SEMA News—June 2022

HERITAGE

Mustangs on the Salt

By Drew Hardin

Photography Courtesy: Eric Rickman, Petersen Publishing Company Archive

Hot Rod magazine Publisher Ray Brock picked up the phone. Mickey Thompson was on the line, calling from Detroit.

“How would you like to drive a car with me at Bonneville to set some international and national endurance records?” he asked. Thompson was at Ford headquarters and had just made a deal to take a team of ’69 Mustangs to Bonneville “and go for a bunch of speed records on the 10-mile oval as well as the straightaway.”

“And that’s how I ended up at Bonneville last July, spinning out at 170 mph in the middle of the night,” Brock recounted in his October 1968 cover story titled, “At Least I Got My Name on the Door.”

Spoiler alert: Thompson and racer Danny Ongais did set records in a 302-powered Mach 1 (seen here during a pit stop). But 24-hour record attempts planned for the yellow 302 car and a red big-block Mustang were called off due to poor salt conditions. Brock and fellow journalist Bob Ottum (on assignment for Sports Illustrated) never got their turns behind the wheel, which explains Brock’s self-deprecating story title.

How did Brock find himself doing 360s in the dark?

“Actually, it wasn’t my first spin,” he admitted in the story. “There had been three or four more, but they had been during the daylight hours when I could watch the mountains spin around. At night, you don’t have the least idea of what’s happening or how to correct the spin—just salt flying around in the headlight glare.”

During practice runs ahead of the record attempts, Brock had trouble controlling the Mustang around the oval’s turns due to the slippery wet salt. Here’s how he described one such excursion, in daylight, at 165 mph:

“Here comes the south turn—keep the throttle steady, let the tail end slide out a little, now correct and catch the slide. Oh-oh, lost it—no, I caught it, lost it again, overcorrected—here we go, Danny. [Ongais was riding shotgun.] Get the clutch in before you get backward so the engine doesn’t back up and catch on fire. There go some more stakes [marking the course]. I’ve heard of tornadoes driving straws through trees; wonder if one of those stakes would go through the side of a car at this speed. Guess not; just mowed down about four of them. Let’s see, they’re 100 feet apart; boy, this sure is a long slide!”

Ottum didn’t fare any better. “I couldn’t even make one lap, and I was only doing around 140,” he told Brock. “I spun it around and around. There aren’t going to be any stakes left to show you where the course is if I keep driving.”

The two journalists weren’t the only ones having trouble with the wet surface. Ongais spun when Brock was riding with him in practice. And when Thompson was on course during a nighttime record run and had settled into a 165-mph pace, “every so often there would be a variation of a couple miles per hour, which indicated that the car was getting sideways on the rough south turn,” Brock wrote. “Mickey didn’t lose it, though. Have to hand it to him; he sure knows how to drive on the salt.”

By the time the record runs were called off and Ongais pulled the yellow Mustang into the pits at the 500-mile mark, “all Class C International and National records had been broken to that point,” Brock reported. “The average was 159.556 for the 500 miles.”

SEMA News—June 2022

FROM THE ASSOCIATION

Who You Gonna Call?

In addition to the annual SEMA Show, the association works continuously to supply a wide array of programs and benefits members can tap into 365 days a year. Here are just a few:

• Most members are aware that SEMA’s Market Research department offers regular reports that provide market insights to keep the industry abreast of trends and their implications. But on top of that, members can access comprehensive counts of vehicles on the road in the United States. This Vehicles In Operation (VIO) data comes via a partnership with Experian Automotive and can be a key information source helping to define and quantify areas of opportunity. Manufacturers considering developing products for a particular vehicle can now get a clear picture of how many units are on the road. Retailers thinking of stocking parts for a particular vehicle can use VIO data to assess how many units are in their area and what their potential customer base looks like. To find out how to access VIO data, email research@sema.org.
• SEMA has long made a priority of helping members understand and resolve vehicle technology, systems integration, and engineering challenges as they arise. The SEMA Garage was built with that priority in mind, and now the advanced vehicle technology group has added capacity on two fronts. First, a full advanced driver-assist systems (ADAS) program was launched in May in Detroit, the first to focus on how aftermarket modifications affect ADAS. The new Detroit facility offers 5,000 sq. ft. to conduct ADAS static testing, the ability to conduct dynamic testing at a third-party test site, plus expert staff. Second, there will be enhanced focus on finding ways to assist the industry to exploit the ongoing trend of electrification. To that end, SEMA Director of Vehicle Technology Luis Morales is meeting with companies in that field, both in the restomod segment of the aftermarket and at the OEM level. His mission includes developing approaches and programs that will help deliver solutions and benefits for companies in the growing field of electric propulsion. He is stationed at the SEMA Garage in Diamond Bar, California, and can be contacted by emailing luism@sema.org.
• Insights into advanced automotive technology, human resources solutions, automotive market research, small-business management techniques and more are available on demand through SEMA’s new virtual education platform. The platform, launched in mid-December, has accumulated more than 1,000 unique users and is a resource that also offers discussions with industry leaders about trends and opportunities; tips on navigating legislative and regulatory issues; and expert guidance on effective marketing techniques. The virtual education library is available to all industry professionals. In addition to live webinars, employees of SEMA-member companies can access more than 100 educational videos at no cost or at a discount. Log in to www.sema.org/education to create a free profile tailored to your individual preferences. Questions? Contact SEMA Education Director Pamela Brown-Matthis at pamelabm@sema.org.
• Product data management keeps getting easier with SEMA Data. It’s been more than a year since SEMA Data introduced plugins to automate uploading eCatalog data for WooCommerce and Shopify eCommerce platforms, simplifying the process and speeding up time-to-market. There is now a third plug-in available, this one for resellers on the Big Commerce platform. Meanwhile, manufacturers have until August 1 to qualify their product data to SEMA Data Excellence scorecard. The SEMA Data eCatalog Team is available to work with members to update their data quality to the highest levels. Manufacturer members can shoot an email to info@semadata.org to connect with the team and get guidance about their data quality, and how to elevate their product line to the level most attractive to retailers. Bonus: SEMA Data Excellence brands get special recognition at this year’s SEMA Show.

SEMA News—June 2022

INDUSTRY NEWS

SEMA Industry Indicators: Global Unrest Roils Markets; U.S. Economy Remains Relatively Sound

Published monthly, “SEMA Industry Indicators” provides a glimpse into the state of global markets and their potential impact on the specialty-equipment industry.

Russia’s invasion of Ukraine in March upset commodity and equity exchanges as traders worked to understand the impact the invasion would have on markets. Russia is the world’s largest exporter of wheat and the second-largest exporter of oil, providing 30%–40% of Europe’s oil, gas and coal. Both countries are also major exporters of commodities such as neon gas that are used to produce semiconductors. Several auto companies with production facilities in the two countries have suspended operations.

The Federal Reserve was set to raise the federal funds rate by 25 basis points in March, with additional moves of 25 basis points in the future to address inflation concerns.

Outside of Ukraine-related uncertainty, the domestic economy is holding up well. Economic activity in the first quarter may have been negatively impacted by the Omicron variant, as it was by the Delta variant, but the spread of the virus slowed rapidly as spring approached. GDP growth, excluding the volatile inventory investment component (final sales), should look good over the coming months, advancing in the range of 3%–4%, a notable pickup from 1% in the second half of 2021.

To learn more, visit www.sema.org/research to download the latest “SEMA Industry Indicators” report.

Industry Veteran RJ de Vera Joins SEMA as Vice President of Marketing

As SEMA’s vice president of marketing, industry veteran RJ de Vera will develop and implement a modernized multichannel marketing strategy with a digital-first focus.

