SEMA News—April 2014

BUSINESS
By Steve Campbell

SEMA INDICATORS

A Look at Areas of Interest for Specialty-Equipment Companies

	At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

For this story, we have drawn upon information from a variety of sources that, taken together, may suggest business trends. SEMA’s trade show data, new-vehicle sales, educational tendencies and other indicators are some of these often-overlooked sources. What follows is a look at some of the areas of interest that may show where business is headed in the near future.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

SEMA Show Buyer, Exhibitor Behavior

For professionals in the automotive specialty-equipment industry, the SEMA Show data can be a goldmine of trends. It’s everything from a barometer of economic health and an indicator of the hottest vehicle segments to a portent of rising product types and a guide to vehicles that are most likely to be accessorized.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests. The totals were well above those from the 2012 Show, which was itself a banner trade event. The industry is showing record-level support of the Show, and the buyers are there to do business.

This year, we saw significantly more buyers make purchases or place orders than at the 2012 SEMA Show. Still, the majority do their research at the trade event and then buy later in the year. About 87% of the buyers in attendance said that they planned to make a purchase from an exhibitor in the next 12 months, and more than half of all buyers at the Show said that they would purchase a product that is either new to the market or at least new to their company. About three-quarters of those who made a purchase at the Show said that they took advantage of SEMA Show specials or discounts in doing so. They also said that they planned to share the information they gathered at the Show with more business contacts than they had in past years.

The single most scanned product at the SEMA Show’s New Products Showcase was the Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA. Second most popular was the 3in1 Truck Ties from PipeMaster Tools, and the OBDLink LX Bluetooth from ScanTool.net was the third most scanned.

Buyers said that product displays were the biggest stimulus in getting them to visit exhibitor booths, and nearly all of them said that they were influenced to attend the SEMA Show by their desire to see new products. Though most said that they come to the Show with a list of companies to see, 88% said that simply walking by an exhibitor’s booth was what drew them in. More than half were also influenced to visit exhibitors by displays in the New Products Showcase and by listings in the SEMA Show Directory.

Objectives for exhibitors center around generating leads, networking with existing customers and increasing awareness of their companies within the industry. A substantially larger number of exhibitors said that they had more than 500 visitors this year than in 2012.

Exhibitors also said that they were taking more orders on average than they did at the 2012 Show, and 44% of Show sales were to new customers. Exhibitors were also more optimistic about the number of future sales and orders than they were in 2012, with many estimating 100 or more post-Show sales.

One method of gauging interest in new products is the number of scans by buyers and media at the New Products Showcase. Electronic scanners that read and record information from bar codes on each Showcase display allow users to quickly and efficiently gather information. At the 2013 SEMA Show, products in the Exterior category received the greatest number of scans, Performance Street products were second, Off-Road products were third and Performance Racing Products were fourth. The top 10 most-scanned products were:

• Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA
• 3in1 Truck Ties from PipeMaster Tools
• OBDLink LX Bluetooth from ScanTool.net
• JDM Series Gauges from Prosport Gauges Inc.
• Arc Bar from Bulldog LED Lighting
• OBDLink MX Wi-Fi from ScanTool.net
• FAST EZ-EFI 2.0 Engine Control System, Base Kit Packaging from COMP Performance Group
• SmartNav 5 from App-Tronics LLC
• Espresso Veloce from Espresso Veloce
• OE Fit Third Brake Light Rearview Camera from Auto-i (Canada) Corp.

New-Vehicle Sales

For most of 2013, new-vehicle sales were an economic bright spot as they continued to rebound, but they hit a bit of a stumbling block in December and early in 2014. Even though the 2013 full-year numbers were strongly positive, delivering gains that took the industry over 15 million units sold for the first time since 2007, GM and Toyota missed their December forecasts, and Ford had only a moderate gain. Every major automaker reported year-over-year improvements compared with 2012, and Chrysler even bucked the trend to perform well in December. But a February 10, 2014, story in Automotive News was headlined “Clouds on the Auto Sales Horizon.”

