From left: SEMA President and CEO Chris Kersting, Sara O’Meara of Childhelp, Mike Spagnola of Street Scene Equipment, Joel Ayres of Truck Accessories Group and Yvonne Fedderson of Childhelp. (Photo Courtesy Jan Miller/Make a Difference Photography)

SEMA News - June 2010 

SEMA Named Childhelp 2010  Corporate Sponsor of the Year

Childhelp, a nonprofit organization headquartered in Scottsdale, Arizona, dedicated to helping victims of child abuse and neglect, presented SEMA with the Childhelp 2010 Corporate Award at a luncheon on April 14 at the annual Childhelp Day of Hope Ceremony in Washington, D.C.

Childhelp ambassador Jane Seymour—actress, artist and jewelry designer—was in attendance and spoke at the event.

Senator Diane Feinstein (D-CA) and Senator Jon Kyl (R-AZ) and his wife Caryll, who have been active in Childhelp for many years, also spoke.

A handful of other senators and congressmen were also in attendance. Joel Ayres, chairman of the SEMA Cares committee, and Mike Spagnola, president of Street Scene Equipment Inc., accepted the award on SEMA’s behalf.

 

Top Vehicle Program Evolves at the SEMA Show

	Exhibitors at the 2010 SEMA Show will determine which of the hottest cars and trucks will be named Vehicles of the Show.

The SEMA Show “Vehicle Manufacturer of the Show” program is being modified to showcase top trendsetting vehicles. Through this enhanced program, exhibitors at the 2010 SEMA Show will determine the hottest cars and trucks in three categories: car, truck and 4x4.

Show organizers will survey every booth vehicle at the SEMA Show, which takes place Tuesday–Friday, November 2–5, 2010, in Las Vegas. The most prominent vehicles in the three categories will be announced as the Vehicles of the Show.

Members of the specialty-equipment industry have defined trends and pioneered technology for several decades. Their cumulative voice influences consumer spending and creates business opportunities. This program is intended to leverage the special role that the specialty-equipment industry plays.

Contenders for the winning vehicles will be announced prior to the 2010 SEMA Show, with the winning vehicles named on the first day of the event, Tuesday, November 2, in Las Vegas. Here is more information about the SEMA Show.

 

Foose Returns as Grand Marshal of SEMA’s Summer Car Show

	Award-winning automotive designer and fabricator Chip Foose returns as the grand marshal of the SEMA Show ’N Shine public car show.

Chip Foose, award-winning automotive designer and fabricator, will return as grand marshal of the second annual SEMA Show ’N Shine public car show, Saturday, July 24, at the Pasadena Convention Center.

Held in connection with the SEMA Installation Banquet & Gala Fundraiser (taking place the evening before, on July 23) and the SEMA Pinewood Drag Races, also on July 24, the Show ’N Shine car show will draw some of the best local enthusiast cars, trucks and classics, with all proceeds benefiting children’s charities Childhelp and Victory Junction Gang Camp. More than 200 vehicles packed the Pasadena Convention Center in Pasadena, California, last year.

“I was thrilled to be a part of the inaugural SEMA Show ’N Shine last year and am even more excited to return for 2010,” said Foose. “SEMA is an important organization for car enthusiasts and industry people like myself, and I’m proud to take part and work in supporting children’s charities through this event.”

Foose’s design talent will be displayed at the show through his personal vehicles and those he’s worked on, including a ’59 Bel Air, among others. Last year, Foose brought a ’56 Ford F-100 pickup, an ’02 Ford T-Bird Speedbird that starred in “Rides” and his Foose Coupe.

Both the Show ’N Shine and Pinewood Drag Races are part of the 2010 SEMA Leadership Days. Other activities include the SPC Business Technology Conference and the Installation Banquet & Gala Fundraiser, both scheduled for the day and evening before, on July 23.

 

	Attendee and media registration are open for the 2010 SEMA Show and AAPEX.

Registration for 2010 SEMA Show and AAPEX Now Open

Attendee and media registration for the 2010 SEMA Show and AAPEX are now open at www.SEMAShow.com and www.aapexshow.com.

The two shows, held the first week of November in Las Vegas, are open to auto-related buyers, installers, retailers, dealers, manufacturer reps and other specified categories.

Registration allows attendees to enter both the SEMA Show (Tuesday–Friday, November 2–5, at the Las Vegas Convention Center) and AAPEX (Tuesday–Thursday, November 2–4, at the Sands Expo & Convention Center).

To register, visit www.SEMAShow.com or www.aapexshow.com and click the registration link. Enter an e-mail address in the attendee or media section to get started.

 

Fast Facts

The Eaton Vehicle Group hired Rodger Olson as automotive global aftermarket sales manager. Olson is responsible for developing the global aftermarket for all automotive products and has a successful history as an aftermarket sales manager for markets that include military, hybrid, electric and performance. Eaton, Cleveland, OH; 216/523-5000.

The Sports Car Club of America Inc. (SCCA) named Nate Siebens public relations manager of the SCCA Pro Racing Trans-Am Series for the 2010 season. Through his company, LCS Public Relations, founded in 2007, Siebens will oversee public relations efforts for the Trans-Am Series, working in concert with SCCA’s in-house public relations staff. His duties include feature articles, press releases and media materials for Trans-Am. SCCA, Topeka, KS; 785/357-7222.

S&W Race Cars announced that Rory Krupp has joined its sales team. According to S&W President Scott Weney, Krupp spends his days as a builder and fabricator and his weekends as the pilot of S&W’s dragster “house car.” Krupp has recently spent time learning a new skill—sales. “Some people can’t get enough, and Rory is living proof,” explained Weney. S&W, Spring City, PA; 610/948-7303.

J. Craig Jordan will succeed Charles “Bud” Wise as vice president of human resources at PPG Industries. Wise will retire from the company effective August 1. Jordan will become a member of PPG’s operating committee, reporting to Chairman and CEO Charles Bunch. Jordan joined PPG in 1989 as director of human resources at the company’s plant in Natrium, West Virginia. He assumed responsibility for corporate industrial relations in 2003, and his responsibilities subsequently expanded to include employee relations, policy and compensation. PPG Industries, Strongsville, OH; 440/572-6131.

Go Rhino! Products named Kathryn Gallagher its marketing manager. She will manage advertising, events, marketing and branding efforts for all IDDEA brands, including Reflections and Big Country Truck Accessories. Gallagher has 11 years of experience in the automotive aftermarket industry, working with companies such as Advanstar Communications and CEC Wheels. She is also a member of the SEMA Businesswomen’s Network and the SEMA Young Executives Network. Go Rhino!, Brea, CA; 888/427-4466.

	Jim MacMaster, Yokohama Tire Corp.

On June 30, Jim MacMaster, Yokohama Tire Corp. executive vice president and chief operating officer, will retire after 39 years in the tire industry. MacMaster, who also served as chairman of the Rubber Manufacturers Association from 2007–2009, began his career with a three-year stint in the navy, followed by work in the defense and computer industries and then 10 years on the manufacturing and dealer side of the tire business. He joined Yokohama in January 1981. During his 30-year tenure at Yokohama, the organization grew from a $30 million company to nearly $1 billion. Yokohama, Fullerton, CA; 714/870-3800.

Holley Performance Products hired John Sonnefeldt as director of sales. He joins Holley with more than 15 years of experience in the performance aftermarket. He is an avid car enthusiast who has built and displays an award-winning ’71 restomod Chevelle. Holley Performance Products, Bowling Green, KY;
270/782-2900.

John York joined the Federated Auto Parts management team as corporate comptroller. York began his aftermarket career working for Perfection Hy-Test, where he held various positions, including financial analyst, regional sales manager, assistant comptroller and, most recently, sales manager of traditional business.

Four Seasons was presented an “Extra Miler” award at AutoZone’s Vendor Summit meeting in Memphis, Tennessee. According to AutoZone, the award is presented to vendors who are unfazed by obstacles, who go above and beyond the call of duty, who exceed expectations and consistently deliver more than
is expected.

Optima Batteries partnered with World Racing Inc. for the 2010 drag-racing season. As the official battery supplier of World Racing Inc., Optima Batteries will provide product and technical sport to World Racing and owner/driver Chris Rado for various competitions. Optima Batteries, Milwaukee, WI; 888/8OPTIMA.