SEMA announced RJ de Vera as its new vice president of marketing. de Vera comes to SEMA after 12 years at 3M, a Fortune 100 company, including the last seven as global leader of digital marketing and public relations for the Meguiar’s Car Care brand. He will be developing and implementing a modernized multichannel marketing strategy for SEMA with a digital-first focus to expand brand awareness and build customer affinity for SEMA and its members.

“RJ is an industry icon, having worked in and with aftermarket specialty businesses for nearly 30 years,” said SEMA Senior Vice President of Operations Bill Miller. “It’s a thrill to have him join the SEMA leadership team. He will surely be an asset to our growth in the coming years, and we look forward to seeing what he will bring to the organization.”

Prior to 3M/Meguiar’s, de Vera worked with OEMs to build corporate image vehicles, including Honda, Lexus, Mitsubishi, Mazda and Scion. He also helped American Racing, Veilside Japan and Vorsteiner design and market aftermarket parts and accessories, and he consulted on automotive-related marketing initiatives with numerous brands, including Pepsi Co., Valvoline, Boost Mobile, Michelin/BFGoodrich and Microsoft/Xbox.

SEMA Show Attendees: Book Your Hotel Now Through onPeak

onPeak not only offers discounted nightly rates for SEMA Show participants but also offers reduced resort fees so you can save even more on your stay.

Showgoers booking through onPeak—the SEMA Show housing partner—receive guaranteed low rates on a wide range of hotel properties at locations on and off the Las Vegas Strip.

onPeak not only offers discounted nightly rates for SEMA Show participants but also offers reduced resort fees so you can save even more on your stay.

SEMA has negotiated exclusive, discounted nightly rates at the best hotels in Las Vegas, but you can only get the discounted rates when you book through the SEMA Show’s official hotel provider, onPeak.

When making your hotel reservations through the SEMA Show Travel & Lodging page, you are receiving the most affordable and convenient hotel options through SEMA’s partnership with onPeak—the only official hotel provider for the 2021 SEMA Show. All negotiated rates provided by onPeak include resort fees and allow you to change or cancel your reservation without any financial penalties.

More information about the 2022 SEMA Show, to be held November 1–4, is available on www.SEMAShow.com.

CARB Assessing Fees for Aftermarket EOs

The SEMA Emissions Compliance Center assists members with ensuring that their performance products are emissions-legal.

For the last seven years, the SEMA Compliance Center has assisted members with ensuring that performance products are emissions-legal. This primarily involved preparation of California Air Resources Board (CARB) Executive Order (EO) applications and emissions laboratory testing. SEMA has also worked closely with CARB to streamline the application procedures and ensure that adequate staffing is available at CARB to handle anticipated added volume.

CARB introduced new procedures on January 1, 2022. SEMA Compliance Center staff has submitted applications following the new guidance, but there is very limited information regarding the successful implementation of these procedures.

CARB is also in the process of implementing fees for EO applications to offset the cost of additional staffing. The fees are heavily dependent on the new procedures; therefore, it is SEMA’s position that the fees should not be implemented until the new procedures have been proven to accomplish the stated goal of streamlining the process.

As of press time, CARB was proceeding with the assessment of fees to be effective for applications submitted after March 31, 2022. SEMA was opposed to this early start date and was working with CARB board members and California government representatives to push the date back.

For more information, contact Peter Treydte, SEMA director of emissions compliance, at petert@sema.org or 909-978-6673.

SEMA News—June 2022

MARKET RESEARCH SNAPSHOT

Classic Cars Are Adapting to Modern Markets

By SEMA Market Research

Top Classic Vehicle Segments for the Specialty-Equipment Industry

While the classic-vehicle market has historically been driven by Baby Boomers and the vehicles they care about, young consumers are bringing with them a growing interest in ‘70s and ‘80s vehicles. These emerging markets are growing in importance for industry companies.

Vehicles from the early ’70s and later have traditionally been considered “classics,” with the idea of ’73 (pre-gas crisis, pre-catalytic converters) as reasonable cutoffs. However, the landscape has changed. More and more, classics have expanded to include vehicles from the ’70s and ’80s. These emerging classics are sparking the same nostalgic feelings among drivers looking to recapture a piece of their youth as they did to consumers a generation earlier. While the traditional areas of the classic vehicle space aren’t going anywhere, newer classic models are becoming more important for the industry.

Ultimate Consumer Goal for Their Classic

Most classic owners have a defined vision for their vehicle, but many don’t have a grand strategy and just want to keep it driving. Pre-’74 vehicles are commonly accessorized for pure restoration, while late ‘80s vehicles are more commonly worked on to ultimately just be a driver.

How Industry Sees Classic Segments Changing in the Future

While numbers-match restoration and hot-rodding are not going away, businesses are seeing a growth in retromodding and flexibility in terms of what goes under the hood of an older vehicle.

SEMA News—June 2022

RESEARCH

SEMA Market Research Releases Its First-Ever CUV Report

The “CUV Market Snapshot” Aims to Make Sense of a Diverse and Rapidly Growing Vehicle Category

By Mike Imlay

The Subaru Outback, which arguably set the stage for the crossover enthusiast craze in the ’90s, soldiers on in 2022 amid a growing market of off-pavement-capable competitors. Photo courtesy of Subaru

When the crossover utility vehicle (CUV) first appeared in the mid-’90s, it seemed like the push-me-pull-you of the automotive market—not quite car and not truly SUV. As such, it raised several questions: Could consumers ever embrace a vehicle whose purpose wasn’t clearly defined and whose styling, quite honestly, wasn’t all that exciting? And, if they did, how would they utilize such an oddity? As a commuter car? A grocery getter or cargo hauler? Some sort of neo station wagon or minivan?

As it turned out, a truck-like vehicle built on a car platform proved to be just what consumers wanted for daily commutes, outdoor adventuring and everything in between. Today, CUVs are the most common vehicle type found on the road, accounting for 45% of automobiles sold in 2021. To help the specialty aftermarket make sense of the category and the growth potential it offers, SEMA Market Research recently released the new “CUV Market Snapshot—Emerging Opportunities” report—its first-ever study focused exclusively on crossovers.

How Modified Vehicles Are Used

Built on car platforms but generally classified as light trucks, CUVs have traditionally been viewed as large, roomy cars. However, OEMs are increasingly building and marketing crossovers as utility vehicles. With many CUVs now outfitted with four-wheel drive, they are also growing in popularity with off-roaders.

“The reality is that if you’re in the truck market, you need to be paying attention to CUVs,” said SEMA Market Research Manager Matthew Kennedy, the report’s lead researcher. “CUVs represent the fastest-selling type of vehicle in the United States. In 2020, they comprised the second-biggest vehicle segment in terms of specialty-
equipment sales. But the industry still doesn’t really have, I think, a full understanding of what to do with them or how they fit into our world. Our report is all about arming you with what you need to know.”

“For the specialty-equipment industry, CUVs represent the biggest emerging trend right now,” added SEMA Director of Market Research Gavin Knapp. “With so many of these vehicles on the road—and representing nearly half of new-car sales and growing—this is an increasingly important space. We’re seeing people at least beginning to treat CUVs more like trucks. They’re beginning to use them off-road. They’re using them more for utility aspects. All of that combined makes CUVs a big area of opportunity going forward, at least in the short term.”

To create the CUV report, SEMA Market Research mined its existing data from prior “State of the Industry” and market reports. The research team also incorporated relevant third-party data on vehicle sales registrations and other market trends.

“One thing we wanted to do here is define what constitutes a CUV, because it’s often a difficult question to answer,” Kennedy said. “The working definition that we use is a utility vehicle that’s built on a car platform. In contrast, a sport-utility vehicle [SUV] is more typically built on a truck platform. But not every source agrees on which vehicle type falls into which category. It’s occasionally nebulous.”

