. On average, last year’s exhibitors were able to garner 325 booth visitors and leave the Show with 141 qualified business leads. Exhibitors were also able to spend more time with the media to explain the merits of their products in greater detail and discuss their plans for the upcoming year.

GM High-Tech Performance, April 2009 “Best New Performance Products for 2009” Reporters want to cover what is hot. The main purpose of their reporting is to get the latest information about these products out to their readers. Even during these tough economic times, the specialty-equipment industry still has a few tricks up its sleeve and is rolling out new products. While GM High-Tech Performance featured dozens of GM products, the 2008 SEMA Show actually had more than 2,000 entries included in the New Products Showcase.

Honda Tuning, February 2009 “SEMA, Only Different” Honda Tuning said that the SEMA Show seemed to be devoid of the “tire kickers”—those simply looking and not prepared to do business. It also noted that “SEMA is always about the cars. And the parts….” Those in the industry looking to discover the newest products and trends were at the SEMA Show—ready to do business.

SEMA News - June 2009
Required Reading

Not open to the general public, the SEMA Show has been the premier automotive accessories trade show in the world for more than 40 years.

This month’s “Required Reading” highlights the many articles that talk about how important it is for businesses to position themselves as industry leaders. With more than 100,000 automotive professionals expected to attend this annual event, the SEMA Show gives those in attendance a great advantage for doing business. Last year, exhibitors left the SEMA Show with an average of 141 qualified business leads.

The SEMA Show was attended by more than 2,000 credentialed media from all 50 states and approximately 100 foreign countries. Here are several articles that outline how the SEMA Show helps companies stay competitive.

FSC, February 2009 “SEMA Thoughts” According to Scott Sparrow, editor of FSC magazine, the way to survive is “innovative thinking with a proactive approach.” After spending a day at the 2008 SEMA Show, Sparrow noted that most folks at the event were looking “for ways to create new business opportunities for themselves.” With more than 100,000 business people gathered in Las Vegas, it made sense that they would come to the SEMA Show to do just that.

Trucks & SUV Performance and Accessory Retailing January/February 2009 “The View From the Floor” Truck & SUV Performance and Accessory Retailing featured top industry suppliers at the SEMA Show in its January/February edition. In the magazine, these experts shared what they thought their customers’ biggest needs were for 2009 and showcased the new products that were unveiled at the SEMA Show. Like many of the other 2,000 companies exhibiting, these innovators had their fingers on the pulse of the industry and came to the SEMA Show to share their knowledge and build new partnerships.

Mustang Enthusiast, April, 2009 “Seen at SEMA, So Much to See, So Little Time” Like almost every automotive enthusiast magazine, Mustang Enthusiast featured a slew of products from the Show, and that was just “scratching the surface,” as there was so much to see and just not enough time. The SEMA Show gives exhibitors with new products plenty of opportunities to showcase their creations. In fact, in describing the SEMA Show, Mustang Enthusiast quoted the movie Field of Dreams, saying “if you build it, they will come.” This is, perhaps, a reference to the thousands of attendees who take part in the SEMA Show each year.

Performance Auto & Sound, February 2009 “SEMA Show 2008” The reporter from Performance Auto & Sound noted that the 2008 SEMA Show had more professionals and decision makers there than in previous years. On average, last year’s exhibitors were able to garner 325 booth visitors and leave the Show with 141 qualified business leads. Exhibitors were also able to spend more time with the media to explain the merits of their products in greater detail and discuss their plans for the upcoming year.

GM High-Tech Performance, April 2009 “Best New Performance Products for 2009” Reporters want to cover what is hot. The main purpose of their reporting is to get the latest information about these products out to their readers. Even during these tough economic times, the specialty-equipment industry still has a few tricks up its sleeve and is rolling out new products. While GM High-Tech Performance featured dozens of GM products, the 2008 SEMA Show actually had more than 2,000 entries included in the New Products Showcase.

Honda Tuning, February 2009 “SEMA, Only Different” Honda Tuning said that the SEMA Show seemed to be devoid of the “tire kickers”—those simply looking and not prepared to do business. It also noted that “SEMA is always about the cars. And the parts….” Those in the industry looking to discover the newest products and trends were at the SEMA Show—ready to do business.

SEMA News - June 2009
SEMA Legislative and Technical Affairs

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

State Update

California

Street Racing: Existing law in California allows law enforcement to arrest and take into custody a person determined to have been engaged in street racing. The law also provides for the removal and seizure of the motor vehicle used in the contest. A vehicle impounded under these provisions is required to be impounded for not more than 30 days. New legislation being considered in the state would require vehicles to be inspected by the state police to determine whether the vehicle has been modified for speed enhancement beyond the manufacturer’s original equipment specifications. The bill would also require that an additional registration fee of $30 be collected for a motor vehicle so seized and that the motor vehicle be designated as speed enhanced on the certificate of registration for that motor vehicle. SEMA is working with the bill’s sponsor to mitigate the inadvertent effects of this bill on law-abiding motorists.