Hastings East Manufacturing Company Ltd., a wholly foreign-owned enterprise of Hastings Manufacturing Company LLC, was recognized as a top 10 automotive parts brand in China. A Top Ten Foreign Automotive Parts Brand in China ceremony was held at the presidential guest house in Beijing. The award selections were made by a panel of state representatives, educational institutions, the Society of Automotive Engineers China, China Auto Parts Association and the automotive aftermarket media.

Mobileye Inc. established a partnership with InstallerNet Inc. that will provide Mobileye customers with immediate access to InstallerNet’s nationwide network of more than 1,500 installation facilities in addition to Mobileye’s existing dealer network. Mobileye driver assistance technologies, such as forward collision warning, headway monitoring and lane-departure warning systems, help alert drivers to potentially life-threatening situations. Mobileye Inc., Southfield, MI; 877/221-0280.

HRE Performance Wheels selected Kahn Media to assist with public relations and communication initiatives. In addition to providing media outreach and PR assistance, Kahn Media will work with HRE management on strategic planning initiatives and social media marketing campaigns to elevate brand visibility, increase sales and promote the company’s top products. HRE Performance Wheels, Vista, CA;
760/598-1960.

Illinois Tool Works Inc. (ITW) acquired Accessories Marketing Inc. (AMI), creator and manufacturer of the Slime brand of tire-sealant products. AMI is a leader in flat-tire prevention and repair. Accessories Marketing Inc. employs approximately 60 people and has a global headquarters in Grover Beach, California. The purchase was announced by David C. Parry, executive vice president of ITW, who indicated that AMI would become part of ITW’s performance polymers and fluids group and continue to operate as a separate entity. The AMI acquisition was led by Permatex, a business unit of ITW. Accessories Marketing Inc., Grover Beach, CA;
805/489-0490.

The Automobile Club of Southern California has expanded its sponsorship of the NHRA to include the title rights of the AAA Insurance NHRA Midwest Nationals at Gateway International Raceway outside St. Louis. The expansion also includes naming rights for Auto Club Raceway at Pomona, entitlement rights of the Automobile Club of Southern California NHRA Finals held at Auto Club Raceway at Pomona, sponsorship of the Auto Club “Road to the Future” award annually recognizing the sport’s professional rookie of the year, presenting sponsorship of the Wally Parks NHRA Motorsports Museum and presenting sponsorship of the popular California Hot Rod Reunion held at Auto Club Famoso Raceway in Bakersfield, California. NHRA, Glendora, CA; 626/963-7695. Automobile Club of Southern California;
800-352-5382.

Off Road Industry magazine recently named Alloy USA’s yoke conversion kits to its list of “10 Best Products for 2010.” Alloy USA is exclusively distributed by OMIX-ADA Inc. Alloy USA, Suwanee, GA; 800/449-6649. 

National Parts Wholesaler has selected Edgenet’s data services for product-information management and distribution for www.searchparts.com. According to National Parts Wholesaler, Edgenet will help customers of Searchparts.com locate the quality data needed to make informed purchasing decisions.

ID Agency’s open house and automotive photography exhibition in April featured custom cars and the works of DC Chavez, Mo Satarzadeh, Joey Redmond, Michael Carrillo and Estevan Oriol, and appearances by Formula Drift drivers Chris Forsberg and Dai Yoshihara. The Los Angeles marketing firm counts Falken Tire, Brembo and Formula Drift among its specialty-equipment industry clients.  

 

SEMA News - June 2010

The images and information provided in “Spy Photos” are supplied by the spy shooters at Brenda Priddy & Co. Spy photos are included each week in SEMA eNews, the association’s electronic newsletter. To receive your copy of SEMA eNews, e-mail enews@sema.org.

Photos Copyright Brenda Priddy & Company. Reuse or reproduction without the copyright holder’s consent is prohibited.

SEMA News - June 2010

The images and information provided in “Spy Photos” are supplied by the spy shooters at Brenda Priddy & Co. Spy photos are included each week in SEMA eNews, the association’s electronic newsletter. To receive your copy of SEMA eNews, e-mail enews@sema.org.

Photos Copyright Brenda Priddy & Company. Reuse or reproduction without the copyright holder’s consent is prohibited.

SEMA News - June 2010

The images and information provided in “Spy Photos” are supplied by the spy shooters at Brenda Priddy & Co. Spy photos are included each week in SEMA eNews, the association’s electronic newsletter. To receive your copy of SEMA eNews, e-mail enews@sema.org.

Photos Copyright Brenda Priddy & Company. Reuse or reproduction without the copyright holder’s consent is prohibited.

SEMA News - June 2010

By Steve McDonald

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

Specially Constructed Vehicles:

Legislation to increase the allowable number of exempted specially constructed vehicle registrations from 500 to 750 vehicles per year was approved by the Assembly Transportation Committee. Current law provides for emissions-system certification and a model-year designation for specially constructed vehicles, including kit cars. Under the law, vehicle owners choose whether a smog-test referee certifies the engine model year or the vehicle model year. To determine model year, inspectors compare the vehicle to those of the era that the vehicle most closely resembles. If there is no close match, it is classified as a ’60 vehicle. Only those emissions controls applicable to the model year and that can be reasonably accommodated by the vehicle are required. The Department of Motor Vehicles provides a new registration to the first 500 specially constructed vehicles per year that meet the criteria.

Kansas

Specialty-Vehicle Fees:
 
SEMA is opposing legislation to raise the registration fee on antiques, street rods and special-interest vehicles. The bill has already passed the House. The Senate substituted the House bill with all-new language to increase the state’s revenue. One section of the substituted bill increases the registration fee for all passenger vehicles, while two separate sections were inserted to specifically target antiques and street rods/special-interest vehicles. Under the substituted bill, each of the registration fees would increase by $10 on January 1, 2013, and by another $10 on January 1, 2014.

Mississippi

Nitrous Oxide:

Working with Mississippi lawmakers and the Mississippi State Troopers Association, SEMA was successful in negotiating a compromise on legislation that originally threatened to prohibit public road use of all motor vehicles equipped to supply the engine with nitrous oxide. The bill was signed into law by Governor Haley Barbour. Originally written as an outright ban, the new law allows for the installation of nitrous-oxide systems as long as the feed lines are disconnected or the canisters are removed while the vehicle is being operated on a public road. The SEMA amendment better protects public road safety while ensuring legitimate off-road uses of nitrous-oxide systems.

Massachusetts

Exhaust Noise:

A bill targeted for defeat by SEMA to ban the “use and sale of any exhaust pipe that increases the sound emissions of any vehicle, including motorcycles,” was set aside for study by the legislature. This action means that the measure is unlikely to be considered by the legislature this year. Among other things, the measure ignored the fact that aftermarket exhaust systems are designed to make vehicles run more efficiently without increasing emissions and did not supply law enforcement with a clear standard to enforce, allowing officers to make subjective judgments on whether or not a modified exhaust system is in violation. Legislation to require the incorporation of noise-level testing into the vehicle inspection process was also set aside. The bill did not define a noise-level limit, but allowed it to be determined by the regulators.

West Virginia

Exhaust Noise:

A SEMA-opposed bill to provide that the noise from a motor-vehicle exhaust system that has been deemed “disturbing or unreasonably loud” constitutes the crime of disturbing the peace is dead for the year. Under the bill, violators could have been fined up to $1,000 per occurrence, jailed for six months or both. Among other things, the bill did not supply law enforcement with an enforcement standard, allowing officers to make subjective judgments on whether an exhaust system is “disturbing or unreasonably loud;” failed to recognize that a better way to address this issue is by establishing a fair and reasonable exhaust-noise decibel limit; ignored the fact that aftermarket exhaust systems are designed to make vehicles run more efficiently without increasing emissions; and would make it difficult for hobbyists to replace factory exhaust systems with more durable, better-performing options.