Growing and Diversifying

New Light-Vehicle Sales Forecast by Segment

Historical CUV Sales

CUVs were introduced in the mid-’90s and have since become the fastest-selling vehicle segment. With more than 170 different models set to be offered in the next few years, the segment is also highly fragmented. Their sheer number spells expanding opportunity for the aftermarket.

By any definition, CUVs are already a significant market for OEMs and the specialty automotive industry.

“About $7.74 billion was spent on key CUV parts in 2020, which makes the category number two for our industry,” Kennedy observed. “CUVs also represent up to 24% of vehicles on the road and 16% of specialty-equipment sales in 2020.”

According to Knapp, the problem for the aftermarket is the segment’s wide differentiation and continuous evolution.

“There are about 130 different models on the road right now, and there will be about 170 within a few years,” he explained. “That means you have a lot of models with smaller sales volumes, which can make it hard to decide which to make products for. Which will offer the best opportunity and uptake? Companies will have to sort through all of these different models to figure out which ones to target.”

Back in the early ’90s, CUVs were widely seen as entry-level vehicles—smaller alternatives to their SUV cousins. But all that has changed,” Kennedy said. Today’s market mix includes a proliferation of upscale brands and trim packages tailored for style, performance and off-highway capability.

“One piece of the OEM strategy we’ve seen in play for a while now is making a CUV for pretty much any buyer you care to appeal to,” Kennedy said. “Part of the challenge is that there are so many options out there, making it difficult to target your customer even within each model.”

That isn’t to say that some vehicles haven’t already distinguished themselves as opportunity leaders.

“We know that the Subaru Outback, Crosstrek and Forester are models of special interest,” Kennedy said. “The Honda CR-V and Toyota RAV4 are absolutely in there as well, along with the Chevrolet Traverse, Ford Escape and Jeep Cherokee.”

Soft-Roading and Performance

2020 Aftermarket Sales Estimates by Vehicle Segment

CUvs Represent...

Crossovers now comprise the second-largest vehicle segment for the specialty aftermarket, accounting for $7.7 billion in retail sales in 2020. What’s more, there are several CUVs emerging as popular enthusiast vehicles, including models from Jeep, Subaru, Toyota and Honda.

When it comes to putting their CUVs to use, one growing trend among consumers over the past couple years has been what the media has dubbed “soft-roading.”

“Subaru and Jeep have a big off-road culture baked into their brands,” Kennedy noted. “And while CUVs are not envisioned as rock-crawlers or hardcore off-road vehicles, it doesn’t take a lot of modification to get you to the dirt and on a trail with your ATV, dirt bike or whatever you’re hauling. Crossovers are versatile, and many absolutely can go off-road. Plus, as we’ve seen with pickups and even the Jeep Wrangler, the off-roading look is also a thing, with people accessorizing regardless of whether they take their vehicles off-road or not.

“Something else to bear in mind is that CUVs are a relatively new concept. They haven’t really taken their place among pickups on one side or SUVs on the other. But they do exist in this liminal space between car and truck, so we can envision more movement toward making them performance vehicles as well as off-road utility vehicles.”

For the foreseeable future, the aftermarket can also expect to encounter further evolution in CUV powertrains and related technologies.

“This is a category that’s likely to see a lot of electrification in the next couple of years,” Knapp explained. “When you look at the new models that are slated for release over the next three years, most of them are electric or at least have an electric powertrain as an option.”

Kennedy added that hybrids and plug-in hybrids will remain in the mix as well.

“But if you look at how things are projected to move, most of the effort, most of the development, most of the growth will be in battery electric,” he said. “We’re seeing the same play in the pickup and Jeep spaces, where there are certainly pushes to develop electric vehicles that are viable for off-road. CUVs are no exception. There is absolutely testing being done to see if they can make electric crossovers capable off-roaders in a manner that enthusiasts will go for.”

Ultimate Goal for Modifying Vehicle Among CUV Accessorizers

Part Types Bought in 2020–Off-Road vs. Non-Off-Road CUVs

While reliability remains the most common motivation for modification, a significant share of CUV accessorizers seek to stand out in the crowd, hit the trails or turn their vehicles into workhorses. In fact, as interest in outdoor recreation spiked in 2020, many CUVs became toy haulers, camping vehicles and trail runners.

Reflecting the category’s current diversity, CUV owners turn to the aftermarket for a variety of solutions. SEMA Market Research finds that 56% of crossover accessorizers can be classified as non-enthusiasts, while 44% can be described as an enthusiast audience.

“When we asked people what their ultimate goal was for their vehicles, a large number said they modify for reliability,” Kennedy noted. “I’d argue that is good news for the aftermarket. Still, almost one out of five are modifying their CUVs for off-road use, and there’s also a one-in-three contingent that just wants their crossovers to stand out. Then we absolutely have a utility-focused segment in there too, and that group is also prone to buying more parts for their vehicles.”

In regard to the specific aftermarket products sought, the list is topped by maintenance oils, additives, waxes and cleaning products. Consumers also gravitate toward navigation and driver-assistance systems among other safety items.

“The wheel and tire segment is usually a ‘gateway drug’ for our industry overall, and that’s also true for CUVs specifically,” Kennedy said. “Some of that is aimed at performance, some at off-road, but modifications tend to start with wheels and tires. Then you get into things such as upgraded lighting (whether light bars or fog lights) and body upgrades. Behind that, we also see some performance upgrades and suspension modifications.”

Mobile electronics, utility parts, truck accessories and intake, fuel and exhaust products round out the roster of popular aftermarket items, he added.

One hurdle for the aftermarket is the tendency of crossover accessorizers to rely on dealerships for vehicle upgrades and accessories. This may indicate that CUV consumers are still underserved by the specialty-equipment industry. However, the upside is that this audience also tends to research potential purchases through a wide range of channels, with a large percentage consulting experts and sales professionals for advice. This would indicate an openness to aftermarket brands and sellers.

It’s also worth noting that while many specialty-equipment businesses now invest considerably in Facebook, Instagram and other social-media platforms as low-cost marketing channels, only about half of CUV accessorizers turn to those platforms for their inspiration or research. According to Kennedy, the ideal marketing strategy for reaching the CUV audience will include a strong company web presence with detailed product information backed by a knowledgeable and readily accessible sales and support staff.

“Social media isn’t going to be enough to reach everybody,” he said. “More than half of this audience is looking for manufacturer or retail website information and hard data that isn’t so easily found through social media.”

Ultimately, CUVs comprise a vehicle category that still hasn’t shaken itself out, meaning that the aftermarket has both an opportunity and a challenge ahead in defining the segment’s full potential.

“One thing I would underscore is how prevalent and differentiated CUVs are—there’s something for everybody out there,” Kennedy said. “Probably the best strategy right now will be for brands to find the models they want to focus on and then drill down a bit to determine who the target customer is.”

SEMA Hot CUVs for Accessorizaiton

Despite their popularity, CUVs remain a challenging segment for the aftermarket. Their diversity makes the targeting of specific platforms offering high ROI difficult. Nonetheless, SEMA Market Research has identified several models that are currently ripe for accessorization.

Kennedy believes that this extra effort in deciphering the space will prove more than worthwhile.

“Again, when we look at the current philosophies and motivations that people have when modifying CUVs, there’s a pretty solid contingent who want the vehicle to stand out,” he said. “That actually comes in ahead of the utility-focused people. There is a real core of what we call the ‘in-crowd’ who want a CUV. Whether it’s for the aesthetics or it’s to achieve that off-road-ready look, you’re going to find that there’s a solid group of people ready to modify these vehicles.”

Get All the Latest Research

For your free download of the “CUV Market Snapshot—Emerging Opportunities” report, visit the SEMA Market Research webpage at www.sema.org/market-research. While there, be sure to check out the many other SEMA Market Research reports that can help prime your business for success.