“Gas Guzzlers”: In an attempt to reduce greenhouse gas emissions, legislation has been reintroduced in California to authorize the establishment of a purchase surcharge for some new motor vehicles based on state calculations of carbon emissions. Funds collected under the program would be used in part to fund rebates for vehicles including hybrids and electric cars. If this effort is successful, the effects on consumers’ ability to purchase the vehicle of choice, not to mention vehicle safety, could be dramatic. SEMA is opposing the bill because it would make popular performance and luxury cars, as well as SUVs, light trucks and minivans, substantially more expensive to own. The measure also will not necessarily curtail greenhouse gas emissions, which depend on a host of other factors, such as total miles traveled.

Massachusetts

Street Rods/Customs: Massachusetts has reintroduced SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The bill allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Late last year, a similar measure was vetoed by Governor Deval Patrick. SEMA will work to uncover and mitigate any concerns raised by the governor and his administration so that the bill can be signed into law this year.

Oregon

Aftermarket Parts: SEMA reached agreement with the Oregon Department of Environmental Quality on an alternative to legislation that originally sought to prohibit the sale and distribution of aftermarket motor-vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” Under the negotiated agreement, the new bill would only give the department authority to adopt the present California certification process for aftermarket emissions-related parts, allowing parts manufacturers to meet one uniform standard rather than a patchwork of multiple state standards. The amended legislation will also incorporate a California law that requires state regulators to develop a tire fuel-efficiency program for passenger-car and light-truck replacement tires. As in California, Oregon will include a SEMA-drafted provision to exempt limited-production tires (15,000 or less annually), deep-tread snow tires, limited-use spares, motorcycle tires and tires manufactured for use on off-road vehicles.

Texas

Street Rods/Customs: SEMA-model legislation to create new vehicle registration and titling classifications for street rods and custom vehicles and provide for special license plates for these vehicles is being considered by the Texas House Subcommittee on License Plates. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The measure also allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Utah

Street Rods/Customs: SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles was approved overwhelmingly by the Utah State Legislature and signed into law by Governor Jon Huntsman Jr. The new law defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The law allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

West Virginia

Inoperable Vehicles : At the urging of SEMA and the hobbyist community in the state, West Virginia legislation has been amended in committee. The bill originally sought to redefine “abandoned motor vehicles” to include vehicles or vehicle parts that are either unlicensed or inoperable or both, are not in an enclosed building and have remained on private property for more than 30 days. Under the amendment, antique motor vehicles would be exempted from the scope of the measure, as would motor vehicles or parts that are obscured from view by means of blocking or screening behind natural objects, plantings, fences or other appropriate visual barriers.

FEDERAL UPDATE

Vehicle Scrappage: President Obama endorsed inclusion of a vehicle scrappage program as part of an overall strategy to help rebuild the U.S. auto industry. As a result, “Cash for Clunkers” was once again a focus of attention for the media and politicians. Scrappage programs accelerate the demise of older vehicles that are then typically crushed into blocks of metal. Owners are given vouchers ranging from about $2,000–$5,000 to buy a new car in exchange for a car older than eight years (under one proposal) or a vehicle that gets 18 mpg or less (under another proposal). The programs do not actually measure emissions or how much the car is driven. SEMA proposed a number of solutions to help revitalize the entire auto industry without unnecessarily crushing cars. These included allowing new-car owners to deduct car loan interest payments on their federal taxes and providing a voucher to any person who wanted to buy a fuel-efficient car. SEMA also supported tax incentives to encourage owners to upgrade, repair or maintain their used vehicles. There are a number of commercially available products that will substantially lower the emissions rates of older vehicles while also offering the owner added performance, drivability and fuel mileage.

CAFE Standards: The National Highway Traffic Safety Administration (NHTSA) raised the Corporate Average Fuel Economy (CAFE) standards for model-year 2011 vehicles by about 2 mpg above the 2010 standards. The agency will use an attribute-based system that sets CAFE standards for individual fleets of vehicles based on size, taking into account the differences between cars and light trucks (SUVs, pickups and vans). The industry-wide combined car/truck standard will be 27.3 mpg, based on a 30.2-mpg car standard (up from 27.5 mpg) and 24.1-mpg light-truck standard (up from 23.1 mpg). Individual car companies have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. Nevertheless, a standard based on each vehicle’s footprint should force automakers to increase the efficiency of every vehicle rather than downsizing some vehicles in order to offset the sale of bigger cars.

Rearward-Viewing Cameras/Sensors: Under a law passed in 2008, the NHTSA has until early 2011 to implement a regulation to consider requiring that all new passenger cars be equipped with a means for alerting the driver if a child is behind the vehicle when it is being backed up. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue. It is unclear whether the industry will experience reduced sales if many cars come equipped with standard equipment. In order to draft a regulation, the NHTSA requested public feedback on the effectiveness of various rear-visibility systems (mirrors, video, etc.) and a cost/benefit analysis on the countermeasures.

Health Care Reform: SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress are now drafting legislation intended to reform and expand the nation’s health care delivery system. The tough questions on how to accomplish the mission will likely be debated this summer. The letter praised the president’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that, “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.” As a member of the Small Business Coalition for Affordable Healthcare, SEMA is working to address small-business concerns during this critical debate.