Federal Update

Fuel Economy and CO2 Emissions:

The National Highway Traffic Safety Administration (NHTSA) finalized the Corporate Average Fuel Economy (CAFE) standards for model-year 2012–2016 cars and trucks, and the U.S. Environmental Protection Agency (EPA) established corresponding standards for CO2 emissions. The two issues are related since CO2 is released in direct proportion to the amount of carbon-based fuel that is burned. The combined actions match CO2 emissions standards previously adopted by California and 13 other states. The average CAFE rating will be 35.5 mpg in 2016, based on a combined 39-mpg rating for passenger cars and 30 mpg for light trucks. The EPA’s CO2 emissions standard is 250 grams per mile for vehicles sold in 2016, roughly the equivalent of 35.5 mpg. The automakers participated in formulating the regulations since it provides a national approach to regulating CO2 emissions rather than a patchwork of state rules. The NHTSA 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). Individual car companies will have flexibility on how to achieve the rules. The automakers will likely rely on more-fuel-efficient tires, turbochargers, low-friction lubricants, six-speed automatic transmissions and similar technological means.

Fuel-Efficient Replacement Tires:

The NHTSA moved closer to establishing a consumer information system to rate the fuel economy, safety and durability characteristics of most replacement tires. The agency issued a final rule to establish test procedures to be used by tire manufacturers in determining tire ratings. However, it has not yet finalized a program on how the information will be conveyed to consumers at the point of sale and online. The program is required under a 2007 law that contains a SEMA provision exempting from the rating system those tires that have been produced or imported in annual units of less than 15,000 and do not exceed 35,000 tires in total brand-name production. The premise for the new program is to allow consumers to compare ratings for different replacement tires and determine the effect of tire choices on fuel economy or the potential tradeoffs between tire fuel efficiency (rolling resistance), safety (wet traction) and durability (treadwear life). The consumer information may be conveyed in the form of a one-to-five-star rating system or some similar approach and included on a label affixed to each tire. The NHTSA agreed with a SEMA recommendation that tire manufacturers claiming the low-volume exemption only needed to provide a one-time list of their tire models/sizes, along with a statement that the tire models/sizes are excluded from the applicability of
the regulation.

Preventing Vehicle Rollaways:

New cars with automatic transmissions must now be equipped with an interlock device that requires the brake pedal to be pressed before the driver can shift the transmission out of “park.” The new NHTSA rule takes effect on September 1,
2010, and is intended to protect children from vehicle rollaways in which a car is inadvertently shifted into neutral or another gear.

Tax Breaks:

The U.S. Senate passed a SEMA-supported bill to extend various expiring tax credits and deductions, including the research and development tax credit. The House of Representatives passed a different version of the bill last year. The legislation must now be reconciled into a single bill. The R&D tax credit lapsed last December, marking the 14th time it had expired since being enacted into law in 1981. SEMA joined more than 100 associations and companies within the R&D Credit Coalition urging Congress to make the credit permanent. The credit offsets costs for companies investing time and money in new technologies and is applicable to both in-house and outside research. The legislation would renew the credit for one year, retroactive to January 1, 2010.

MAP Pricing:

The Senate Judiciary Committee approved a bill to reinstate the doctrine that treats minimum resale price agreements as automatically illegal under the Sherman Antitrust Act. Minimum price agreements allow manufacturers to establish a set pricing system with distributors and retailers in exchange for the rights to market their products. In 2007, the Supreme Court overturned a precedent dating back to 1911 that outlawed “vertical price fixing.” The Court found that minimum-pricing requirements by manufacturers no longer constitute an automatic violation of federal law. Rather, such agreements will now be considered on a case-by-case basis according to a “rule of reason” to determine whether they interfere with market competition. (Since the Court ruling is not a “green light” to set prices, businesses considering establishing resale price policies or agreements should proceed with caution and consult with antitrust counsel.) It is unclear if the bill has the support of a super-majority of Senators to allow passage in the Senate. The House Judiciary Committee has already approved similar legislation. 

Colorado Wilderness:

The House Resources Committee held a hearing on the “Colorado Wilderness Act,” a bill to designate 850,000 acres in 34 separate areas as wilderness. No motorized activity is permitted in such designated lands. The areas include lands around Redcloud Peak, Dolores River Canyons, the Palisade, Bull Gulch and Browns Canyon. Most of the land is managed by the U.S. Bureau of Land Management and the U.S. Forest Service. Representatives for both federal agencies testified that the legislation is too sweeping and should exclude certain areas where motorized recreation, mining, timber harvest and other activities currently exist. SEMA supports land-use decisions that are reasonable and enjoy local community support. However, SEMA opposes legislation such as the current bill, which threatens to prohibit recreation without sufficient public consensus.  

 

SEMA News - June 2010

By Steve McDonald

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

Specially Constructed Vehicles:

Legislation to increase the allowable number of exempted specially constructed vehicle registrations from 500 to 750 vehicles per year was approved by the Assembly Transportation Committee. Current law provides for emissions-system certification and a model-year designation for specially constructed vehicles, including kit cars. Under the law, vehicle owners choose whether a smog-test referee certifies the engine model year or the vehicle model year. To determine model year, inspectors compare the vehicle to those of the era that the vehicle most closely resembles. If there is no close match, it is classified as a ’60 vehicle. Only those emissions controls applicable to the model year and that can be reasonably accommodated by the vehicle are required. The Department of Motor Vehicles provides a new registration to the first 500 specially constructed vehicles per year that meet the criteria.

Kansas

Specialty-Vehicle Fees:
 
SEMA is opposing legislation to raise the registration fee on antiques, street rods and special-interest vehicles. The bill has already passed the House. The Senate substituted the House bill with all-new language to increase the state’s revenue. One section of the substituted bill increases the registration fee for all passenger vehicles, while two separate sections were inserted to specifically target antiques and street rods/special-interest vehicles. Under the substituted bill, each of the registration fees would increase by $10 on January 1, 2013, and by another $10 on January 1, 2014.

Mississippi

Nitrous Oxide:

Working with Mississippi lawmakers and the Mississippi State Troopers Association, SEMA was successful in negotiating a compromise on legislation that originally threatened to prohibit public road use of all motor vehicles equipped to supply the engine with nitrous oxide. The bill was signed into law by Governor Haley Barbour. Originally written as an outright ban, the new law allows for the installation of nitrous-oxide systems as long as the feed lines are disconnected or the canisters are removed while the vehicle is being operated on a public road. The SEMA amendment better protects public road safety while ensuring legitimate off-road uses of nitrous-oxide systems.

Massachusetts

Exhaust Noise:

A bill targeted for defeat by SEMA to ban the “use and sale of any exhaust pipe that increases the sound emissions of any vehicle, including motorcycles,” was set aside for study by the legislature. This action means that the measure is unlikely to be considered by the legislature this year. Among other things, the measure ignored the fact that aftermarket exhaust systems are designed to make vehicles run more efficiently without increasing emissions and did not supply law enforcement with a clear standard to enforce, allowing officers to make subjective judgments on whether or not a modified exhaust system is in violation. Legislation to require the incorporation of noise-level testing into the vehicle inspection process was also set aside. The bill did not define a noise-level limit, but allowed it to be determined by the regulators.

West Virginia

Exhaust Noise:

A SEMA-opposed bill to provide that the noise from a motor-vehicle exhaust system that has been deemed “disturbing or unreasonably loud” constitutes the crime of disturbing the peace is dead for the year. Under the bill, violators could have been fined up to $1,000 per occurrence, jailed for six months or both. Among other things, the bill did not supply law enforcement with an enforcement standard, allowing officers to make subjective judgments on whether an exhaust system is “disturbing or unreasonably loud;” failed to recognize that a better way to address this issue is by establishing a fair and reasonable exhaust-noise decibel limit; ignored the fact that aftermarket exhaust systems are designed to make vehicles run more efficiently without increasing emissions; and would make it difficult for hobbyists to replace factory exhaust systems with more durable, better-performing options.