SEMA News—June 2022

SEMA DATA

By Gigi Ho

SEMA Data Product News

The products featured below are from SEMA Data member companies that have attained Gold- or Platinum-level data, which means that their product data is robust and complete—likely to drive customer purchase decisions. SEMA Data members meeting data scorecard requirements are invited to submit product releases for consideration to enews@semadatacoop.org.

MICKEY THOMPSON

ET DRAG 29.5/9.0-15ST M5

Mickey Thompson Performance Tires designs, develops and distributes specialty tires for the street, strip, track and off-road. Designing and producing innovative tread patterns and compounds to build the best performance tires in the world was our focus then, and is still our focus today.

• Multiple compounds and sizes.
• Compounded for maximum traction.
• Requires little or no burnout.
• Engineered for consistent performance.

Information: www.mickeythompsontires.com

PN: 90000000855

Raptor Series

Chase/Tire Rack

Magnum Chase Tire Rack is a bed organizing rack that is customizable into a multitude of configurations. Its heavy-duty steel construction and patent-pending design allow up to 40-in.-diameter fullsize spare tires to securely mount in the bed of the truck. These rack’s anchoring points can be used to arrange the bolt-on optional bed organizing accessories which are sold separately. The rack is e-coated and finished in a matte black powdercoat finish for years of durability.

Information: www.raptorseries.com

PN: CHS001UNV

Bilstein

EVO S Suspension Kit

Bilstein EVO Series Coilovers are the next step in the evolution of performance suspension tuning. EVO S is a coilover kit built and tuned specifically for everyday street use. Featuring ride-height adjustability in an OE-quality, direct-fit package. Redesigned threaded bodied dampers allow for extreme lowering of up to 70 mm. High-quality components ensure longevity through every day use while providing a sportier look. Improved handling and ride comfort are achieved through specific application tuning.

Information: www.bilstein.com

PN: 47-309067

SEMA News—June 2022

BUSINESS

2022 Hot-Rod Market Trends

A Legacy Sector Evolves for the Next Generation

By Douglas McColloch

Central Hall at the Las Vegas Convention Center is host to Hot Rod Alley, home of many of the performance aftermarket’s most storied legacy brands.

Once considered one of the more backward-looking segments of the automotive aftermarket, the hot-rod and street-rod markets have changed radically over the past generation. No longer the exclusive province of ’30s through ’50s roadsters and sedans equipped with traditional running gear, today’s hot-rod market spans the automotive spectrum to include ’60s through ’80s musclecars, pickups and utility vehicles sporting 21st-century technologies. In all, the market has grown into a global industry that constitutes a $1.26-billion market sector, according to the most recent survey from the SEMA’s Hot Rod Industry Alliance (HRIA).

Like many specialty-equipment market segments, hot rodding faces a number of challenges in the coming years while also presenting opportunities for future growth. For this article, we contacted some two dozen industry insiders representing manufacturers, fabricators, racers, retailers and media. What follows is a compilation of their insights.

The State of the Industry: Catching Up to Consumer Demand

Musclecars from the ‘60s and ‘70s are still among rodders’ favorites, and this LSX-powered ‘71 Camaro that exhibited at the 2022 Grand National Roadster show showcases the builders’ art at its finest.

Overall, our panel of experts felt that the marketplace remained strong, but they also acknowledged the challenges posed by COVID-related disruptions over the past year. The automotive aftermarket gained an estimated four million new customers during the 2020 pandemic year, according to a report published by consumer-research firm NPD Group, but many companies are struggling to meet the surge in consumer demand because of the combination of pandemic-related plant closures, raw-materials shortages and clogged supply lines.

“The best word to describe the current market is ‘behind,’” said Trevor Hobson, sales and technical support manager at CVF Racing. “Sales are still strong, but while a lot of the COVID spike has subsided, people are still waiting on parts from a lot of manufacturers around the industry. The strain that has been placed on the global supply chain is being felt all over.”

“In 2020, we had one of our best years, but now we’ve got a pretty good-sized backlog due to supply-chain issues, and we’re still trying to catch up,” said Clay Johnson, creative director for Lokar.

Despite the challenges, the hot-rod market is presently strong, according to Jeanette Ladima, president of Flaming River Industries.

“The 2021 SEMA Show was a great show for our company,” she said. “We continued to see a lot of interest in custom products for the hot-rod market. Customers continue to pursue their passion, particularly enjoying the projects they can do themselves.”

What’s Trending: Classic Trucks and New Tech

Pickups have become a hot commodity in the ‘rodding community, and one of the most talked-about at the 2021 SEMA Show was Brad DeBerti’s 1,000hp, six-wheel “C10 Slayer.”

The consensus among our group of experts was that the biggest drivers of market-development growth today are later-model cars, pickups and digital-age technologies.

“Vehicles of the ’80s and early ’90s are being accepted as hot rods and classics, thanks to the popularity of square-body GM trucks,” said Todd Ryden, media specialist at InGear Media. “There are going to be opportunities for later-model G-bodies, Fox-bodies, Camaros and other trucks as the price point to entry is lower than for a ’60s musclecar—plus, the next generation grew up watching those cars when they were new.”

Ladima agreed, adding that “incorporating the latest technology such as electric power steering into those musclecars is a major change that customers are embracing.”

One place where late-model tech is prevalent these days is under the hood.

“The GM LS engine has been around for 25 years now,” said Bill Martens, special performance manager at Chevrolet Performance. “Each new version has represented an improvement in technology. When I go to a truck show or one of the Goodguys events, it’s more common to see an LS than it is to see an original engine anymore.”

Pickups remain a hot commodity, noted Tim Foss, publisher at In The Garage Media.

“The classic-truck market, while now a solid 20 years old, is an ever-expanding example of how aftermarket manufacturers were quick to recognize an emerging market and react,” he said. “It was once the ’47–’54 Chevy truck. Then it became the C10 [’67–’72]. Then came the ’73–’87 square bodies. Now, the ’88–’98 Ford OBS [old body style] are what rodders are building.”

On a related note, “It seems that the popularity of overlanding is spreading out into the hot-rod world,” Ryden said. “We’re seeing more early Broncos, Scouts, Blazers and Cherokees being built and enjoyed.”

While new technology has gained widespread acceptance in the marketplace, retro-minded building and styling aesthetics seem to be making a comeback.

“It’s refreshing to see people take a more traditional approach to a lot of builds,” said Tommy Lee Byrd, marketing and PR coordinator at Coker Tire. “We used to see people grabbing 20- or 22-in. wheels for their musclecar builds. The biggest size they could fit was what they wanted. Now we’re seeing people dialing that back a bit and going for a more traditional and tasteful look.”

“There seems to be a ‘get it running and have fun whether it’s done or not’ mantra,” Ryden said. “It’s actually rather refreshing to see in-progress hot rods of all sorts out there. They may not look pretty, but there’s a serious amount of backyard engineering, DIY and fabricating taking place, which is what hot rodding was all about in its early days.”

Another growing trend (one that was in evidence at the 2021 SEMA Show) is electrification across a variety of vehicle platforms.

“While small, it will have an outsize interest and lots of attention will be paid to it,” Foss said, adding that it’s a growing area.

Challenges and Opportunities

Grafting new tech onto older platforms is a growing trend in hot rodding, and this ‘32 Ford Coupe EV conversion that exhibited at the Webb Motorworks booth at the 2021 SEMA Show is a prime example of “old meets new.”

Nearly all of our experts agreed that the biggest challenge facing the industry in the short term has been the convulsive influence of COVID upon the existing business model and the need to adapt to changes in consumer spending habits and unforeseen market conditions.

“Rising costs and supply-chain issues will be challenges for just about everyone in the industry, as will reaching out and getting new people involved in our industry,” Byrd said. “A lot of new customers are experiencing sticker shock without realizing that a lot of the factors that go into pricing are out of our control.”