Small-Business Credit Relief: The Obama Administration took steps aimed at unfreezing the small-business credit markets. The Treasury Department is making direct purchases of securities backed by Small Business Administration (SBA) loans, thereby allowing community banks and other lending institutions to start lending again. The Treasury Department will guarantee up to 90% of SBA loans and spend up to $15 billion purchasing the loans. Previously, the government would guarantee up to 80% on SBA loans less than $150,000 and 75% for larger loans.

Land Use: President Obama signed into law a bill that adds more than 2 million acres to the National Wilderness Preservation System, including lands in and around Joshua Tree National Park and the Eastern Sierras in California, Mt. Hood in Oregon and Zion National Park in Utah. No mechanized activity is permitted in wilderness areas. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. Some roads and trails were excluded from the wilderness designations and therefore remain available to off-roaders. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly, since not all roads and trails received protection.

Updated I-9 Employment Verification Form: The U.S. Bureau of Citizenship and Immigration Services revised the list of documents acceptable for the Form I-9, Employment Eligibility Verification. Employers must now use the new form. The major change is that all documents presented during the verification process must be unexpired.

SEMA News - June 2009
SEMA Legislative and Technical Affairs

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

State Update

California

Street Racing: Existing law in California allows law enforcement to arrest and take into custody a person determined to have been engaged in street racing. The law also provides for the removal and seizure of the motor vehicle used in the contest. A vehicle impounded under these provisions is required to be impounded for not more than 30 days. New legislation being considered in the state would require vehicles to be inspected by the state police to determine whether the vehicle has been modified for speed enhancement beyond the manufacturer’s original equipment specifications. The bill would also require that an additional registration fee of $30 be collected for a motor vehicle so seized and that the motor vehicle be designated as speed enhanced on the certificate of registration for that motor vehicle. SEMA is working with the bill’s sponsor to mitigate the inadvertent effects of this bill on law-abiding motorists.

“Gas Guzzlers”: In an attempt to reduce greenhouse gas emissions, legislation has been reintroduced in California to authorize the establishment of a purchase surcharge for some new motor vehicles based on state calculations of carbon emissions. Funds collected under the program would be used in part to fund rebates for vehicles including hybrids and electric cars. If this effort is successful, the effects on consumers’ ability to purchase the vehicle of choice, not to mention vehicle safety, could be dramatic. SEMA is opposing the bill because it would make popular performance and luxury cars, as well as SUVs, light trucks and minivans, substantially more expensive to own. The measure also will not necessarily curtail greenhouse gas emissions, which depend on a host of other factors, such as total miles traveled.

Massachusetts

Street Rods/Customs: Massachusetts has reintroduced SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The bill allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Late last year, a similar measure was vetoed by Governor Deval Patrick. SEMA will work to uncover and mitigate any concerns raised by the governor and his administration so that the bill can be signed into law this year.

Oregon

Aftermarket Parts: SEMA reached agreement with the Oregon Department of Environmental Quality on an alternative to legislation that originally sought to prohibit the sale and distribution of aftermarket motor-vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” Under the negotiated agreement, the new bill would only give the department authority to adopt the present California certification process for aftermarket emissions-related parts, allowing parts manufacturers to meet one uniform standard rather than a patchwork of multiple state standards. The amended legislation will also incorporate a California law that requires state regulators to develop a tire fuel-efficiency program for passenger-car and light-truck replacement tires. As in California, Oregon will include a SEMA-drafted provision to exempt limited-production tires (15,000 or less annually), deep-tread snow tires, limited-use spares, motorcycle tires and tires manufactured for use on off-road vehicles.

Texas

Street Rods/Customs: SEMA-model legislation to create new vehicle registration and titling classifications for street rods and custom vehicles and provide for special license plates for these vehicles is being considered by the Texas House Subcommittee on License Plates. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The measure also allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Utah

Street Rods/Customs: SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles was approved overwhelmingly by the Utah State Legislature and signed into law by Governor Jon Huntsman Jr. The new law defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The law allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

West Virginia

Inoperable Vehicles : At the urging of SEMA and the hobbyist community in the state, West Virginia legislation has been amended in committee. The bill originally sought to redefine “abandoned motor vehicles” to include vehicles or vehicle parts that are either unlicensed or inoperable or both, are not in an enclosed building and have remained on private property for more than 30 days. Under the amendment, antique motor vehicles would be exempted from the scope of the measure, as would motor vehicles or parts that are obscured from view by means of blocking or screening behind natural objects, plantings, fences or other appropriate visual barriers.

FEDERAL UPDATE

Vehicle Scrappage: President Obama endorsed inclusion of a vehicle scrappage program as part of an overall strategy to help rebuild the U.S. auto industry. As a result, “Cash for Clunkers” was once again a focus of attention for the media and politicians. Scrappage programs accelerate the demise of older vehicles that are then typically crushed into blocks of metal. Owners are given vouchers ranging from about $2,000–$5,000 to buy a new car in exchange for a car older than eight years (under one proposal) or a vehicle that gets 18 mpg or less (under another proposal). The programs do not actually measure emissions or how much the car is driven. SEMA proposed a number of solutions to help revitalize the entire auto industry without unnecessarily crushing cars. These included allowing new-car owners to deduct car loan interest payments on their federal taxes and providing a voucher to any person who wanted to buy a fuel-efficient car. SEMA also supported tax incentives to encourage owners to upgrade, repair or maintain their used vehicles. There are a number of commercially available products that will substantially lower the emissions rates of older vehicles while also offering the owner added performance, drivability and fuel mileage.