Federal Update

Fuel Economy and CO2 Emissions:

The National Highway Traffic Safety Administration (NHTSA) finalized the Corporate Average Fuel Economy (CAFE) standards for model-year 2012–2016 cars and trucks, and the U.S. Environmental Protection Agency (EPA) established corresponding standards for CO2 emissions. The two issues are related since CO2 is released in direct proportion to the amount of carbon-based fuel that is burned. The combined actions match CO2 emissions standards previously adopted by California and 13 other states. The average CAFE rating will be 35.5 mpg in 2016, based on a combined 39-mpg rating for passenger cars and 30 mpg for light trucks. The EPA’s CO2 emissions standard is 250 grams per mile for vehicles sold in 2016, roughly the equivalent of 35.5 mpg. The automakers participated in formulating the regulations since it provides a national approach to regulating CO2 emissions rather than a patchwork of state rules. The NHTSA 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). Individual car companies will have flexibility on how to achieve the rules. The automakers will likely rely on more-fuel-efficient tires, turbochargers, low-friction lubricants, six-speed automatic transmissions and similar technological means.

Fuel-Efficient Replacement Tires:

The NHTSA moved closer to establishing a consumer information system to rate the fuel economy, safety and durability characteristics of most replacement tires. The agency issued a final rule to establish test procedures to be used by tire manufacturers in determining tire ratings. However, it has not yet finalized a program on how the information will be conveyed to consumers at the point of sale and online. The program is required under a 2007 law that contains a SEMA provision exempting from the rating system those tires that have been produced or imported in annual units of less than 15,000 and do not exceed 35,000 tires in total brand-name production. The premise for the new program is to allow consumers to compare ratings for different replacement tires and determine the effect of tire choices on fuel economy or the potential tradeoffs between tire fuel efficiency (rolling resistance), safety (wet traction) and durability (treadwear life). The consumer information may be conveyed in the form of a one-to-five-star rating system or some similar approach and included on a label affixed to each tire. The NHTSA agreed with a SEMA recommendation that tire manufacturers claiming the low-volume exemption only needed to provide a one-time list of their tire models/sizes, along with a statement that the tire models/sizes are excluded from the applicability of
the regulation.

Preventing Vehicle Rollaways:

New cars with automatic transmissions must now be equipped with an interlock device that requires the brake pedal to be pressed before the driver can shift the transmission out of “park.” The new NHTSA rule takes effect on September 1,
2010, and is intended to protect children from vehicle rollaways in which a car is inadvertently shifted into neutral or another gear.

Tax Breaks:

The U.S. Senate passed a SEMA-supported bill to extend various expiring tax credits and deductions, including the research and development tax credit. The House of Representatives passed a different version of the bill last year. The legislation must now be reconciled into a single bill. The R&D tax credit lapsed last December, marking the 14th time it had expired since being enacted into law in 1981. SEMA joined more than 100 associations and companies within the R&D Credit Coalition urging Congress to make the credit permanent. The credit offsets costs for companies investing time and money in new technologies and is applicable to both in-house and outside research. The legislation would renew the credit for one year, retroactive to January 1, 2010.

MAP Pricing:

The Senate Judiciary Committee approved a bill to reinstate the doctrine that treats minimum resale price agreements as automatically illegal under the Sherman Antitrust Act. Minimum price agreements allow manufacturers to establish a set pricing system with distributors and retailers in exchange for the rights to market their products. In 2007, the Supreme Court overturned a precedent dating back to 1911 that outlawed “vertical price fixing.” The Court found that minimum-pricing requirements by manufacturers no longer constitute an automatic violation of federal law. Rather, such agreements will now be considered on a case-by-case basis according to a “rule of reason” to determine whether they interfere with market competition. (Since the Court ruling is not a “green light” to set prices, businesses considering establishing resale price policies or agreements should proceed with caution and consult with antitrust counsel.) It is unclear if the bill has the support of a super-majority of Senators to allow passage in the Senate. The House Judiciary Committee has already approved similar legislation. 

Colorado Wilderness:

The House Resources Committee held a hearing on the “Colorado Wilderness Act,” a bill to designate 850,000 acres in 34 separate areas as wilderness. No motorized activity is permitted in such designated lands. The areas include lands around Redcloud Peak, Dolores River Canyons, the Palisade, Bull Gulch and Browns Canyon. Most of the land is managed by the U.S. Bureau of Land Management and the U.S. Forest Service. Representatives for both federal agencies testified that the legislation is too sweeping and should exclude certain areas where motorized recreation, mining, timber harvest and other activities currently exist. SEMA supports land-use decisions that are reasonable and enjoy local community support. However, SEMA opposes legislation such as the current bill, which threatens to prohibit recreation without sufficient public consensus.  

 

SEMA News - June 2010

Powersports: Emerging From the Valley of a Down Market

By Steve Campbell

	SEMA recently added a powersports section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.  Photo Courtesy of Eibach Springs

Motorcycles and scooters play a key role in transportation systems throughout much of the world. Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, they are primary conveyances in Asia and large segments of Europe. In the United States, however, motorcycles and other powersports machines, such as all-terrain vehicles (ATVs) and side-by-side utility type vehicles (UTVs), are viewed almost exclusively as luxury items—toys that enthusiasts prize but most mainstream consumers consider only for hobby or secondary use. That view of powersports vehicles as luxury items is the main reason why the industry suffered an overall drop in sales of 44% during the recession years, according to industry expert Gart Sutton & Associates (GSA). A motorsports and powersports dealership and retailer trainer and consultancy, GSA offers data showing that sales began to skid in 2006, and 2007 was the first year in nearly a decade and a half in which industry sales declined rather than grew. As a result, dealer inventories piled up before manufacturers began to back-off production.

“There was a dramatic change in the retail sales of motorcycles,” said Sel Narayana, who works on sales, logistics and operations in Asia for motorcycle manufacturer KTM. “Consumers protected themselves and became very careful of their spending. That was reflected in the market for motocross, ATV and other products in the powersports industry. Now, however, things are looking more positive again.”

The changes in consumer buying habits led to a record level of dealership failures during the past two years, according to a recent GSA survey, but that shakeout may actually help some of the businesses that remain. Jimmy Lewis, editor of Dirt Rider magazine, said that a number of companies had come into the market while it was in a boom state and counted on making money without an emphasis on supplying quality products.

“The companies that made decisions based on the idea that the market was just going to keep going have been weeded out,” Lewis said. “People are still riding, though. Race entries are up, and people are still participating. Aftermarket parts sales are really strong even in the down economy. Instead of buying a new bike, people are buying brake pads, sprockets, chains, new graphics and are freshening their bikes so that they can keep riding them longer. In that sense, the industry is still very strong.”

	Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not “warehouses” for the manufacturers. Service work is strong as customers are repairing rather than replacing their bikes. Photo Courtesy of KTM

Steve Jones is the general manager of GSA and also writes a featured column in Motorcycle Product News magazine and edits GSA columns for other publications. He recently conducted a limited survey of dealers to get their take on the state of the market and found that, indeed, the industry remains optimistic overall.

“Current motorcycle sales continue to be down,” Jones said, “but March picked up for many dealers. Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not ‘warehouses’ for the manufacturers. Service work is strong as customers are repairing rather than replacing their units.”

Dealers also reported that used midsize motorcycles and many new models with rebates are selling well in the street market, Jones said, including the three-wheeled Can-Am Spyder, although many do not class it as a motorcycle. Most of the movement is occurring in the low- and mid-priced classes, but even sport bikes appear to be picking up somewhat after the diminished sales wrought by the economy.

“Overall, there is a slow shift to ‘standard’ bikes that provide good performance but more comfort than sport bikes,” said Sean Finley, group publisher for Source Interlink Media's motorcycle group, which includes Motorcyclist, Sport Rider, Super Streetbike, Cruiser, Dirt Rider, ATV Rider, Hot Bike and Baggers magazines and their associated websites. “In the sport-bike market, which drives a lot of the innovation, traction control and antilock braking are now improved to the level that they are being embraced even by very serious riders.” 

There has also been a strong push toward light cruisers in the V-twin market, which now includes offerings from not only Harley-Davidson, but also from most of the Asian manufacturers. “Harley-Davidson just introduced a new line of Sportsters, which are smaller bikes that have a heavyweight cruiser feel,” said Ken Laivins, principal owner and head of design at Hardstreet USA, which manufactures saddlebags and bodywork for V-twin motorcycles. “Honda also cut all of its cruisers down to smaller displacements, and Yamaha just brought out a V-Star 950 that retails for $8,000–$9,000. These light cruisers are easy to own, easy to maintain and are accessible for more people to ride, including women. We’re seeing a surge of riders getting into bikes that they otherwise might have ignored.”