“Supplies of unsold vehicles have ballooned to the highest level since the recession,” the story’s lead said, “and U.S. sales growth has slowed significantly in the past five months. It’s an ominous combination that could mean a return of bigger discounts and lower profit margins throughout 2014.”

While bad weather may have been at least partly to blame, the Automotive News report quoted Morgan Stanley analyst Adam Jonas as fearing that the market may be shifting.

“The industry stands at a crossroads,” the Jonas quote read. “We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to, making financial willingness to lend and credit availability more important than ever.”

Still, the succession of nasty winter storms that froze much of the Midwest, the Southeast and the Eastern seaboard undoubtedly put a crimp on the public’s willingness to go shopping. The weather forced many consumers to stay inside and also hit them in the pocketbook as the cost of home heating escalated.

	The Ford F-Series took the top sales slot for 2013 with 713,960 units. The Chevrolet Silverado was second at 480,414, and the Toyota Camry was third with 408,261. However, Automotive News reported that vehicle inventories are building significantly, which may not bode well for the industry.

Auto manufacturers, dealers and specialty-equipment companies will have to keep a close eye on sales figures as the year progresses and the weather becomes less of a factor. For 2013, these were the top 10 best sellers, according to WardsAuto:

• Ford F-Series—713,960
• Chevrolet Silverado—480,414
• Toyota Camry—408,261
• Honda Accord—365,986
• RAM Pickup—344,772
• Honda Civic—334,805
• Nissan Altima—320,723
• Honda CR-V—303,827
• Ford Escape—295,993
• Ford Fusion—295,280

Measuring Sessions

SEMA’s Measuring Sessions programs may be seen as an adjunct to new-vehicle sales data. Manufacturing companies attend these sessions, which allow SEMA-member manufacturing companies to use both electronic and traditional tools to measure for new parts and accessories and to check component fitments on near-production prototypes of new vehicle releases. The sessions provide the attending manufacturers with advance product-development opportunities before the vehicles hit showroom floors.

In 2013, more than 300 companies took advantage of measuring sessions, which are generally held for vehicles that are projected to be the most popular and best-selling models. The top three categories of member interest were suspension, engine and interior components, and the three most requested vehicles were the Chevrolet Silverado, the Toyota Tundra and the Scion FR-S.

Measuring-session vehicles also appear frequently at the SEMA Show each year, reflecting the manufacturers’ beliefs that products for those vehicles will be popular with buyers and, eventually, consumers. For the 2013 SEMA Show, vehicle models that were the subject of measuring sessions and subsequently showed up at the SEMA Show in significant numbers included the Chevy Silverado, the Acura RLX, the Mazda3, the Ford TransitConnect, the Jeep Cherokee, the Ram 1500, the Honda Civic, the Ford Focus and the Ford Fiesta, among others. In fact, almost all of the vehicles that SEMA offers sessions for end up at the Show because of the tendency to feature popular models that offer the possibility of product sales.

Spy Photos

SEMA also tries to keep abreast of pre-release vehicles that are under development. Through the services of outside spy photographers, the association offers readers of SEMA News and SEMA eNews preview images of developmental vehicles captured during test runs. The number of clicks on these images in eNews may indicate the level of industry interest in the vehicle and, by extrapolation, an indicator of how popular the vehicle may become.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). The most popular overall category was performance cars.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). Perhaps indicative of an enthusiast bias, the performance car category was the most popular, including not only the Charger and Corvette but also the ’15 Dodge Challenger, with 8,264 clicks. Next in overall category popularity were light trucks, including a top-three list that featured the ’15 Nissan Titan (5,004), the ’15 Ford Raptor (4,878) and the ’14 GMC Sierra Denali (4,551).

The most clicked luxury vehicles included the ’15 Porsche Cayenne (2,293), the Lamborghini Aventador (2,164) and the U.S. Spec Hyundai Equus (2,083). In addition to the Expedition/Navigator, the top SUV selections included the ’14 Acura MDX (2,494) and the ’15 Audi Q7 (2,469).