CAFE Standards: The National Highway Traffic Safety Administration (NHTSA) raised the Corporate Average Fuel Economy (CAFE) standards for model-year 2011 vehicles by about 2 mpg above the 2010 standards. The agency will use an attribute-based system that sets CAFE standards for individual fleets of vehicles based on size, taking into account the differences between cars and light trucks (SUVs, pickups and vans). The industry-wide combined car/truck standard will be 27.3 mpg, based on a 30.2-mpg car standard (up from 27.5 mpg) and 24.1-mpg light-truck standard (up from 23.1 mpg). Individual car companies have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. Nevertheless, a standard based on each vehicle’s footprint should force automakers to increase the efficiency of every vehicle rather than downsizing some vehicles in order to offset the sale of bigger cars.

Rearward-Viewing Cameras/Sensors: Under a law passed in 2008, the NHTSA has until early 2011 to implement a regulation to consider requiring that all new passenger cars be equipped with a means for alerting the driver if a child is behind the vehicle when it is being backed up. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue. It is unclear whether the industry will experience reduced sales if many cars come equipped with standard equipment. In order to draft a regulation, the NHTSA requested public feedback on the effectiveness of various rear-visibility systems (mirrors, video, etc.) and a cost/benefit analysis on the countermeasures.

Health Care Reform: SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress are now drafting legislation intended to reform and expand the nation’s health care delivery system. The tough questions on how to accomplish the mission will likely be debated this summer. The letter praised the president’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that, “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.” As a member of the Small Business Coalition for Affordable Healthcare, SEMA is working to address small-business concerns during this critical debate.

Small-Business Credit Relief: The Obama Administration took steps aimed at unfreezing the small-business credit markets. The Treasury Department is making direct purchases of securities backed by Small Business Administration (SBA) loans, thereby allowing community banks and other lending institutions to start lending again. The Treasury Department will guarantee up to 90% of SBA loans and spend up to $15 billion purchasing the loans. Previously, the government would guarantee up to 80% on SBA loans less than $150,000 and 75% for larger loans.

Land Use: President Obama signed into law a bill that adds more than 2 million acres to the National Wilderness Preservation System, including lands in and around Joshua Tree National Park and the Eastern Sierras in California, Mt. Hood in Oregon and Zion National Park in Utah. No mechanized activity is permitted in wilderness areas. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. Some roads and trails were excluded from the wilderness designations and therefore remain available to off-roaders. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly, since not all roads and trails received protection.

Updated I-9 Employment Verification Form: The U.S. Bureau of Citizenship and Immigration Services revised the list of documents acceptable for the Form I-9, Employment Eligibility Verification. Employers must now use the new form. The major change is that all documents presented during the verification process must be unexpired.

SEMA News - June 2009
SEMA Legislative and Technical Affairs

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

State Update

California

Street Racing: Existing law in California allows law enforcement to arrest and take into custody a person determined to have been engaged in street racing. The law also provides for the removal and seizure of the motor vehicle used in the contest. A vehicle impounded under these provisions is required to be impounded for not more than 30 days. New legislation being considered in the state would require vehicles to be inspected by the state police to determine whether the vehicle has been modified for speed enhancement beyond the manufacturer’s original equipment specifications. The bill would also require that an additional registration fee of $30 be collected for a motor vehicle so seized and that the motor vehicle be designated as speed enhanced on the certificate of registration for that motor vehicle. SEMA is working with the bill’s sponsor to mitigate the inadvertent effects of this bill on law-abiding motorists.

“Gas Guzzlers”: In an attempt to reduce greenhouse gas emissions, legislation has been reintroduced in California to authorize the establishment of a purchase surcharge for some new motor vehicles based on state calculations of carbon emissions. Funds collected under the program would be used in part to fund rebates for vehicles including hybrids and electric cars. If this effort is successful, the effects on consumers’ ability to purchase the vehicle of choice, not to mention vehicle safety, could be dramatic. SEMA is opposing the bill because it would make popular performance and luxury cars, as well as SUVs, light trucks and minivans, substantially more expensive to own. The measure also will not necessarily curtail greenhouse gas emissions, which depend on a host of other factors, such as total miles traveled.

Massachusetts

Street Rods/Customs: Massachusetts has reintroduced SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The bill allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Late last year, a similar measure was vetoed by Governor Deval Patrick. SEMA will work to uncover and mitigate any concerns raised by the governor and his administration so that the bill can be signed into law this year.

Oregon

Aftermarket Parts: SEMA reached agreement with the Oregon Department of Environmental Quality on an alternative to legislation that originally sought to prohibit the sale and distribution of aftermarket motor-vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” Under the negotiated agreement, the new bill would only give the department authority to adopt the present California certification process for aftermarket emissions-related parts, allowing parts manufacturers to meet one uniform standard rather than a patchwork of multiple state standards. The amended legislation will also incorporate a California law that requires state regulators to develop a tire fuel-efficiency program for passenger-car and light-truck replacement tires. As in California, Oregon will include a SEMA-drafted provision to exempt limited-production tires (15,000 or less annually), deep-tread snow tires, limited-use spares, motorcycle tires and tires manufactured for use on off-road vehicles.