Narayana pointed out that the industry is focusing on environmentally friendly and user-friendly models, but he, Jones and Laivins all said that financing and insurance are problematic for larger models and for young people 16–20 years old. This core youth market isn’t financially capable of getting into bigger bikes, Narayana said, so the industry needs to focus on smaller, less-expensive models in order to cultivate new riders. Some hoped that scooters might provide that low-cost entry, and they did spike in popularity when gas prices rose in the summer of 2008. But as soon as fuel costs subsided, so did the fervor for scooters.

The soft market also extends to the off-road segment, where the challenges are exacerbated by land-use issues and the public perception of off-roaders in general. “It’s hard to defend legitimate off-highway vehicle (OHV) use to those who don’t understand it,” said Lewis. “They think that any motorcycle trail going through a national forest must look like a war zone. In fact, though, motorcycle trails can be as pristine as the Pacific Coast Trail. The radical environmentalists portray OHV use as really destructive, but the truth is that most bike riders are very good stewards of the land who enjoy recreating outdoors with their families.”

	The family aspect of off-roading powersports is notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors.    Photo Courtesy of ATV Rider Magazine

The family aspect of off-roading powersports is particularly notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors. ATV sales have also begun to rebound somewhat, with power steering affecting sales of larger ATVs, Jones said, and Finley added that several ATV manufacturers have recently introduced race models that don’t require many aftermarket modifications to make them competitive, though, there is still room for improvement in suspension and engine performance. In fact, specialty-equipment manufacturers offer contributions throughout the powersports industry.

“There is continuous innovation from the aftermarket,” Finely said. “A few of the significant products include an ‘automatic’ clutch from Rekluse that makes it virtually impossible to stall the bike but still provides the ability to override the clutch with the lever to allow the rider to optimize traction and engine revs. Quieter exhaust is also becoming more and more important due to tighter standards at the racing level, but it’s also an important topic for land-
use issues.”

Oliver Rathlein, vice president of marketing for Eibach Springs, said such environmental improvements are running in tandem with technological refinements, resulting in “green” products that also provide better power. “We see more and more bikes going to electronic fuel injection/ignition systems, including motocross and dual sport,” Rathlein said. “That sometimes adds weight to the bikes, which requires stronger springs, such as our proprietary High-Ten spring steel alloys, to deliver consistent suspension performance.”

Retailers also recognize that people are holding onto their powersports equipment longer rather than moving into new bikes the way they use to. Lewis wonders if the heyday of owners buying new bikes every year or two might be over, but he believes that business will eventually return to a more robust level and will then stabilize. In the meantime, he sees profit in service.

“Retailers should stock the equipment that will help people keep their current bikes running longer,” he said. “I’m not 100% sure that we’re in a recovery cycle just yet; people are still sitting on the fence, and that’s what is stopping them from buying a brand-new bike. But any bike wears out, so if a guy really likes to ride, he eventually has to replace it.”

Dealers recognize the realities of the marketplace, so service and customer satisfaction have become paramount. “A lot of people who ride motorcycles are not mechanically inclined,” Laivins said. “There are opportunities to help them put accessories on the bikes and give them the kind of service that they’ve grown to expect with their cars. In addition to selling bikes, dealers should be looking at including accessories and being outfitters. That is particularly true with used bikes.”

Most dealers report that traditional advertising is not producing, according to GSA. They’re finding that their best results come from social marketing, working trade/sports shows and community events, and they’re also using 21st century tools to market their products.

“Internet sales and the use of eBay to move obsolete inventory have changed dealer business structures,” said Jones. “They’re now using true computer-based customer relationship management tools instead of the traditional paper traffic logs. Most customers come in after considerable web research. They know about the products and what is on sale on dealer websites. TV ads are driving traffic to see products, such as the Spyder.”

	Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, powersports vehicles are primary conveyances in  much of the world, though they’re still viewed primarily as luxury items in the United States.  Photo Courtesy of Dirt Rider Magazine

There has also been a big shift to online sales on the aftermarket side, Finley said, so every “mail-order” company must provide a good website that lives up to consumers’ expectations.

“People buy other products online and expect that same level of customer service and ease of use,” he said. “Some companies are slow to recognize this opportunity. As magazine publishers, we still believe that print is important in reaching the market, but we also provide dedicated websites that now reach more unique visitors than the base magazine for each brand. Combined, we reach more people than ever.”

SEMA recently added a Powersports & Utility Vehicles section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.

John Waraniak, vice president of vehicle technology for SEMA, said that the association is to the auto industry what ESPN’s X-Games is to the action sports industry. “They both represent unique global platforms for extreme performance and lifestyle activation. Passion for performance and an emotional connection to self-actualized lifestyles are common denominators between successful SEMA and powersports manufacturers, distributors and retailers. The SEMA Show is one of the largest gatherings of small businesses in America, so I am confident that integrating leading powersports companies at the Show with SEMA’s programs and benefits will offer new dimensions of growth, innovation and profitability for both the powersports and specialty-equipment industries.” 

 

SEMA News - June 2010

Powersports: Emerging From the Valley of a Down Market

By Steve Campbell

	SEMA recently added a powersports section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.  Photo Courtesy of Eibach Springs

Motorcycles and scooters play a key role in transportation systems throughout much of the world. Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, they are primary conveyances in Asia and large segments of Europe. In the United States, however, motorcycles and other powersports machines, such as all-terrain vehicles (ATVs) and side-by-side utility type vehicles (UTVs), are viewed almost exclusively as luxury items—toys that enthusiasts prize but most mainstream consumers consider only for hobby or secondary use. That view of powersports vehicles as luxury items is the main reason why the industry suffered an overall drop in sales of 44% during the recession years, according to industry expert Gart Sutton & Associates (GSA). A motorsports and powersports dealership and retailer trainer and consultancy, GSA offers data showing that sales began to skid in 2006, and 2007 was the first year in nearly a decade and a half in which industry sales declined rather than grew. As a result, dealer inventories piled up before manufacturers began to back-off production.

“There was a dramatic change in the retail sales of motorcycles,” said Sel Narayana, who works on sales, logistics and operations in Asia for motorcycle manufacturer KTM. “Consumers protected themselves and became very careful of their spending. That was reflected in the market for motocross, ATV and other products in the powersports industry. Now, however, things are looking more positive again.”

The changes in consumer buying habits led to a record level of dealership failures during the past two years, according to a recent GSA survey, but that shakeout may actually help some of the businesses that remain. Jimmy Lewis, editor of Dirt Rider magazine, said that a number of companies had come into the market while it was in a boom state and counted on making money without an emphasis on supplying quality products.

“The companies that made decisions based on the idea that the market was just going to keep going have been weeded out,” Lewis said. “People are still riding, though. Race entries are up, and people are still participating. Aftermarket parts sales are really strong even in the down economy. Instead of buying a new bike, people are buying brake pads, sprockets, chains, new graphics and are freshening their bikes so that they can keep riding them longer. In that sense, the industry is still very strong.”

	Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not “warehouses” for the manufacturers. Service work is strong as customers are repairing rather than replacing their bikes. Photo Courtesy of KTM

Steve Jones is the general manager of GSA and also writes a featured column in Motorcycle Product News magazine and edits GSA columns for other publications. He recently conducted a limited survey of dealers to get their take on the state of the market and found that, indeed, the industry remains optimistic overall.

“Current motorcycle sales continue to be down,” Jones said, “but March picked up for many dealers. Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not ‘warehouses’ for the manufacturers. Service work is strong as customers are repairing rather than replacing their units.”

Dealers also reported that used midsize motorcycles and many new models with rebates are selling well in the street market, Jones said, including the three-wheeled Can-Am Spyder, although many do not class it as a motorcycle. Most of the movement is occurring in the low- and mid-priced classes, but even sport bikes appear to be picking up somewhat after the diminished sales wrought by the economy.