Education

SEMA offers a variety of educational opportunities through the SEMA Education Institute (SEI). SEI encompasses all of SEMA’s educational efforts, including both online opportunities, such as webinars and the eLearning center (www.sema.org/sei/library-courses) and live events such as Education Days at the SEMA Show and the SEMA Product Development Conference. The most popular topics at these offerings provide some insights about where the industry currently places its emphasis.

The most popular seminars during Education Days were those focused on marketing, business management, customer service and sales. The single best-attended session at the 2013 SEMA Show was “Are You a Boss or Leader?”

SEMA members are requesting more educational sessions on automotive technology. The best-attended SEMA webinars deal with customer service, sales and online marketing.

Attendees are asked to suggest future topics and provide feedback on topics of interest in all SEMA post-event evaluations. Typically, the responses are reflective of the session topic being presented, but there appears to be a specific trend for more sessions on automotive technology. That notion has been buttressed in recent SEMA-member commentaries such as those contained in this issue’s “Truck, SUV & Off-Road Gear” (see p. 24) listings, and this issue contains an extensive look at the topic featuring many insights from SEMA Vice President of Vehicle Technology John Waraniak (see p. 84).

The best-attended webinar topics deal with customer service, sales and online marketing. The single most downloaded webinar for 2013 was “The Psychology of Search and The Find-ability Formula: What Is Really in the Mind of the Online Searcher?” And a recent SEMA Town Hall in Sacramento, California, revealed that online marketing continues to be an area of high interest for the industry.

SEMA also gathers information from the industry in various types of surveys. Recent findings show that the most challenging issues facing the industry continue to be hiring qualified employees, concerns about the economy, increasing costs and regulatory issues.

SEMA’s councils and networks also provide feedback that is used to develop relevant educational topics. In recent months, for instance, the Motorsports Parts Manufacturers Council (MPMC) took on minimum advertised pricing (MAP) issues through a seminar entitled “Debunking the Myths: Resale Price and MAP Policies to Control Resale Price Erosion.” The Professional Restylers Organization (PRO) helped develop sessions for the Auto Dealer Track at the SEMA Show and sponsored a webinar from the Automotive Industry Action Group about working with top auto manufacturers.

SEMA Membership

SEMA has 26 member categories that range from manufacturers and retailers to warehouse distributors and publishers. Since 2009, the restorer category has seen the largest growth, with a 48% increase. On the other hand, the number of truck accessory retailers declined by about 43% during the same period, but that category had been decimated during the recession and is now trending upward again.

The top reasons member companies give for joining SEMA are the association’s business resources and solutions, access to its industry communications and its market research. The most popular programs among all members are SEMA’s freight savings, now administered through UPS, and the CarCareONE credit-card program through GE Capital Retail Bank.

While no one can precisely predict the future of the industry, we hope that these indicators at least serve as food for thought within member companies and for executives charged with future planning.

SEMA News—April 2014

BUSINESS
By Steve Campbell

SEMA INDICATORS

A Look at Areas of Interest for Specialty-Equipment Companies

	At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

For this story, we have drawn upon information from a variety of sources that, taken together, may suggest business trends. SEMA’s trade show data, new-vehicle sales, educational tendencies and other indicators are some of these often-overlooked sources. What follows is a look at some of the areas of interest that may show where business is headed in the near future.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

SEMA Show Buyer, Exhibitor Behavior

For professionals in the automotive specialty-equipment industry, the SEMA Show data can be a goldmine of trends. It’s everything from a barometer of economic health and an indicator of the hottest vehicle segments to a portent of rising product types and a guide to vehicles that are most likely to be accessorized.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests. The totals were well above those from the 2012 Show, which was itself a banner trade event. The industry is showing record-level support of the Show, and the buyers are there to do business.

This year, we saw significantly more buyers make purchases or place orders than at the 2012 SEMA Show. Still, the majority do their research at the trade event and then buy later in the year. About 87% of the buyers in attendance said that they planned to make a purchase from an exhibitor in the next 12 months, and more than half of all buyers at the Show said that they would purchase a product that is either new to the market or at least new to their company. About three-quarters of those who made a purchase at the Show said that they took advantage of SEMA Show specials or discounts in doing so. They also said that they planned to share the information they gathered at the Show with more business contacts than they had in past years.