“In the last couple of years, the biggest change has been how customers have been shopping and how long they are willing to wait.” Hobson said. ”With super-long lead times, customers have started to shop for what might be in stock versus what they want. They’re moving to other options and finding new products they may not have found otherwise.”

In the wake of the pandemic, many companies have adopted partial work-from-home policies for their employees, which can pose challenges as well as opportunities.

“You have a lot of potential distractions at home—dogs and kids and such,” Byrd said. “But I also think there are times when working from home lets you bear down and get some quality work done. Overall, I think it’s helped us be more productive.”

The pandemic also reinforced the need for companies to leverage digital marketing and social media as essential brand-building and communication tools.

“It plays a pretty important role in what we do,” Hobson said, and Foss concurred: “It’s one more spoke in the wheel that makes our industry go around.”

Some of our experts mentioned the return of public events and the opportunity they present for companies to once again interact directly with their customers as invaluable for reestablishing a company’s market presence and increasing sales.

“Our existing customer base wants to be able to touch and feel the product,” Byrd said.

“They want to have a direct, normal conversation with somebody. You can do that over the phone, of course, but what we see when we go to events to sell our products is that our conversion rates are much greater.”

The need to recruit a new generation of talent to the hobby was mentioned by nearly all of our experts, though most noted promising developments in that regard.

“I do see younger people getting more interested in older cars,” Johnson said. “The more we can do to get them interested in hot rods and hot rodding in general, the brighter the future of the pastime will be.”

Despite the many challenges, our experts felt strongly that the future of hot rodding poses numerous opportunities for growth, although COVID-related issues will continue to be a concern for the near term.

“With the backlog of the supply chain, the foreseeable future is going to be plagued by availability, lead times and price increases, which are going to also stifle new-product development in some way,” Hobson said. “People are getting pulled in different directions looking for sources on things or waiting for things where time would normally be spent innovating.”

“We hear lots of growth stories, and we see plenty of new cars being built,” Foss concluded. “Overcoming the supply-chain issues is important, but the enthusiasm by both the manufacturers and individuals is at an all-time high.”

Hot-Rod Industry Resources

Hot Rod Industry Alliance: This SEMA council works to ensure the future prosperity of the hot-rod industry and to advance and promote awareness of the hobby. To learn more about how your business can become involved and benefit from the community, visit www.sema.org/hria.

SEMA Action Network (SAN): A nationwide partnership between vehicle clubs, enthusiasts and members of the specialty auto parts industry who want to protect their hobby. Founded in 1997, the SAN was designed to help stamp out legislative threats to the automotive hobby and pass favorable laws. To learn more and join, visit www.semasan.com.

SEMA News—June 2022

BUSINESS

Leading Across Generations

How to Establish a Rapport and Maintain Harmony Among Your Multi-Generational Team

By Chad Simon

Steve VerBurg, from Dale Carnegie of Orange County, says it’s important to find out the people and events that influenced each generation and what their tendencies are, because the more we know about them, the easier it is to understand what motivates them and communicate with them.

There are many challenges to leading multiple generations in the workforce, primarily being able to achieve a common goal while coming from different life perspectives and experiences. But before that can happen, you must earn each member of your team’s trust and respect. Because today’s world has gone digital, the younger generation is more likely to be in tune with the progression of technology than their elder counterparts. Each generation communicates in a different way, and each has different motivations—especially when you add cultural, age and racial diversity to the mix.

Five generations are currently in the workforce:

• Veterans (born before 1945). They make up 2% of the workforce. Most have already left.
• Baby Boomers (1946–1964). With 45 million in the workforce, the Boomers ranks are shrinking due to retirements.
• Gen X (1965–1976). They are the second-largest generation in the U.S. workforce at 52.9 million.
• Millennials (1977–1995). With 53.5 million people, Millennials are the largest generation in the U.S. workforce.
• Gen Z (1996–present). By 2025, Gen Z will make up 27% of the U.S. workforce.

Steve VerBurg, from Dale Carnegie of Orange County, led a 2021 SEMA Show education session entitled “Leading Across Generations.” The following is his advice on how to be an effective leader when your team is comprised of individuals from various generations.

Key Life Experiences

It’s important to learn about the people and events that influenced each generation and what that generation’s tendencies are, because the more we know about them, the easier it is to understand what motivates them and communicate with them.

Veterans are typically “traditionalists” who grew up during World War II and the Korean War. Baby Boomers are called “loyalists,” who lived through the Vietnam War, women’s lib, civil rights, the Cold War and space travel. Gen X are the “latchkey kids,” who remember the fall of the Berlin Wall, single-parent households, AIDS, computers, the Gulf War, the Challenger explosion and MTV. Millennials grew up during 9/11, school shootings, environmental disasters, 24-hour news and social media. Gen Y are known as the “screenagers” who lived through the Great Recession, smartphones, terrorism, diversity, hyper-security, same-sex marriages, mass shootings and alternative
news outlets.

Different people influenced each generation, so they’re going to have different outlooks and perspectives. Veterans were influenced by Babe Ruth, James Dean and Frank Sinatra. Baby Boomers had Elvis, the Beatles and JFK. Gen X had Oprah, Ronald Reagan, Michael Jordan, Michael Jackson and Madonna. Millennials were influenced by Steve Jobs, Mark Zuckerberg and Elon Musk. Gen Y had Barack Obama, Taylor Swift and JK Rowling.

“Each generation has become more dependent on technology,” VerBurg said. “The Boomers are tech adopters. Gen X are tech practical. Millennials are tech natives. Gen Z are tech reliant. Gen Z is known for having a strong work ethic and are more likely to bypass college and go directly into the workforce because they want job security.”

Criteria for Successful Cross-Generational Interaction

The keys to successfully relating to team members from other generations are to not criticize, condemn or complain. Instead, give honest, sincere appreciation. Arouse in the other person an eager want. Become genuinely interested in other people and remember their names. Be a good listener and encourage others to talk about themselves. Make the other person feel important, and do it sincerely by talking in terms of their interests.

“Be interested in generational differences, but know your own generation first,” VerBurg said. “If we know what’s driving our point of view, we can better empathize with another generation. We can use our emotional intelligence to adapt the way we communicate with them.”

Dale Carnegie wrote 30 different principles on how to communicate in his book, How to Win Friends and Influence People. He said the first step is to have a relationship with people, regardless of their generation. If you don’t do that, they will be indifferent toward you and you won’t be able to build a rapport. After you develop that, move on to the next step, which is to gain their willing cooperation. If you don’t win them over, the best you can hope for is compliance; however, you’re going to get resistance. With willing cooperation, you can influence and lead them.

“When team members come to you with an idea and you immediately think of ways to make it better, you increase the value of their idea by about 10% and demotivate them by 40% because now it’s no longer their idea; it’s your idea,” VerBurg said. “Ask questions and be a good listener so it remains their idea.”

Avoid holding grudges; instead, have positive feelings toward them. Sometimes we have negative feelings or assumptions based on the age of the other person. Focus your attention on thinking, feelings and behavior, and recognize how your perception impacts your encounters. Be aware of the impact of your behavior on other generations. Whether it’s somebody you directly lead or you have to interface with customers from different generations, figure out a way to communicate better with them.

What Motivates All Generations?

A positive relationship with one’s manager is the primary motivation across all generations in the workforce.

“People don’t leave their companies; they leave their managers,” VerBurg said. “Thirty or 40 years ago, people would work for the same company their whole lives and retire with that company. Now, if they don’t like their manager, they’re going to leave. The Great Resignation of today has magnified that.”

Employees want their jobs to be stimulating and fulfilling and to receive regular recognition and appreciation. They desire a clear career path with growth opportunities and managers who respect a balanced life. Competitive compensation and benefits are usually lower priorities.

“People across all generations want feedback,” VerBurg said. “There’s a difference in each generation. We need to be able to give feedback in other ways besides patting them on the back and saying ‘Good job.’ Give positive, constructive feedback that will help them grow.”