Texas

Street Rods/Customs: SEMA-model legislation to create new vehicle registration and titling classifications for street rods and custom vehicles and provide for special license plates for these vehicles is being considered by the Texas House Subcommittee on License Plates. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The measure also allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Utah

Street Rods/Customs: SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles was approved overwhelmingly by the Utah State Legislature and signed into law by Governor Jon Huntsman Jr. The new law defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The law allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

West Virginia

Inoperable Vehicles : At the urging of SEMA and the hobbyist community in the state, West Virginia legislation has been amended in committee. The bill originally sought to redefine “abandoned motor vehicles” to include vehicles or vehicle parts that are either unlicensed or inoperable or both, are not in an enclosed building and have remained on private property for more than 30 days. Under the amendment, antique motor vehicles would be exempted from the scope of the measure, as would motor vehicles or parts that are obscured from view by means of blocking or screening behind natural objects, plantings, fences or other appropriate visual barriers.

FEDERAL UPDATE

Vehicle Scrappage: President Obama endorsed inclusion of a vehicle scrappage program as part of an overall strategy to help rebuild the U.S. auto industry. As a result, “Cash for Clunkers” was once again a focus of attention for the media and politicians. Scrappage programs accelerate the demise of older vehicles that are then typically crushed into blocks of metal. Owners are given vouchers ranging from about $2,000–$5,000 to buy a new car in exchange for a car older than eight years (under one proposal) or a vehicle that gets 18 mpg or less (under another proposal). The programs do not actually measure emissions or how much the car is driven. SEMA proposed a number of solutions to help revitalize the entire auto industry without unnecessarily crushing cars. These included allowing new-car owners to deduct car loan interest payments on their federal taxes and providing a voucher to any person who wanted to buy a fuel-efficient car. SEMA also supported tax incentives to encourage owners to upgrade, repair or maintain their used vehicles. There are a number of commercially available products that will substantially lower the emissions rates of older vehicles while also offering the owner added performance, drivability and fuel mileage.

CAFE Standards: The National Highway Traffic Safety Administration (NHTSA) raised the Corporate Average Fuel Economy (CAFE) standards for model-year 2011 vehicles by about 2 mpg above the 2010 standards. The agency will use an attribute-based system that sets CAFE standards for individual fleets of vehicles based on size, taking into account the differences between cars and light trucks (SUVs, pickups and vans). The industry-wide combined car/truck standard will be 27.3 mpg, based on a 30.2-mpg car standard (up from 27.5 mpg) and 24.1-mpg light-truck standard (up from 23.1 mpg). Individual car companies have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. Nevertheless, a standard based on each vehicle’s footprint should force automakers to increase the efficiency of every vehicle rather than downsizing some vehicles in order to offset the sale of bigger cars.

Rearward-Viewing Cameras/Sensors: Under a law passed in 2008, the NHTSA has until early 2011 to implement a regulation to consider requiring that all new passenger cars be equipped with a means for alerting the driver if a child is behind the vehicle when it is being backed up. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue. It is unclear whether the industry will experience reduced sales if many cars come equipped with standard equipment. In order to draft a regulation, the NHTSA requested public feedback on the effectiveness of various rear-visibility systems (mirrors, video, etc.) and a cost/benefit analysis on the countermeasures.

Health Care Reform: SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress are now drafting legislation intended to reform and expand the nation’s health care delivery system. The tough questions on how to accomplish the mission will likely be debated this summer. The letter praised the president’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that, “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.” As a member of the Small Business Coalition for Affordable Healthcare, SEMA is working to address small-business concerns during this critical debate.

Small-Business Credit Relief: The Obama Administration took steps aimed at unfreezing the small-business credit markets. The Treasury Department is making direct purchases of securities backed by Small Business Administration (SBA) loans, thereby allowing community banks and other lending institutions to start lending again. The Treasury Department will guarantee up to 90% of SBA loans and spend up to $15 billion purchasing the loans. Previously, the government would guarantee up to 80% on SBA loans less than $150,000 and 75% for larger loans.

Land Use: President Obama signed into law a bill that adds more than 2 million acres to the National Wilderness Preservation System, including lands in and around Joshua Tree National Park and the Eastern Sierras in California, Mt. Hood in Oregon and Zion National Park in Utah. No mechanized activity is permitted in wilderness areas. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. Some roads and trails were excluded from the wilderness designations and therefore remain available to off-roaders. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly, since not all roads and trails received protection.

Updated I-9 Employment Verification Form: The U.S. Bureau of Citizenship and Immigration Services revised the list of documents acceptable for the Form I-9, Employment Eligibility Verification. Employers must now use the new form. The major change is that all documents presented during the verification process must be unexpired.