The single most scanned product at the SEMA Show’s New Products Showcase was the Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA. Second most popular was the 3in1 Truck Ties from PipeMaster Tools, and the OBDLink LX Bluetooth from ScanTool.net was the third most scanned.

Buyers said that product displays were the biggest stimulus in getting them to visit exhibitor booths, and nearly all of them said that they were influenced to attend the SEMA Show by their desire to see new products. Though most said that they come to the Show with a list of companies to see, 88% said that simply walking by an exhibitor’s booth was what drew them in. More than half were also influenced to visit exhibitors by displays in the New Products Showcase and by listings in the SEMA Show Directory.

Objectives for exhibitors center around generating leads, networking with existing customers and increasing awareness of their companies within the industry. A substantially larger number of exhibitors said that they had more than 500 visitors this year than in 2012.

Exhibitors also said that they were taking more orders on average than they did at the 2012 Show, and 44% of Show sales were to new customers. Exhibitors were also more optimistic about the number of future sales and orders than they were in 2012, with many estimating 100 or more post-Show sales.

One method of gauging interest in new products is the number of scans by buyers and media at the New Products Showcase. Electronic scanners that read and record information from bar codes on each Showcase display allow users to quickly and efficiently gather information. At the 2013 SEMA Show, products in the Exterior category received the greatest number of scans, Performance Street products were second, Off-Road products were third and Performance Racing Products were fourth. The top 10 most-scanned products were:

• Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA
• 3in1 Truck Ties from PipeMaster Tools
• OBDLink LX Bluetooth from ScanTool.net
• JDM Series Gauges from Prosport Gauges Inc.
• Arc Bar from Bulldog LED Lighting
• OBDLink MX Wi-Fi from ScanTool.net
• FAST EZ-EFI 2.0 Engine Control System, Base Kit Packaging from COMP Performance Group
• SmartNav 5 from App-Tronics LLC
• Espresso Veloce from Espresso Veloce
• OE Fit Third Brake Light Rearview Camera from Auto-i (Canada) Corp.

New-Vehicle Sales

For most of 2013, new-vehicle sales were an economic bright spot as they continued to rebound, but they hit a bit of a stumbling block in December and early in 2014. Even though the 2013 full-year numbers were strongly positive, delivering gains that took the industry over 15 million units sold for the first time since 2007, GM and Toyota missed their December forecasts, and Ford had only a moderate gain. Every major automaker reported year-over-year improvements compared with 2012, and Chrysler even bucked the trend to perform well in December. But a February 10, 2014, story in Automotive News was headlined “Clouds on the Auto Sales Horizon.”

“Supplies of unsold vehicles have ballooned to the highest level since the recession,” the story’s lead said, “and U.S. sales growth has slowed significantly in the past five months. It’s an ominous combination that could mean a return of bigger discounts and lower profit margins throughout 2014.”

While bad weather may have been at least partly to blame, the Automotive News report quoted Morgan Stanley analyst Adam Jonas as fearing that the market may be shifting.

“The industry stands at a crossroads,” the Jonas quote read. “We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to, making financial willingness to lend and credit availability more important than ever.”

Still, the succession of nasty winter storms that froze much of the Midwest, the Southeast and the Eastern seaboard undoubtedly put a crimp on the public’s willingness to go shopping. The weather forced many consumers to stay inside and also hit them in the pocketbook as the cost of home heating escalated.

	The Ford F-Series took the top sales slot for 2013 with 713,960 units. The Chevrolet Silverado was second at 480,414, and the Toyota Camry was third with 408,261. However, Automotive News reported that vehicle inventories are building significantly, which may not bode well for the industry.