When providing positive feedback, make sure it’s a bull’s-eye.

“Farthest from the bull’s-eye is if you give them feedback on things—for example, ‘I like your new car,’” VerBurg said. “People are prouder of their achievements (a promotion or certification). The middle of the bull’s-eye is when you compliment them and give them positive feedback on traits and characteristics. To make it stick is the evidence. If you were to say, ‘I appreciate your dedication. I saw you putting in extra hours to make sure the car was done for the SEMA Show,’ they would appreciate that more than saying ‘good job.’”

When talking about dedication, say things about them that they didn’t even realize. See in them what they bring to the table.

Generational Approach to Coaching

To be an effective coach, you need to be a good listener. Don’t multitask on your cellphone or do other things while they’re talking. For Boomers, involve them in task forces and recognize their efforts. Appreciate their foundational accomplishments and contributions that built the organization. For Gen X, provide numerous opportunities to learn new skills. Keep coaching brief and straightforward. For Millennials, show them flexibility and provide self-development and growth. Authenticity is critical; share both successes and failures. For Gen Z, show you care, be encouraging, and involve them in the process of creating an improvement plan.

When delivering constructive feedback to team members, gather all the facts, then address the situation promptly and privately. Focus on the act or behavior, not the person. Give the person a genuine compliment first before the criticism. Listen and observe, then identify their strengths and give them the evidence and feedback. Provide seven positives to one negative.

“Oftentimes managers will say they don’t have time to walk around and give feedback to their employees, but how long does it take to post a job and interview candidates because that employee quit? It’s much more time-efficient to give them 30-sec. feedback than to have to hire someone else,” VerBurg said.

Positive Behavior vs. Negative Behavior

Negative behavior is when you tell people what they’re doing wrong and what they need to fix. However, negative behavior drives negative behavior, because if the only time you talk to your employees is when they do something wrong, they could subconsciously do something wrong just so you talk to them. Whereas with positive behavior, if you give them specific things they’re doing right, it drives that behavior.

“People post pictures of their meals on social media looking for likes because it actually releases chemicals in their brain and they have a visceral reaction to those positive things, whether it’s a like or a manager telling them they’ve done something right,” VerBurg said.

Identify observed behaviors, values, accomplishments, successes, personality traits, qualities and attributes. Use a specific example. Explain how the quality will help the individual, the team, the organization and the customer. Recognizing the things that your employees do well will make them feel valued and less likely to leave the company.

“Practice makes permanent,” VerBurg said. “The more you practice coaching people, the more it becomes a skill. You also have to give corrective feedback. Listen, observe and evaluate. Identify the opportunity for your employees to get better at their jobs. Once you identify the opportunity, use a cushion to soften the blow, but also let them know you understand where they’re coming from. Not only do you have to tell them what you want them to do but also the benefit. Regardless of their generation, if you let them know how an action benefits them, they’re more likely to do it. If you’re focused on the outcome and why, then they’re more apt to say yes. If we’re just focused on the problem, then they’re more apt to get frustrated with us. Put it into context and you’ll be viewed as a clearer and more concise communicator.”

SEMA News—June 2022

BUSINESS

2022 Mobile-Electronics Trends

Hard Hit by COVID, the Industry Bounces Back

By Douglas McColloch

North Hall at the Las Vegas Convention Center was the center of activity for the mobile electronics market at the 2021 SEMA Show. More than 100,000 industry professionals attended the weeklong event last November.

It’s no secret that the electronic age has influenced every segment of the automotive aftermarket—and will continue to do so for as far into the future as we can see. Whether it’s the adoption of computer-aided design and 3-D printing by builders and fabricators or consumers demanding full integration of their cars and their devices, computer-driven electronics are here to stay. The proliferation of advanced driver-assistance systems across OE vehicle platforms and increased vehicle connectivity with the Internet of Things have created enormous technical and logistical challenges for the aftermarket—and boundless opportunities for entrepreneurs looking to establish a brand presence in a rapidly evolving marketplace.

As a whole, the mobile-electronics industry did not fare well during the initial stages of the COVID-19 pandemic. Severely impacted by COVID-related manufacturing disruptions, the industry took a hard hit, with a 5% decline in sales worldwide in 2020, according to Fortune Business Insights. Still, new players enter the market on a near-weekly basis, and the increase in the number of homebound consumers in search of alternative forms of entertainment during the pandemic provided additional opportunities for recovery and growth. As supply-chain issues are resolved over time, the global automotive electronics market is projected to reach $382 billion by 2026, with a 7.3% compound annual growth rate over the 2020–2026 time period, according to a recent study from Allied Global Insights.

For this article, we consulted more than a dozen industry leaders. What follows is a summation of their insights, edited for clarity and length.

The State of the Market: Healthy, With Headwinds

Demand for vehicle safety products continues to remain steady, both from Tier-1 suppliers and the aftermarket. This EchoMaster analog high-density backup camera from AAMP Global offers standard 720p resolution.

Overall, our panel of experts agreed that the market has returned to a relatively normal condition, though challenges loom for the near future.

“Challenging, ever-changing and rewarding,” said Darryl Miya, brand manager for Scosche Industries. Miya cited inflation, the end of stimulus funding and further COVID disruptions to the supply chain as near-term concerns, adding that “hopefully things will start to smooth out by the third quarter.”

“The supply chain is what’s hurting most companies, and now it’s twice as difficult because of the increase in consumer demand,” said Dennis Hopper, executive vice president at VAIS Technology. “COVID shut down workplaces, and people had extra money to spend. That helped feed the extra demand.”

Recent geopolitical unrest is also likely to weigh on the industry for the near term.

“We’re a global economy now, so when something happens such as what’s going on in Ukraine, it can send everything into a tailspin,” said Robin McNeal, national sales manager for Nakamichi Car Audio. “For us, Russia is a huge customer, and I suspect that side of the business may soon come to a grinding halt.”

Still, some companies have managed to weather the storm with continued strong sales.

“Business the last two years has been very strong, with unprecedented growth,” said Brian Sherman, vice president of product and marketing for Maxxsonics USA. “We feel that it’s starting to level off, but we still see certain opportunities for growth.”

Major Trends and Developments

Vehicle owners looking to upgrade their vehicles to include blind-spot monitoring have options available via the aftermarket. This Brandmotion radar-based RDBS camera system includes cross-traffic detection.

The mobile-electronics industry serves a number of diverse customer bases. Not surprisingly, our panel of experts saw growth in different markets.

“A lot of the manufacturers on the mobile side have been turning their attention to the marine and powersports markets,” Hopper said. “It seems like just about everyone has product now for side-by-sides. Motorcycle audio has been steady for a few years, and while car audio still exists, the new niche segments such as powersports have been growing the most rapidly.”

McNeal also cited the marine market as a strong sales driver: “That’s an up-and-coming market for us.”

Marine electronics alone comprise a $5.25 global market, according to a recent survey from Maximize Market Research Ltd.

“And don’t forget golf carts and three wheelers,” Hopper continued. “Across the country, you have a lot of gated communities where people drive them all over the place, and some of them have massive audio systems in them.”

McNeal saw strong consumer demand for software installations.

“It’s all about Apple Car Play and Android Auto—and, of course, those are the two biggest users of the microchips that everyone’s struggling to get,” he said. “Now, unless you’re just looking to fill a hole in your dash, that’s what everyone is after. With the cost of new and used vehicles so high, people are holding onto their vehicles longer, and eventually they’ll want to bring that new technology into the current vehicle.”

Sherman pointed to the powersports market as a rapidly expanding sector, and to increasing consumer interest in high-powered, high-end mobile audio systems. But Sherman and McNeal both pointed to a shortage of skilled labor as an issue that has forced the market to adapt.