“Overall, there is a slow shift to ‘standard’ bikes that provide good performance but more comfort than sport bikes,” said Sean Finley, group publisher for Source Interlink Media's motorcycle group, which includes Motorcyclist, Sport Rider, Super Streetbike, Cruiser, Dirt Rider, ATV Rider, Hot Bike and Baggers magazines and their associated websites. “In the sport-bike market, which drives a lot of the innovation, traction control and antilock braking are now improved to the level that they are being embraced even by very serious riders.” 

There has also been a strong push toward light cruisers in the V-twin market, which now includes offerings from not only Harley-Davidson, but also from most of the Asian manufacturers. “Harley-Davidson just introduced a new line of Sportsters, which are smaller bikes that have a heavyweight cruiser feel,” said Ken Laivins, principal owner and head of design at Hardstreet USA, which manufactures saddlebags and bodywork for V-twin motorcycles. “Honda also cut all of its cruisers down to smaller displacements, and Yamaha just brought out a V-Star 950 that retails for $8,000–$9,000. These light cruisers are easy to own, easy to maintain and are accessible for more people to ride, including women. We’re seeing a surge of riders getting into bikes that they otherwise might have ignored.”

Narayana pointed out that the industry is focusing on environmentally friendly and user-friendly models, but he, Jones and Laivins all said that financing and insurance are problematic for larger models and for young people 16–20 years old. This core youth market isn’t financially capable of getting into bigger bikes, Narayana said, so the industry needs to focus on smaller, less-expensive models in order to cultivate new riders. Some hoped that scooters might provide that low-cost entry, and they did spike in popularity when gas prices rose in the summer of 2008. But as soon as fuel costs subsided, so did the fervor for scooters.

The soft market also extends to the off-road segment, where the challenges are exacerbated by land-use issues and the public perception of off-roaders in general. “It’s hard to defend legitimate off-highway vehicle (OHV) use to those who don’t understand it,” said Lewis. “They think that any motorcycle trail going through a national forest must look like a war zone. In fact, though, motorcycle trails can be as pristine as the Pacific Coast Trail. The radical environmentalists portray OHV use as really destructive, but the truth is that most bike riders are very good stewards of the land who enjoy recreating outdoors with their families.”

	The family aspect of off-roading powersports is notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors.    Photo Courtesy of ATV Rider Magazine

The family aspect of off-roading powersports is particularly notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors. ATV sales have also begun to rebound somewhat, with power steering affecting sales of larger ATVs, Jones said, and Finley added that several ATV manufacturers have recently introduced race models that don’t require many aftermarket modifications to make them competitive, though, there is still room for improvement in suspension and engine performance. In fact, specialty-equipment manufacturers offer contributions throughout the powersports industry.

“There is continuous innovation from the aftermarket,” Finely said. “A few of the significant products include an ‘automatic’ clutch from Rekluse that makes it virtually impossible to stall the bike but still provides the ability to override the clutch with the lever to allow the rider to optimize traction and engine revs. Quieter exhaust is also becoming more and more important due to tighter standards at the racing level, but it’s also an important topic for land-
use issues.”

Oliver Rathlein, vice president of marketing for Eibach Springs, said such environmental improvements are running in tandem with technological refinements, resulting in “green” products that also provide better power. “We see more and more bikes going to electronic fuel injection/ignition systems, including motocross and dual sport,” Rathlein said. “That sometimes adds weight to the bikes, which requires stronger springs, such as our proprietary High-Ten spring steel alloys, to deliver consistent suspension performance.”

Retailers also recognize that people are holding onto their powersports equipment longer rather than moving into new bikes the way they use to. Lewis wonders if the heyday of owners buying new bikes every year or two might be over, but he believes that business will eventually return to a more robust level and will then stabilize. In the meantime, he sees profit in service.

“Retailers should stock the equipment that will help people keep their current bikes running longer,” he said. “I’m not 100% sure that we’re in a recovery cycle just yet; people are still sitting on the fence, and that’s what is stopping them from buying a brand-new bike. But any bike wears out, so if a guy really likes to ride, he eventually has to replace it.”

Dealers recognize the realities of the marketplace, so service and customer satisfaction have become paramount. “A lot of people who ride motorcycles are not mechanically inclined,” Laivins said. “There are opportunities to help them put accessories on the bikes and give them the kind of service that they’ve grown to expect with their cars. In addition to selling bikes, dealers should be looking at including accessories and being outfitters. That is particularly true with used bikes.”

Most dealers report that traditional advertising is not producing, according to GSA. They’re finding that their best results come from social marketing, working trade/sports shows and community events, and they’re also using 21st century tools to market their products.

“Internet sales and the use of eBay to move obsolete inventory have changed dealer business structures,” said Jones. “They’re now using true computer-based customer relationship management tools instead of the traditional paper traffic logs. Most customers come in after considerable web research. They know about the products and what is on sale on dealer websites. TV ads are driving traffic to see products, such as the Spyder.”

	Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, powersports vehicles are primary conveyances in  much of the world, though they’re still viewed primarily as luxury items in the United States.  Photo Courtesy of Dirt Rider Magazine

There has also been a big shift to online sales on the aftermarket side, Finley said, so every “mail-order” company must provide a good website that lives up to consumers’ expectations.

“People buy other products online and expect that same level of customer service and ease of use,” he said. “Some companies are slow to recognize this opportunity. As magazine publishers, we still believe that print is important in reaching the market, but we also provide dedicated websites that now reach more unique visitors than the base magazine for each brand. Combined, we reach more people than ever.”

SEMA recently added a Powersports & Utility Vehicles section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.

John Waraniak, vice president of vehicle technology for SEMA, said that the association is to the auto industry what ESPN’s X-Games is to the action sports industry. “They both represent unique global platforms for extreme performance and lifestyle activation. Passion for performance and an emotional connection to self-actualized lifestyles are common denominators between successful SEMA and powersports manufacturers, distributors and retailers. The SEMA Show is one of the largest gatherings of small businesses in America, so I am confident that integrating leading powersports companies at the Show with SEMA’s programs and benefits will offer new dimensions of growth, innovation and profitability for both the powersports and specialty-equipment industries.” 

 

SEMA News - June 2010

Powersports: Emerging From the Valley of a Down Market

By Steve Campbell

	SEMA recently added a powersports section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.  Photo Courtesy of Eibach Springs

Motorcycles and scooters play a key role in transportation systems throughout much of the world. Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, they are primary conveyances in Asia and large segments of Europe. In the United States, however, motorcycles and other powersports machines, such as all-terrain vehicles (ATVs) and side-by-side utility type vehicles (UTVs), are viewed almost exclusively as luxury items—toys that enthusiasts prize but most mainstream consumers consider only for hobby or secondary use. That view of powersports vehicles as luxury items is the main reason why the industry suffered an overall drop in sales of 44% during the recession years, according to industry expert Gart Sutton & Associates (GSA). A motorsports and powersports dealership and retailer trainer and consultancy, GSA offers data showing that sales began to skid in 2006, and 2007 was the first year in nearly a decade and a half in which industry sales declined rather than grew. As a result, dealer inventories piled up before manufacturers began to back-off production.

“There was a dramatic change in the retail sales of motorcycles,” said Sel Narayana, who works on sales, logistics and operations in Asia for motorcycle manufacturer KTM. “Consumers protected themselves and became very careful of their spending. That was reflected in the market for motocross, ATV and other products in the powersports industry. Now, however, things are looking more positive again.”

The changes in consumer buying habits led to a record level of dealership failures during the past two years, according to a recent GSA survey, but that shakeout may actually help some of the businesses that remain. Jimmy Lewis, editor of Dirt Rider magazine, said that a number of companies had come into the market while it was in a boom state and counted on making money without an emphasis on supplying quality products.

“The companies that made decisions based on the idea that the market was just going to keep going have been weeded out,” Lewis said. “People are still riding, though. Race entries are up, and people are still participating. Aftermarket parts sales are really strong even in the down economy. Instead of buying a new bike, people are buying brake pads, sprockets, chains, new graphics and are freshening their bikes so that they can keep riding them longer. In that sense, the industry is still very strong.”

	Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not “warehouses” for the manufacturers. Service work is strong as customers are repairing rather than replacing their bikes. Photo Courtesy of KTM

Steve Jones is the general manager of GSA and also writes a featured column in Motorcycle Product News magazine and edits GSA columns for other publications. He recently conducted a limited survey of dealers to get their take on the state of the market and found that, indeed, the industry remains optimistic overall.