Auto manufacturers, dealers and specialty-equipment companies will have to keep a close eye on sales figures as the year progresses and the weather becomes less of a factor. For 2013, these were the top 10 best sellers, according to WardsAuto:

• Ford F-Series—713,960
• Chevrolet Silverado—480,414
• Toyota Camry—408,261
• Honda Accord—365,986
• RAM Pickup—344,772
• Honda Civic—334,805
• Nissan Altima—320,723
• Honda CR-V—303,827
• Ford Escape—295,993
• Ford Fusion—295,280

Measuring Sessions

SEMA’s Measuring Sessions programs may be seen as an adjunct to new-vehicle sales data. Manufacturing companies attend these sessions, which allow SEMA-member manufacturing companies to use both electronic and traditional tools to measure for new parts and accessories and to check component fitments on near-production prototypes of new vehicle releases. The sessions provide the attending manufacturers with advance product-development opportunities before the vehicles hit showroom floors.

In 2013, more than 300 companies took advantage of measuring sessions, which are generally held for vehicles that are projected to be the most popular and best-selling models. The top three categories of member interest were suspension, engine and interior components, and the three most requested vehicles were the Chevrolet Silverado, the Toyota Tundra and the Scion FR-S.

Measuring-session vehicles also appear frequently at the SEMA Show each year, reflecting the manufacturers’ beliefs that products for those vehicles will be popular with buyers and, eventually, consumers. For the 2013 SEMA Show, vehicle models that were the subject of measuring sessions and subsequently showed up at the SEMA Show in significant numbers included the Chevy Silverado, the Acura RLX, the Mazda3, the Ford TransitConnect, the Jeep Cherokee, the Ram 1500, the Honda Civic, the Ford Focus and the Ford Fiesta, among others. In fact, almost all of the vehicles that SEMA offers sessions for end up at the Show because of the tendency to feature popular models that offer the possibility of product sales.

Spy Photos

SEMA also tries to keep abreast of pre-release vehicles that are under development. Through the services of outside spy photographers, the association offers readers of SEMA News and SEMA eNews preview images of developmental vehicles captured during test runs. The number of clicks on these images in eNews may indicate the level of industry interest in the vehicle and, by extrapolation, an indicator of how popular the vehicle may become.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). The most popular overall category was performance cars.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). Perhaps indicative of an enthusiast bias, the performance car category was the most popular, including not only the Charger and Corvette but also the ’15 Dodge Challenger, with 8,264 clicks. Next in overall category popularity were light trucks, including a top-three list that featured the ’15 Nissan Titan (5,004), the ’15 Ford Raptor (4,878) and the ’14 GMC Sierra Denali (4,551).

The most clicked luxury vehicles included the ’15 Porsche Cayenne (2,293), the Lamborghini Aventador (2,164) and the U.S. Spec Hyundai Equus (2,083). In addition to the Expedition/Navigator, the top SUV selections included the ’14 Acura MDX (2,494) and the ’15 Audi Q7 (2,469).

Education

SEMA offers a variety of educational opportunities through the SEMA Education Institute (SEI). SEI encompasses all of SEMA’s educational efforts, including both online opportunities, such as webinars and the eLearning center (www.sema.org/sei/library-courses) and live events such as Education Days at the SEMA Show and the SEMA Product Development Conference. The most popular topics at these offerings provide some insights about where the industry currently places its emphasis.

The most popular seminars during Education Days were those focused on marketing, business management, customer service and sales. The single best-attended session at the 2013 SEMA Show was “Are You a Boss or Leader?”

SEMA members are requesting more educational sessions on automotive technology. The best-attended SEMA webinars deal with customer service, sales and online marketing.

Attendees are asked to suggest future topics and provide feedback on topics of interest in all SEMA post-event evaluations. Typically, the responses are reflective of the session topic being presented, but there appears to be a specific trend for more sessions on automotive technology. That notion has been buttressed in recent SEMA-member commentaries such as those contained in this issue’s “Truck, SUV & Off-Road Gear” (see p. 24) listings, and this issue contains an extensive look at the topic featuring many insights from SEMA Vice President of Vehicle Technology John Waraniak (see p. 84).