“The complexity of new vehicles and access to a pool of qualified installers has certainly presented challenges,” Sherman said. “We’ve responded by developing products that are easier to install for people with even basic mechanical knowledge. Products like our MB Quart Jeep audio kits are just one example.”

The pandemic and its related disruptions forced many companies to ramp up their investments in digital marketing and social media, in particular.

“We’ve always been very pro-digital,” Hopper said. “We have a very active Facebook page with a lot of users, and we do our own email blasts based off information we capture from dealers that buy from us. Add Google SEO, and that would be the top three digital marketing platforms for us.”

Sherman said that social media is a key part of his company’s marketing strategy.

“It still represents the most cost-effective and efficient way to get info on new products out to our distributors, dealers and consumers,” he said.

A mobile-friendly website that’s capable of conducting transactions is an increasingly important tool in the digital toolbox as well.

“Purchases made from smartphones increase each year,” Miya noted.

Challenges and Opportunities

App-based connectivity is another fast-growing mobile electronics segment. Voyo’s Scan Pro diagnostic scan tool can monitor a car’s activity in real time and forward the information to the owner’s mechanic.

Most of our experts agreed that the overall economy and consumer demand were likely to slow down later in the year. Citing unstable geopolitical issues, Hopper felt that the market “might get a little wavy” in the near term, though supply-chain problems may gradually resolve themselves by the third quarter of 2022.

Advances in OE electronics systems will also pose challenges to certain elements of the market.

“The radio segment of the 12-volt category will suffer because the OE manufacturers are really pushing to put bigger screens in cars,” Hopper said. “You have to integrate a lot more of the car into that bigger screen, so I think you’re going to see more dealers on the aftermarket side say, ‘Let’s just leave the head unit alone, go with DSP, and put the emphasis on better amps and better speakers.’”

McNeal also mentioned rising fuel prices as a near-term concern.

“When the price at the pump goes up, it has never been kind to our industry,” he said.

Still, opportunities abound, particularly among newer OE platforms that appeal to enthusiasts and modifiers.

“The expansion of enthusiast-owned vehicles presents a great deal of opportunity,” Sherman said. “Newer platforms like the Bronco, along with existing platforms from Jeep, will create a lot of opportunity for audio upgrades to customers who will readily embrace the chance to improve their vehicles.” On the other hand, “significant challenges remain on the supply chain and logistics side, with freight costs at an all-time high.”

Miya additionally pointed to the growth in used-vehicle sales as an opportunity for the aftermarket as consumers look to retrofit and/or upgrade their vehicles’ factory electronics packages.

“I don’t think we’ll see big growth this year, but as we get into 2023, I think we’ll see business returning to pre-COVID levels,” Hopper concluded.

SEMA News—June 2022

BUSINESS

Going Carbon-Neutral

Why the Race Is on to Achieve Ever-More-Ambitious Standards

By Mike Imlay

In July 2021, the European Union (EU) published its European Climate Law, setting a goal of full carbon neutrality by 2050 and a more immediate 55%-reduction target for greenhouse gases by 2030. The legislation has broad implications for any company with a presence in an EU-member state. Photo courtesy: Leonid Andronov/Shutterstock.com

Carbon neutrality is a hot-button issue laden with political overtones and media hype—a true third rail if there ever was one for many in the automotive industry. Yet a growing number of brands are announcing green-friendly initiatives aimed at sustainability and carbon reduction. What’s driving this trend? And more importantly, how are industry businesses future-proofing themselves against what may be an unstoppable seismic shift?

First, understanding the decarbonization movement entails unjumbling the jargon. Carbon neutrality or “net-zero carbon dioxide (CO2) emissions” is defined as striking a balance between human-caused CO2 emissions and their removal from the global environment. This can involve “carbon offsets,” which represent greenhouse gas (GHG) reductions, or “carbon storage” increases through such practices as land preservation or tree-planting initiatives. These offsets compensate for emissions generated elsewhere.

Then, of course, there are offset credits—transferable instruments representing a single metric ton of CO2 or other GHGs. They can be sold and traded between businesses to reach decarbonization goals.

Finally, there’s sustainability—a concept that the United Nations World Commission on Environment and Development defines as actions that maintain natural resources so that future generations can “live an equal, if not better, way of life.” This is where renewable energy and materials sources factor into the environmental equation.

Such concepts may sound like PR catchwords, but they reflect global economic realities that—all arguments about climate change aside—may soon impact businesses at every level.

Global Forces

Interviewed by Speed Sport’s Ralph Sheheen at the 2022 Performance Racing Industry Trade Show opening breakfast, Indianapolis Motor Speedway owner Roger Penske (pictured) reaffirmed Penske Corporation’s commitment to carbon neutrality, an issue gaining serious traction in the racing and performance community. Photo courtesy: Performance Racing Industry

In July 2021, the European Union (EU) promulgated Regulation 2021/1119 of the European Parliament and Council. The rule established a framework for achieving “climate neutrality” throughout the EU by 2050, with intermediate carbon neutrality targets in 2030 and 2040. The legislation calls for aggressive measures to reduce GHG emissions and balance any remaining emissions through offsetting measures to achieve a net-zero emissions balance.

Although the United States has not enacted similar legislation, the Biden Administration launched a “whole-of-government process” in April 2021 through the president’s National Climate Task Force to establish a 50% to 52% GHG reduction from 2005 emissions levels throughout the American economy. (Of course, states such as California continue to enact variously stringent measures to regulate carbon emissions on their own.)

In the automotive realm, these initiatives have become market drivers for new research and development, supply-chain decisions, and even venture capital investments. Decarbonization measures are now sweeping the industry, from OEMs to specialty-equipment suppliers. Consider a few recent news items:

In June 2020, Ford Motor Company released its annual “Sustainability Report” highlighting its efforts to achieve carbon neutrality by 2050. At the time, Ford claimed to be “the only full line U.S. automaker committed to doing its part to reduce CO2 emissions in line with the Paris Climate Agreement and working with California for stronger greenhouse gas standards.”

To meet its goals, the automaker promised sweeping changes to its vehicles, supply base and company facilities. Ford additionally touted its then-$11.5 billion investment in vehicle electrification as well as its progress toward powering all of its manufacturing plants via “100% locally sourced renewable energy” by 2035.

Not to be outdone, General Motors (GM) announced the following year that it would become carbon-neutral in its global products and operations by 2040, centered on what it called “science-based targets.” While much of the media focused on the automaker’s vehicle electrification goals, the company also announced a major initiative for powering all of its U.S. facilities with renewable energy by 2030, heavy investments in carbon offsets and credits, and a commitment to emissions reductions throughout its supply chains.

Further underscoring the industry race toward decarbonization through vehicle electrification, Nissan has partnered with NASA to develop a new electric vehicle (EV) battery that will be safer, lighter and quicker to charge than today’s versions. The all-solid-state units will replace lithium-ion batteries, avoiding the use of rare metals. Toyota, Volkswagen, GM and Ford are also reportedly working on similar projects.

Perhaps due to their world-wide nature and close alignments with major OEMs, motorsports organizations and brands also appear to be racing alongside automakers to embrace carbon neutrality. Two years ago, when famed Penske Corporation Chairman and CEO Roger Penske acquired the Indianapolis Motor Speedway, he personally toured the facilities looking to improve the fan experience. But he had an equal eye out for reducing the speedway’s carbon footprint.

“I think we spent the next two weeks walking every restroom, every refreshment stand, up in every stand,” he related onstage to Speed Sport’s Ralph Sheheen during the 2021 Performance Racing Industry (PRI) Trade Show opening breakfast in Indianapolis. “When you look at the whole footprint, we have 1,000 acres, and we’re looking at sustainability. We’re certainly looking at decarbonization, and I think that has really popped to the top of the list when you look at a 10-year plan. We’d like to be carbon-neutral at the track as we go forward for the next several years.”