“Current motorcycle sales continue to be down,” Jones said, “but March picked up for many dealers. Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not ‘warehouses’ for the manufacturers. Service work is strong as customers are repairing rather than replacing their units.”

Dealers also reported that used midsize motorcycles and many new models with rebates are selling well in the street market, Jones said, including the three-wheeled Can-Am Spyder, although many do not class it as a motorcycle. Most of the movement is occurring in the low- and mid-priced classes, but even sport bikes appear to be picking up somewhat after the diminished sales wrought by the economy.

“Overall, there is a slow shift to ‘standard’ bikes that provide good performance but more comfort than sport bikes,” said Sean Finley, group publisher for Source Interlink Media's motorcycle group, which includes Motorcyclist, Sport Rider, Super Streetbike, Cruiser, Dirt Rider, ATV Rider, Hot Bike and Baggers magazines and their associated websites. “In the sport-bike market, which drives a lot of the innovation, traction control and antilock braking are now improved to the level that they are being embraced even by very serious riders.” 

There has also been a strong push toward light cruisers in the V-twin market, which now includes offerings from not only Harley-Davidson, but also from most of the Asian manufacturers. “Harley-Davidson just introduced a new line of Sportsters, which are smaller bikes that have a heavyweight cruiser feel,” said Ken Laivins, principal owner and head of design at Hardstreet USA, which manufactures saddlebags and bodywork for V-twin motorcycles. “Honda also cut all of its cruisers down to smaller displacements, and Yamaha just brought out a V-Star 950 that retails for $8,000–$9,000. These light cruisers are easy to own, easy to maintain and are accessible for more people to ride, including women. We’re seeing a surge of riders getting into bikes that they otherwise might have ignored.”

Narayana pointed out that the industry is focusing on environmentally friendly and user-friendly models, but he, Jones and Laivins all said that financing and insurance are problematic for larger models and for young people 16–20 years old. This core youth market isn’t financially capable of getting into bigger bikes, Narayana said, so the industry needs to focus on smaller, less-expensive models in order to cultivate new riders. Some hoped that scooters might provide that low-cost entry, and they did spike in popularity when gas prices rose in the summer of 2008. But as soon as fuel costs subsided, so did the fervor for scooters.

The soft market also extends to the off-road segment, where the challenges are exacerbated by land-use issues and the public perception of off-roaders in general. “It’s hard to defend legitimate off-highway vehicle (OHV) use to those who don’t understand it,” said Lewis. “They think that any motorcycle trail going through a national forest must look like a war zone. In fact, though, motorcycle trails can be as pristine as the Pacific Coast Trail. The radical environmentalists portray OHV use as really destructive, but the truth is that most bike riders are very good stewards of the land who enjoy recreating outdoors with their families.”

	The family aspect of off-roading powersports is notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors.    Photo Courtesy of ATV Rider Magazine

The family aspect of off-roading powersports is particularly notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors. ATV sales have also begun to rebound somewhat, with power steering affecting sales of larger ATVs, Jones said, and Finley added that several ATV manufacturers have recently introduced race models that don’t require many aftermarket modifications to make them competitive, though, there is still room for improvement in suspension and engine performance. In fact, specialty-equipment manufacturers offer contributions throughout the powersports industry.

“There is continuous innovation from the aftermarket,” Finely said. “A few of the significant products include an ‘automatic’ clutch from Rekluse that makes it virtually impossible to stall the bike but still provides the ability to override the clutch with the lever to allow the rider to optimize traction and engine revs. Quieter exhaust is also becoming more and more important due to tighter standards at the racing level, but it’s also an important topic for land-
use issues.”

Oliver Rathlein, vice president of marketing for Eibach Springs, said such environmental improvements are running in tandem with technological refinements, resulting in “green” products that also provide better power. “We see more and more bikes going to electronic fuel injection/ignition systems, including motocross and dual sport,” Rathlein said. “That sometimes adds weight to the bikes, which requires stronger springs, such as our proprietary High-Ten spring steel alloys, to deliver consistent suspension performance.”

Retailers also recognize that people are holding onto their powersports equipment longer rather than moving into new bikes the way they use to. Lewis wonders if the heyday of owners buying new bikes every year or two might be over, but he believes that business will eventually return to a more robust level and will then stabilize. In the meantime, he sees profit in service.

“Retailers should stock the equipment that will help people keep their current bikes running longer,” he said. “I’m not 100% sure that we’re in a recovery cycle just yet; people are still sitting on the fence, and that’s what is stopping them from buying a brand-new bike. But any bike wears out, so if a guy really likes to ride, he eventually has to replace it.”

Dealers recognize the realities of the marketplace, so service and customer satisfaction have become paramount. “A lot of people who ride motorcycles are not mechanically inclined,” Laivins said. “There are opportunities to help them put accessories on the bikes and give them the kind of service that they’ve grown to expect with their cars. In addition to selling bikes, dealers should be looking at including accessories and being outfitters. That is particularly true with used bikes.”

Most dealers report that traditional advertising is not producing, according to GSA. They’re finding that their best results come from social marketing, working trade/sports shows and community events, and they’re also using 21st century tools to market their products.

“Internet sales and the use of eBay to move obsolete inventory have changed dealer business structures,” said Jones. “They’re now using true computer-based customer relationship management tools instead of the traditional paper traffic logs. Most customers come in after considerable web research. They know about the products and what is on sale on dealer websites. TV ads are driving traffic to see products, such as the Spyder.”

	Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, powersports vehicles are primary conveyances in  much of the world, though they’re still viewed primarily as luxury items in the United States.  Photo Courtesy of Dirt Rider Magazine

There has also been a big shift to online sales on the aftermarket side, Finley said, so every “mail-order” company must provide a good website that lives up to consumers’ expectations.

“People buy other products online and expect that same level of customer service and ease of use,” he said. “Some companies are slow to recognize this opportunity. As magazine publishers, we still believe that print is important in reaching the market, but we also provide dedicated websites that now reach more unique visitors than the base magazine for each brand. Combined, we reach more people than ever.”

SEMA recently added a Powersports & Utility Vehicles section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.

John Waraniak, vice president of vehicle technology for SEMA, said that the association is to the auto industry what ESPN’s X-Games is to the action sports industry. “They both represent unique global platforms for extreme performance and lifestyle activation. Passion for performance and an emotional connection to self-actualized lifestyles are common denominators between successful SEMA and powersports manufacturers, distributors and retailers. The SEMA Show is one of the largest gatherings of small businesses in America, so I am confident that integrating leading powersports companies at the Show with SEMA’s programs and benefits will offer new dimensions of growth, innovation and profitability for both the powersports and specialty-equipment industries.” 

 

SEMA News - June 2010

Powersports: Emerging From the Valley of a Down Market

By Steve Campbell

	SEMA recently added a powersports section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.  Photo Courtesy of Eibach Springs

Motorcycles and scooters play a key role in transportation systems throughout much of the world. Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, they are primary conveyances in Asia and large segments of Europe. In the United States, however, motorcycles and other powersports machines, such as all-terrain vehicles (ATVs) and side-by-side utility type vehicles (UTVs), are viewed almost exclusively as luxury items—toys that enthusiasts prize but most mainstream consumers consider only for hobby or secondary use. That view of powersports vehicles as luxury items is the main reason why the industry suffered an overall drop in sales of 44% during the recession years, according to industry expert Gart Sutton & Associates (GSA). A motorsports and powersports dealership and retailer trainer and consultancy, GSA offers data showing that sales began to skid in 2006, and 2007 was the first year in nearly a decade and a half in which industry sales declined rather than grew. As a result, dealer inventories piled up before manufacturers began to back-off production.

“There was a dramatic change in the retail sales of motorcycles,” said Sel Narayana, who works on sales, logistics and operations in Asia for motorcycle manufacturer KTM. “Consumers protected themselves and became very careful of their spending. That was reflected in the market for motocross, ATV and other products in the powersports industry. Now, however, things are looking more positive again.”