The best-attended webinar topics deal with customer service, sales and online marketing. The single most downloaded webinar for 2013 was “The Psychology of Search and The Find-ability Formula: What Is Really in the Mind of the Online Searcher?” And a recent SEMA Town Hall in Sacramento, California, revealed that online marketing continues to be an area of high interest for the industry.

SEMA also gathers information from the industry in various types of surveys. Recent findings show that the most challenging issues facing the industry continue to be hiring qualified employees, concerns about the economy, increasing costs and regulatory issues.

SEMA’s councils and networks also provide feedback that is used to develop relevant educational topics. In recent months, for instance, the Motorsports Parts Manufacturers Council (MPMC) took on minimum advertised pricing (MAP) issues through a seminar entitled “Debunking the Myths: Resale Price and MAP Policies to Control Resale Price Erosion.” The Professional Restylers Organization (PRO) helped develop sessions for the Auto Dealer Track at the SEMA Show and sponsored a webinar from the Automotive Industry Action Group about working with top auto manufacturers.

SEMA Membership

SEMA has 26 member categories that range from manufacturers and retailers to warehouse distributors and publishers. Since 2009, the restorer category has seen the largest growth, with a 48% increase. On the other hand, the number of truck accessory retailers declined by about 43% during the same period, but that category had been decimated during the recession and is now trending upward again.

The top reasons member companies give for joining SEMA are the association’s business resources and solutions, access to its industry communications and its market research. The most popular programs among all members are SEMA’s freight savings, now administered through UPS, and the CarCareONE credit-card program through GE Capital Retail Bank.

While no one can precisely predict the future of the industry, we hope that these indicators at least serve as food for thought within member companies and for executives charged with future planning.

SEMA News—April 2014

BUSINESS
By Steve Campbell

SEMA INDICATORS

A Look at Areas of Interest for Specialty-Equipment Companies

	At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

For this story, we have drawn upon information from a variety of sources that, taken together, may suggest business trends. SEMA’s trade show data, new-vehicle sales, educational tendencies and other indicators are some of these often-overlooked sources. What follows is a look at some of the areas of interest that may show where business is headed in the near future.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

SEMA Show Buyer, Exhibitor Behavior

For professionals in the automotive specialty-equipment industry, the SEMA Show data can be a goldmine of trends. It’s everything from a barometer of economic health and an indicator of the hottest vehicle segments to a portent of rising product types and a guide to vehicles that are most likely to be accessorized.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests. The totals were well above those from the 2012 Show, which was itself a banner trade event. The industry is showing record-level support of the Show, and the buyers are there to do business.

This year, we saw significantly more buyers make purchases or place orders than at the 2012 SEMA Show. Still, the majority do their research at the trade event and then buy later in the year. About 87% of the buyers in attendance said that they planned to make a purchase from an exhibitor in the next 12 months, and more than half of all buyers at the Show said that they would purchase a product that is either new to the market or at least new to their company. About three-quarters of those who made a purchase at the Show said that they took advantage of SEMA Show specials or discounts in doing so. They also said that they planned to share the information they gathered at the Show with more business contacts than they had in past years.

The single most scanned product at the SEMA Show’s New Products Showcase was the Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA. Second most popular was the 3in1 Truck Ties from PipeMaster Tools, and the OBDLink LX Bluetooth from ScanTool.net was the third most scanned.

Buyers said that product displays were the biggest stimulus in getting them to visit exhibitor booths, and nearly all of them said that they were influenced to attend the SEMA Show by their desire to see new products. Though most said that they come to the Show with a list of companies to see, 88% said that simply walking by an exhibitor’s booth was what drew them in. More than half were also influenced to visit exhibitors by displays in the New Products Showcase and by listings in the SEMA Show Directory.

Objectives for exhibitors center around generating leads, networking with existing customers and increasing awareness of their companies within the industry. A substantially larger number of exhibitors said that they had more than 500 visitors this year than in 2012.

Exhibitors also said that they were taking more orders on average than they did at the 2012 Show, and 44% of Show sales were to new customers. Exhibitors were also more optimistic about the number of future sales and orders than they were in 2012, with many estimating 100 or more post-Show sales.