SEMA News - June 2009
SEMA Legislative and Technical Affairs

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

State Update

California

Street Racing: Existing law in California allows law enforcement to arrest and take into custody a person determined to have been engaged in street racing. The law also provides for the removal and seizure of the motor vehicle used in the contest. A vehicle impounded under these provisions is required to be impounded for not more than 30 days. New legislation being considered in the state would require vehicles to be inspected by the state police to determine whether the vehicle has been modified for speed enhancement beyond the manufacturer’s original equipment specifications. The bill would also require that an additional registration fee of $30 be collected for a motor vehicle so seized and that the motor vehicle be designated as speed enhanced on the certificate of registration for that motor vehicle. SEMA is working with the bill’s sponsor to mitigate the inadvertent effects of this bill on law-abiding motorists.

“Gas Guzzlers”: In an attempt to reduce greenhouse gas emissions, legislation has been reintroduced in California to authorize the establishment of a purchase surcharge for some new motor vehicles based on state calculations of carbon emissions. Funds collected under the program would be used in part to fund rebates for vehicles including hybrids and electric cars. If this effort is successful, the effects on consumers’ ability to purchase the vehicle of choice, not to mention vehicle safety, could be dramatic. SEMA is opposing the bill because it would make popular performance and luxury cars, as well as SUVs, light trucks and minivans, substantially more expensive to own. The measure also will not necessarily curtail greenhouse gas emissions, which depend on a host of other factors, such as total miles traveled.

Massachusetts

Street Rods/Customs: Massachusetts has reintroduced SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The bill allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Late last year, a similar measure was vetoed by Governor Deval Patrick. SEMA will work to uncover and mitigate any concerns raised by the governor and his administration so that the bill can be signed into law this year.

Oregon

Aftermarket Parts: SEMA reached agreement with the Oregon Department of Environmental Quality on an alternative to legislation that originally sought to prohibit the sale and distribution of aftermarket motor-vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” Under the negotiated agreement, the new bill would only give the department authority to adopt the present California certification process for aftermarket emissions-related parts, allowing parts manufacturers to meet one uniform standard rather than a patchwork of multiple state standards. The amended legislation will also incorporate a California law that requires state regulators to develop a tire fuel-efficiency program for passenger-car and light-truck replacement tires. As in California, Oregon will include a SEMA-drafted provision to exempt limited-production tires (15,000 or less annually), deep-tread snow tires, limited-use spares, motorcycle tires and tires manufactured for use on off-road vehicles.

Texas

Street Rods/Customs: SEMA-model legislation to create new vehicle registration and titling classifications for street rods and custom vehicles and provide for special license plates for these vehicles is being considered by the Texas House Subcommittee on License Plates. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The measure also allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Utah

Street Rods/Customs: SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles was approved overwhelmingly by the Utah State Legislature and signed into law by Governor Jon Huntsman Jr. The new law defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The law allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

West Virginia

Inoperable Vehicles : At the urging of SEMA and the hobbyist community in the state, West Virginia legislation has been amended in committee. The bill originally sought to redefine “abandoned motor vehicles” to include vehicles or vehicle parts that are either unlicensed or inoperable or both, are not in an enclosed building and have remained on private property for more than 30 days. Under the amendment, antique motor vehicles would be exempted from the scope of the measure, as would motor vehicles or parts that are obscured from view by means of blocking or screening behind natural objects, plantings, fences or other appropriate visual barriers.

FEDERAL UPDATE

Vehicle Scrappage: President Obama endorsed inclusion of a vehicle scrappage program as part of an overall strategy to help rebuild the U.S. auto industry. As a result, “Cash for Clunkers” was once again a focus of attention for the media and politicians. Scrappage programs accelerate the demise of older vehicles that are then typically crushed into blocks of metal. Owners are given vouchers ranging from about $2,000–$5,000 to buy a new car in exchange for a car older than eight years (under one proposal) or a vehicle that gets 18 mpg or less (under another proposal). The programs do not actually measure emissions or how much the car is driven. SEMA proposed a number of solutions to help revitalize the entire auto industry without unnecessarily crushing cars. These included allowing new-car owners to deduct car loan interest payments on their federal taxes and providing a voucher to any person who wanted to buy a fuel-efficient car. SEMA also supported tax incentives to encourage owners to upgrade, repair or maintain their used vehicles. There are a number of commercially available products that will substantially lower the emissions rates of older vehicles while also offering the owner added performance, drivability and fuel mileage.

CAFE Standards: The National Highway Traffic Safety Administration (NHTSA) raised the Corporate Average Fuel Economy (CAFE) standards for model-year 2011 vehicles by about 2 mpg above the 2010 standards. The agency will use an attribute-based system that sets CAFE standards for individual fleets of vehicles based on size, taking into account the differences between cars and light trucks (SUVs, pickups and vans). The industry-wide combined car/truck standard will be 27.3 mpg, based on a 30.2-mpg car standard (up from 27.5 mpg) and 24.1-mpg light-truck standard (up from 23.1 mpg). Individual car companies have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. Nevertheless, a standard based on each vehicle’s footprint should force automakers to increase the efficiency of every vehicle rather than downsizing some vehicles in order to offset the sale of bigger cars.