The changes in consumer buying habits led to a record level of dealership failures during the past two years, according to a recent GSA survey, but that shakeout may actually help some of the businesses that remain. Jimmy Lewis, editor of Dirt Rider magazine, said that a number of companies had come into the market while it was in a boom state and counted on making money without an emphasis on supplying quality products.

“The companies that made decisions based on the idea that the market was just going to keep going have been weeded out,” Lewis said. “People are still riding, though. Race entries are up, and people are still participating. Aftermarket parts sales are really strong even in the down economy. Instead of buying a new bike, people are buying brake pads, sprockets, chains, new graphics and are freshening their bikes so that they can keep riding them longer. In that sense, the industry is still very strong.”

	Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not “warehouses” for the manufacturers. Service work is strong as customers are repairing rather than replacing their bikes. Photo Courtesy of KTM

Steve Jones is the general manager of GSA and also writes a featured column in Motorcycle Product News magazine and edits GSA columns for other publications. He recently conducted a limited survey of dealers to get their take on the state of the market and found that, indeed, the industry remains optimistic overall.

“Current motorcycle sales continue to be down,” Jones said, “but March picked up for many dealers. Floor traffic is picking up, dealers are holding better margins and some banks and credit unions are starting to free up money. Dealers have also reduced their old inventories, so they are not ‘warehouses’ for the manufacturers. Service work is strong as customers are repairing rather than replacing their units.”

Dealers also reported that used midsize motorcycles and many new models with rebates are selling well in the street market, Jones said, including the three-wheeled Can-Am Spyder, although many do not class it as a motorcycle. Most of the movement is occurring in the low- and mid-priced classes, but even sport bikes appear to be picking up somewhat after the diminished sales wrought by the economy.

“Overall, there is a slow shift to ‘standard’ bikes that provide good performance but more comfort than sport bikes,” said Sean Finley, group publisher for Source Interlink Media's motorcycle group, which includes Motorcyclist, Sport Rider, Super Streetbike, Cruiser, Dirt Rider, ATV Rider, Hot Bike and Baggers magazines and their associated websites. “In the sport-bike market, which drives a lot of the innovation, traction control and antilock braking are now improved to the level that they are being embraced even by very serious riders.” 

There has also been a strong push toward light cruisers in the V-twin market, which now includes offerings from not only Harley-Davidson, but also from most of the Asian manufacturers. “Harley-Davidson just introduced a new line of Sportsters, which are smaller bikes that have a heavyweight cruiser feel,” said Ken Laivins, principal owner and head of design at Hardstreet USA, which manufactures saddlebags and bodywork for V-twin motorcycles. “Honda also cut all of its cruisers down to smaller displacements, and Yamaha just brought out a V-Star 950 that retails for $8,000–$9,000. These light cruisers are easy to own, easy to maintain and are accessible for more people to ride, including women. We’re seeing a surge of riders getting into bikes that they otherwise might have ignored.”

Narayana pointed out that the industry is focusing on environmentally friendly and user-friendly models, but he, Jones and Laivins all said that financing and insurance are problematic for larger models and for young people 16–20 years old. This core youth market isn’t financially capable of getting into bigger bikes, Narayana said, so the industry needs to focus on smaller, less-expensive models in order to cultivate new riders. Some hoped that scooters might provide that low-cost entry, and they did spike in popularity when gas prices rose in the summer of 2008. But as soon as fuel costs subsided, so did the fervor for scooters.

The soft market also extends to the off-road segment, where the challenges are exacerbated by land-use issues and the public perception of off-roaders in general. “It’s hard to defend legitimate off-highway vehicle (OHV) use to those who don’t understand it,” said Lewis. “They think that any motorcycle trail going through a national forest must look like a war zone. In fact, though, motorcycle trails can be as pristine as the Pacific Coast Trail. The radical environmentalists portray OHV use as really destructive, but the truth is that most bike riders are very good stewards of the land who enjoy recreating outdoors with their families.”

	The family aspect of off-roading powersports is notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors.    Photo Courtesy of ATV Rider Magazine

The family aspect of off-roading powersports is particularly notable in the side-by-side UTV market, but farmers are also using UTVs in some areas as low-cost alternatives to trucks and tractors. ATV sales have also begun to rebound somewhat, with power steering affecting sales of larger ATVs, Jones said, and Finley added that several ATV manufacturers have recently introduced race models that don’t require many aftermarket modifications to make them competitive, though, there is still room for improvement in suspension and engine performance. In fact, specialty-equipment manufacturers offer contributions throughout the powersports industry.

“There is continuous innovation from the aftermarket,” Finely said. “A few of the significant products include an ‘automatic’ clutch from Rekluse that makes it virtually impossible to stall the bike but still provides the ability to override the clutch with the lever to allow the rider to optimize traction and engine revs. Quieter exhaust is also becoming more and more important due to tighter standards at the racing level, but it’s also an important topic for land-
use issues.”

Oliver Rathlein, vice president of marketing for Eibach Springs, said such environmental improvements are running in tandem with technological refinements, resulting in “green” products that also provide better power. “We see more and more bikes going to electronic fuel injection/ignition systems, including motocross and dual sport,” Rathlein said. “That sometimes adds weight to the bikes, which requires stronger springs, such as our proprietary High-Ten spring steel alloys, to deliver consistent suspension performance.”

Retailers also recognize that people are holding onto their powersports equipment longer rather than moving into new bikes the way they use to. Lewis wonders if the heyday of owners buying new bikes every year or two might be over, but he believes that business will eventually return to a more robust level and will then stabilize. In the meantime, he sees profit in service.

“Retailers should stock the equipment that will help people keep their current bikes running longer,” he said. “I’m not 100% sure that we’re in a recovery cycle just yet; people are still sitting on the fence, and that’s what is stopping them from buying a brand-new bike. But any bike wears out, so if a guy really likes to ride, he eventually has to replace it.”

Dealers recognize the realities of the marketplace, so service and customer satisfaction have become paramount. “A lot of people who ride motorcycles are not mechanically inclined,” Laivins said. “There are opportunities to help them put accessories on the bikes and give them the kind of service that they’ve grown to expect with their cars. In addition to selling bikes, dealers should be looking at including accessories and being outfitters. That is particularly true with used bikes.”

Most dealers report that traditional advertising is not producing, according to GSA. They’re finding that their best results come from social marketing, working trade/sports shows and community events, and they’re also using 21st century tools to market their products.

“Internet sales and the use of eBay to move obsolete inventory have changed dealer business structures,” said Jones. “They’re now using true computer-based customer relationship management tools instead of the traditional paper traffic logs. Most customers come in after considerable web research. They know about the products and what is on sale on dealer websites. TV ads are driving traffic to see products, such as the Spyder.”

	Economical to own, maintain and use, easily navigated through tight and winding roads, a breeze to park and flat-out fun to ride, powersports vehicles are primary conveyances in  much of the world, though they’re still viewed primarily as luxury items in the United States.  Photo Courtesy of Dirt Rider Magazine

There has also been a big shift to online sales on the aftermarket side, Finley said, so every “mail-order” company must provide a good website that lives up to consumers’ expectations.

“People buy other products online and expect that same level of customer service and ease of use,” he said. “Some companies are slow to recognize this opportunity. As magazine publishers, we still believe that print is important in reaching the market, but we also provide dedicated websites that now reach more unique visitors than the base magazine for each brand. Combined, we reach more people than ever.”

SEMA recently added a Powersports & Utility Vehicles section to the annual SEMA Show, which will be held this year from November 2–5 in Las Vegas. SEMA’s goal for the new section, as well as the creation of a new Powersports Advisory Group, is to bolster the industry and help powersports companies grow and prosper.

John Waraniak, vice president of vehicle technology for SEMA, said that the association is to the auto industry what ESPN’s X-Games is to the action sports industry. “They both represent unique global platforms for extreme performance and lifestyle activation. Passion for performance and an emotional connection to self-actualized lifestyles are common denominators between successful SEMA and powersports manufacturers, distributors and retailers. The SEMA Show is one of the largest gatherings of small businesses in America, so I am confident that integrating leading powersports companies at the Show with SEMA’s programs and benefits will offer new dimensions of growth, innovation and profitability for both the powersports and specialty-equipment industries.”