One method of gauging interest in new products is the number of scans by buyers and media at the New Products Showcase. Electronic scanners that read and record information from bar codes on each Showcase display allow users to quickly and efficiently gather information. At the 2013 SEMA Show, products in the Exterior category received the greatest number of scans, Performance Street products were second, Off-Road products were third and Performance Racing Products were fourth. The top 10 most-scanned products were:

• Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA
• 3in1 Truck Ties from PipeMaster Tools
• OBDLink LX Bluetooth from ScanTool.net
• JDM Series Gauges from Prosport Gauges Inc.
• Arc Bar from Bulldog LED Lighting
• OBDLink MX Wi-Fi from ScanTool.net
• FAST EZ-EFI 2.0 Engine Control System, Base Kit Packaging from COMP Performance Group
• SmartNav 5 from App-Tronics LLC
• Espresso Veloce from Espresso Veloce
• OE Fit Third Brake Light Rearview Camera from Auto-i (Canada) Corp.

New-Vehicle Sales

For most of 2013, new-vehicle sales were an economic bright spot as they continued to rebound, but they hit a bit of a stumbling block in December and early in 2014. Even though the 2013 full-year numbers were strongly positive, delivering gains that took the industry over 15 million units sold for the first time since 2007, GM and Toyota missed their December forecasts, and Ford had only a moderate gain. Every major automaker reported year-over-year improvements compared with 2012, and Chrysler even bucked the trend to perform well in December. But a February 10, 2014, story in Automotive News was headlined “Clouds on the Auto Sales Horizon.”

“Supplies of unsold vehicles have ballooned to the highest level since the recession,” the story’s lead said, “and U.S. sales growth has slowed significantly in the past five months. It’s an ominous combination that could mean a return of bigger discounts and lower profit margins throughout 2014.”

While bad weather may have been at least partly to blame, the Automotive News report quoted Morgan Stanley analyst Adam Jonas as fearing that the market may be shifting.

“The industry stands at a crossroads,” the Jonas quote read. “We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to, making financial willingness to lend and credit availability more important than ever.”

Still, the succession of nasty winter storms that froze much of the Midwest, the Southeast and the Eastern seaboard undoubtedly put a crimp on the public’s willingness to go shopping. The weather forced many consumers to stay inside and also hit them in the pocketbook as the cost of home heating escalated.

	The Ford F-Series took the top sales slot for 2013 with 713,960 units. The Chevrolet Silverado was second at 480,414, and the Toyota Camry was third with 408,261. However, Automotive News reported that vehicle inventories are building significantly, which may not bode well for the industry.

Auto manufacturers, dealers and specialty-equipment companies will have to keep a close eye on sales figures as the year progresses and the weather becomes less of a factor. For 2013, these were the top 10 best sellers, according to WardsAuto:

• Ford F-Series—713,960
• Chevrolet Silverado—480,414
• Toyota Camry—408,261
• Honda Accord—365,986
• RAM Pickup—344,772
• Honda Civic—334,805
• Nissan Altima—320,723
• Honda CR-V—303,827
• Ford Escape—295,993
• Ford Fusion—295,280

Measuring Sessions

SEMA’s Measuring Sessions programs may be seen as an adjunct to new-vehicle sales data. Manufacturing companies attend these sessions, which allow SEMA-member manufacturing companies to use both electronic and traditional tools to measure for new parts and accessories and to check component fitments on near-production prototypes of new vehicle releases. The sessions provide the attending manufacturers with advance product-development opportunities before the vehicles hit showroom floors.

In 2013, more than 300 companies took advantage of measuring sessions, which are generally held for vehicles that are projected to be the most popular and best-selling models. The top three categories of member interest were suspension, engine and interior components, and the three most requested vehicles were the Chevrolet Silverado, the Toyota Tundra and the Scion FR-S.