Rearward-Viewing Cameras/Sensors: Under a law passed in 2008, the NHTSA has until early 2011 to implement a regulation to consider requiring that all new passenger cars be equipped with a means for alerting the driver if a child is behind the vehicle when it is being backed up. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue. It is unclear whether the industry will experience reduced sales if many cars come equipped with standard equipment. In order to draft a regulation, the NHTSA requested public feedback on the effectiveness of various rear-visibility systems (mirrors, video, etc.) and a cost/benefit analysis on the countermeasures.

Health Care Reform: SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress are now drafting legislation intended to reform and expand the nation’s health care delivery system. The tough questions on how to accomplish the mission will likely be debated this summer. The letter praised the president’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that, “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.” As a member of the Small Business Coalition for Affordable Healthcare, SEMA is working to address small-business concerns during this critical debate.

Small-Business Credit Relief: The Obama Administration took steps aimed at unfreezing the small-business credit markets. The Treasury Department is making direct purchases of securities backed by Small Business Administration (SBA) loans, thereby allowing community banks and other lending institutions to start lending again. The Treasury Department will guarantee up to 90% of SBA loans and spend up to $15 billion purchasing the loans. Previously, the government would guarantee up to 80% on SBA loans less than $150,000 and 75% for larger loans.

Land Use: President Obama signed into law a bill that adds more than 2 million acres to the National Wilderness Preservation System, including lands in and around Joshua Tree National Park and the Eastern Sierras in California, Mt. Hood in Oregon and Zion National Park in Utah. No mechanized activity is permitted in wilderness areas. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. Some roads and trails were excluded from the wilderness designations and therefore remain available to off-roaders. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly, since not all roads and trails received protection.

Updated I-9 Employment Verification Form: The U.S. Bureau of Citizenship and Immigration Services revised the list of documents acceptable for the Form I-9, Employment Eligibility Verification. Employers must now use the new form. The major change is that all documents presented during the verification process must be unexpired.

SEMA News - June 2009
SEMA Legislative and Technical Affairs

Law and Order is an update of some of the most recent federal and state legislative and regulatory issues that could potentially impact the automotive specialty-equipment industry. These include issues affecting small-business owners and their employees.

State Update

California

Street Racing: Existing law in California allows law enforcement to arrest and take into custody a person determined to have been engaged in street racing. The law also provides for the removal and seizure of the motor vehicle used in the contest. A vehicle impounded under these provisions is required to be impounded for not more than 30 days. New legislation being considered in the state would require vehicles to be inspected by the state police to determine whether the vehicle has been modified for speed enhancement beyond the manufacturer’s original equipment specifications. The bill would also require that an additional registration fee of $30 be collected for a motor vehicle so seized and that the motor vehicle be designated as speed enhanced on the certificate of registration for that motor vehicle. SEMA is working with the bill’s sponsor to mitigate the inadvertent effects of this bill on law-abiding motorists.

“Gas Guzzlers”: In an attempt to reduce greenhouse gas emissions, legislation has been reintroduced in California to authorize the establishment of a purchase surcharge for some new motor vehicles based on state calculations of carbon emissions. Funds collected under the program would be used in part to fund rebates for vehicles including hybrids and electric cars. If this effort is successful, the effects on consumers’ ability to purchase the vehicle of choice, not to mention vehicle safety, could be dramatic. SEMA is opposing the bill because it would make popular performance and luxury cars, as well as SUVs, light trucks and minivans, substantially more expensive to own. The measure also will not necessarily curtail greenhouse gas emissions, which depend on a host of other factors, such as total miles traveled.

Massachusetts

Street Rods/Customs: Massachusetts has reintroduced SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The bill allowed kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble. Late last year, a similar measure was vetoed by Governor Deval Patrick. SEMA will work to uncover and mitigate any concerns raised by the governor and his administration so that the bill can be signed into law this year.

Oregon

Aftermarket Parts: SEMA reached agreement with the Oregon Department of Environmental Quality on an alternative to legislation that originally sought to prohibit the sale and distribution of aftermarket motor-vehicle parts if alternatives are available that “decrease greenhouse gas emissions from motor vehicles.” Under the negotiated agreement, the new bill would only give the department authority to adopt the present California certification process for aftermarket emissions-related parts, allowing parts manufacturers to meet one uniform standard rather than a patchwork of multiple state standards. The amended legislation will also incorporate a California law that requires state regulators to develop a tire fuel-efficiency program for passenger-car and light-truck replacement tires. As in California, Oregon will include a SEMA-drafted provision to exempt limited-production tires (15,000 or less annually), deep-tread snow tires, limited-use spares, motorcycle tires and tires manufactured for use on off-road vehicles.

Texas

Street Rods/Customs: SEMA-model legislation to create new vehicle registration and titling classifications for street rods and custom vehicles and provide for special license plates for these vehicles is being considered by the Texas House Subcommittee on License Plates. The bill defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The measure also allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

Utah

Street Rods/Customs: SEMA-model legislation to create a vehicle registration classification for street rods and custom vehicles was approved overwhelmingly by the Utah State Legislature and signed into law by Governor Jon Huntsman Jr. The new law defines a street rod as an altered vehicle manufactured before 1949 and a custom as an altered vehicle at least 25 years old and manufactured after 1948. The law allows kit cars and replica vehicles to be assigned certificates of title bearing the same model-year designations as the production vehicles they most closely resemble.