Penske added that Penske Corporation is scrutinizing everything from the use of paper towels in restrooms to the environmentally safe disposal of tires. The corporation and Team Penske also announced last year that they would enter a “strategic collaboration” with Shell Oil to address emissions across supply chains, including warehouse facilities, vehicle and fleet technologies, and transportation routes. In addition, the two companies are aiming to reduce the carbon footprint of the NTT IndyCar series.

Motorsports suppliers are following suit. VP Racing Fuels is one of several fuel and lubrication brands adding synthetic biofuels to its race-fuel portfolio. The company also continues to test new formulations to meet oncoming renewable fuel requirements set by multiple race series, including Formula 1 and the International Motor Sports Association.

“Many race series, mainly from Europe, require carbon-friendly fuels to help reduce the overall CO2 footprint that race events bring,” explained Mike Saeger, VP Racing Fuel’s senior marketing coordinator. “As a world leader in fuel tech, our OEM and race series partners look to VP to deliver solutions with sustainable components to meet their environmental goals while maintaining performance.”

Saeger added that supplying these types of fuels has its own set of challenges: Biofuels can cost up to four times the amount of fossil fuels. Developing fuels that are chemically equivalent to their fossil counterparts in terms of power and performance also requires much R&D. Moreover, the fuels’ advanced renewable components aren’t easily sourced, especially in the United States.

“Long term, VP is working with other technology groups to produce its own advanced renewable feedstocks to further reduce our CO2 footprint,” Saeger said.

While they may not always tout a green message, numerous specialty-automotive companies are also innovating solutions that can drastically cut or eliminate vehicle emissions. Sometimes the carbon reduction is an intentional goal, and sometimes it’s a happy byproduct of increasing a vehicle’s efficiency and performance. More often, however, it’s a combination of all the above.

Saving the ICE

At the 2021 SEMA Show, Arrington Performance CEO Mike Copeland revealed a stunning full-custom ‘48 Chevrolet pickup with a twist: The vehicle runs on an internal-combustion engine (inset) fueled by green hydrogen. Copeland envisions the technology as a viable, scalable alternative to electrification.

Amid the rising demands for EVs and synthetic fuels, Arrington Performance CEO Mike Copeland believes that the industry may be overlooking something more elemental—namely hydrogen. At the 2021 SEMA Show, Copeland unveiled a fully custom, hydrogen-powered ’48 Chevrolet pickup with a twist. The vehicle utilized a 6.2L Chevrolet LS engine adapted for green hydrogen—an internal-
combustion engine (ICE) technology that he believes offers a viable alternative to other emerging technologies.

“I think we’re the only people that are making a true carbon-neutral package, because electricity is not always clean to generate,” Copeland said. “In our case, we take green hydrogen, use it in our truck, extract the energy, and create transportation with zero carbon footprint.”

Green hydrogen is produced using solar power and other zero-GHG processes and can be manufactured on-site virtually anywhere. Unlike fuel cells, which pass hydrogen through a membrane to create the electricity to propel a vehicle, Arrington’s method follows a traditional ICE design.

Copeland added that the Chevy’s 3kg tank fills in 3 min.—a fraction of the time it takes an EV to charge. Moreover, his engine’s range and towing capacity are more akin to those of a gasoline engine.

Although it’s a pricey alternative now, Copeland believes that scaling production will drop costs exponentially. Arrington’s immediate goal is to supply vehicle, taxi, bus and governmental fleets to bring this about. That will allow Arrington to offer affordable “hydrogen crate engine” solutions to builders. The company is presently working toward California Air Resources Board certification and is in negotiation with a fleet owner who’s considering the conversion of up to 200 buses.

“Today, there are around 280 million registered internal-combustion, gasoline-powered vehicles in the United States,” Copeland said. “None of those can be converted to a hybrid, an electric, a fuel cell or any of that without basically scrapping the vehicle and starting over. With our process, we save those 90 million vehicles. All of those can be converted to run on hydrogen and save the scrapping of many millions of vehicles.”

Copeland knows that hydrogen has its naysayers—many people mistakenly think “Hindenburg” when they think hydrogen. However, he says that the technology is a safe alternative for preserving older and classic ICE vehicles in the face of ever-stricter emissions laws.

“I’m a hot rodder,” he explained. “I’ve got a bunch of hot rods. I’ve got a number of classic cars. I want those to be around for the next generation.”

Increasingly, specialty-equipment companies are proving that decarbonization doesn’t mean sacrificing performance or vehicle efficiency. Just the opposite. Still, a green message can be a hard sell with the aftermarket audience.

Pareto Point Industries CEO Bob Hammer and President Adan Reinosa, P.E., formed their company in 1999 to develop and market the Mini Bypass Oil Filter Booster system, which filters oil at the superfine level of 2 microns. The system bolts on to an existing filter, diverting a small oil flow through a denser filter. By saving wear and tear while extending engine longevity, the unit helps reduce a vehicle’s carbon emissions over a prolonged lifecycle.
The invention even garnered a SEMA Show New Product Award and multiple SEMA Show Global Media Awards in the early ’00s.

Pareto has since introduced the TopDog-V 5-micron fiber. However, said Hammer, “It turns out that the market is a little bit more niche than we would have liked. It seems that a lot of the people with an environmental mindset are not necessarily SEMA or automotive-aftermarket people.”

Pareto has seen some success with off-road consumers, who appreciate the system’s benefits in a harsh and gritty environment. But Hammer believes that governmental fleets striving to meet stringent carbon-reduction goals may prove more lucrative. Pareto now has an agreement with the Donaldson Company to further develop its technologies and pursue new applications and markets.

Future-Proofing

VP Racing Fuels is among the many motorsports suppliers helping racing organizations and teams hit their environmental targets. The company continues to test and develop new synthetic biofuels to conform to upcoming race series requirements, including for Formula 1 and the International Motor Sports Association. Photo courtesy: VP Racing Fuels

Aside from environmental concerns, sheer market forces will likely move industry businesses large and small toward carbon-neutral operations, despite the perceived cost and disruption.

“For sure, changes in energy infrastructure or energy production require investment, but they will pay off, especially in areas with high energy prices, rising CO2 costs or high volatility,” said Rainer Berghausen, head of Trumpf Group communications. An industrial machine manufacturer headquartered in Ditzingen, Germany, the company has joined the Science Based Targets Initiative, committing to carbon reductions in accordance with the Paris 1.5C-degree target.

This goal, which Berghausen conceded is “very ambitious,” means that Trumpf will, among other things, improve the energy efficiency of its buildings, produce its own green energy through solar power, and electrify its car fleet.

“Emissions that we can’t yet avoid are being compensated with high-quality projects,” he added. “These measures already make our own production carbon neutral today. In parallel, we have started to tackle emissions in our up- and downstream value chain as well.

“Additionally, these investments will prevent losing orders. Demands from customers and society in that area are increasing, so even the smallest companies in industrial supply chains will have to deal with their emissions sooner or later. We expect that companies that ignore this transition will face some challenges in keeping up their customer relations.”

Trumpf is equally committed to refining its machine products to help its customers meet their own decarbonization goals, putting more effort into decreasing machine energy consumption while making more efficient use of materials. The company also offers alternative machine technologies such as additive manufacturing.

“This directly benefits the emissions in our customers’ production,” Berghausen said. “The demand for this is definitely growing.” He further noted that even small operations can begin now to future-proof against the inevitable market realities to come.

“First, gain an overview of where the energy—the power, gas, oil, air—in your company actually goes,” he advised. “Identify the largest energy user and start with that. A lot of energy efficiency measures require just a little more attention, like turning off machines when they are not needed, fixing leakages, keeping doors closed, or fully utilizing metal sheets, etc. Also, switching the energy supply to renewables instead of energy from fossil fuels is quick and relatively easy to implement.”