West Virginia

Inoperable Vehicles : At the urging of SEMA and the hobbyist community in the state, West Virginia legislation has been amended in committee. The bill originally sought to redefine “abandoned motor vehicles” to include vehicles or vehicle parts that are either unlicensed or inoperable or both, are not in an enclosed building and have remained on private property for more than 30 days. Under the amendment, antique motor vehicles would be exempted from the scope of the measure, as would motor vehicles or parts that are obscured from view by means of blocking or screening behind natural objects, plantings, fences or other appropriate visual barriers.

FEDERAL UPDATE

Vehicle Scrappage: President Obama endorsed inclusion of a vehicle scrappage program as part of an overall strategy to help rebuild the U.S. auto industry. As a result, “Cash for Clunkers” was once again a focus of attention for the media and politicians. Scrappage programs accelerate the demise of older vehicles that are then typically crushed into blocks of metal. Owners are given vouchers ranging from about $2,000–$5,000 to buy a new car in exchange for a car older than eight years (under one proposal) or a vehicle that gets 18 mpg or less (under another proposal). The programs do not actually measure emissions or how much the car is driven. SEMA proposed a number of solutions to help revitalize the entire auto industry without unnecessarily crushing cars. These included allowing new-car owners to deduct car loan interest payments on their federal taxes and providing a voucher to any person who wanted to buy a fuel-efficient car. SEMA also supported tax incentives to encourage owners to upgrade, repair or maintain their used vehicles. There are a number of commercially available products that will substantially lower the emissions rates of older vehicles while also offering the owner added performance, drivability and fuel mileage.

CAFE Standards: The National Highway Traffic Safety Administration (NHTSA) raised the Corporate Average Fuel Economy (CAFE) standards for model-year 2011 vehicles by about 2 mpg above the 2010 standards. The agency will use an attribute-based system that sets CAFE standards for individual fleets of vehicles based on size, taking into account the differences between cars and light trucks (SUVs, pickups and vans). The industry-wide combined car/truck standard will be 27.3 mpg, based on a 30.2-mpg car standard (up from 27.5 mpg) and 24.1-mpg light-truck standard (up from 23.1 mpg). Individual car companies have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. Nevertheless, a standard based on each vehicle’s footprint should force automakers to increase the efficiency of every vehicle rather than downsizing some vehicles in order to offset the sale of bigger cars.

Rearward-Viewing Cameras/Sensors: Under a law passed in 2008, the NHTSA has until early 2011 to implement a regulation to consider requiring that all new passenger cars be equipped with a means for alerting the driver if a child is behind the vehicle when it is being backed up. The specialty-equipment market has been at the forefront of offering cameras and sensors to address the issue. It is unclear whether the industry will experience reduced sales if many cars come equipped with standard equipment. In order to draft a regulation, the NHTSA requested public feedback on the effectiveness of various rear-visibility systems (mirrors, video, etc.) and a cost/benefit analysis on the countermeasures.

Health Care Reform: SEMA joined hundreds of companies and trade associations in sending a letter to President Obama on the critical need for affordable, private health care options within a voluntary employer-based system. Lawmakers in Congress are now drafting legislation intended to reform and expand the nation’s health care delivery system. The tough questions on how to accomplish the mission will likely be debated this summer. The letter praised the president’s commitment to comprehensive, bipartisan reform and a shared belief that all Americans should have access to affordable coverage. The letter noted that, “as voluntary providers of health care to more than 170 million Americans, employers are leading the way in helping to improve our health care system. While firmly committed to helping workers and their families meet their health care needs, employers are also struggling with health care costs.” As a member of the Small Business Coalition for Affordable Healthcare, SEMA is working to address small-business concerns during this critical debate.

Small-Business Credit Relief: The Obama Administration took steps aimed at unfreezing the small-business credit markets. The Treasury Department is making direct purchases of securities backed by Small Business Administration (SBA) loans, thereby allowing community banks and other lending institutions to start lending again. The Treasury Department will guarantee up to 90% of SBA loans and spend up to $15 billion purchasing the loans. Previously, the government would guarantee up to 80% on SBA loans less than $150,000 and 75% for larger loans.

Land Use: President Obama signed into law a bill that adds more than 2 million acres to the National Wilderness Preservation System, including lands in and around Joshua Tree National Park and the Eastern Sierras in California, Mt. Hood in Oregon and Zion National Park in Utah. No mechanized activity is permitted in wilderness areas. The issue is of keen interest to off-roaders and the SEMA-member companies that market products to those groups. Some roads and trails were excluded from the wilderness designations and therefore remain available to off-roaders. Nevertheless, SEMA expressed regret that lawmakers had moved too quickly, since not all roads and trails received protection.

Updated I-9 Employment Verification Form: The U.S. Bureau of Citizenship and Immigration Services revised the list of documents acceptable for the Form I-9, Employment Eligibility Verification. Employers must now use the new form. The major change is that all documents presented during the verification process must be unexpired.