Measuring-session vehicles also appear frequently at the SEMA Show each year, reflecting the manufacturers’ beliefs that products for those vehicles will be popular with buyers and, eventually, consumers. For the 2013 SEMA Show, vehicle models that were the subject of measuring sessions and subsequently showed up at the SEMA Show in significant numbers included the Chevy Silverado, the Acura RLX, the Mazda3, the Ford TransitConnect, the Jeep Cherokee, the Ram 1500, the Honda Civic, the Ford Focus and the Ford Fiesta, among others. In fact, almost all of the vehicles that SEMA offers sessions for end up at the Show because of the tendency to feature popular models that offer the possibility of product sales.

Spy Photos

SEMA also tries to keep abreast of pre-release vehicles that are under development. Through the services of outside spy photographers, the association offers readers of SEMA News and SEMA eNews preview images of developmental vehicles captured during test runs. The number of clicks on these images in eNews may indicate the level of industry interest in the vehicle and, by extrapolation, an indicator of how popular the vehicle may become.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). The most popular overall category was performance cars.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). Perhaps indicative of an enthusiast bias, the performance car category was the most popular, including not only the Charger and Corvette but also the ’15 Dodge Challenger, with 8,264 clicks. Next in overall category popularity were light trucks, including a top-three list that featured the ’15 Nissan Titan (5,004), the ’15 Ford Raptor (4,878) and the ’14 GMC Sierra Denali (4,551).

The most clicked luxury vehicles included the ’15 Porsche Cayenne (2,293), the Lamborghini Aventador (2,164) and the U.S. Spec Hyundai Equus (2,083). In addition to the Expedition/Navigator, the top SUV selections included the ’14 Acura MDX (2,494) and the ’15 Audi Q7 (2,469).

Education

SEMA offers a variety of educational opportunities through the SEMA Education Institute (SEI). SEI encompasses all of SEMA’s educational efforts, including both online opportunities, such as webinars and the eLearning center (www.sema.org/sei/library-courses) and live events such as Education Days at the SEMA Show and the SEMA Product Development Conference. The most popular topics at these offerings provide some insights about where the industry currently places its emphasis.

The most popular seminars during Education Days were those focused on marketing, business management, customer service and sales. The single best-attended session at the 2013 SEMA Show was “Are You a Boss or Leader?”

SEMA members are requesting more educational sessions on automotive technology. The best-attended SEMA webinars deal with customer service, sales and online marketing.

Attendees are asked to suggest future topics and provide feedback on topics of interest in all SEMA post-event evaluations. Typically, the responses are reflective of the session topic being presented, but there appears to be a specific trend for more sessions on automotive technology. That notion has been buttressed in recent SEMA-member commentaries such as those contained in this issue’s “Truck, SUV & Off-Road Gear” (see p. 24) listings, and this issue contains an extensive look at the topic featuring many insights from SEMA Vice President of Vehicle Technology John Waraniak (see p. 84).

The best-attended webinar topics deal with customer service, sales and online marketing. The single most downloaded webinar for 2013 was “The Psychology of Search and The Find-ability Formula: What Is Really in the Mind of the Online Searcher?” And a recent SEMA Town Hall in Sacramento, California, revealed that online marketing continues to be an area of high interest for the industry.

SEMA also gathers information from the industry in various types of surveys. Recent findings show that the most challenging issues facing the industry continue to be hiring qualified employees, concerns about the economy, increasing costs and regulatory issues.

SEMA’s councils and networks also provide feedback that is used to develop relevant educational topics. In recent months, for instance, the Motorsports Parts Manufacturers Council (MPMC) took on minimum advertised pricing (MAP) issues through a seminar entitled “Debunking the Myths: Resale Price and MAP Policies to Control Resale Price Erosion.” The Professional Restylers Organization (PRO) helped develop sessions for the Auto Dealer Track at the SEMA Show and sponsored a webinar from the Automotive Industry Action Group about working with top auto manufacturers.

SEMA Membership

SEMA has 26 member categories that range from manufacturers and retailers to warehouse distributors and publishers. Since 2009, the restorer category has seen the largest growth, with a 48% increase. On the other hand, the number of truck accessory retailers declined by about 43% during the same period, but that category had been decimated during the recession and is now trending upward again.

The top reasons member companies give for joining SEMA are the association’s business resources and solutions, access to its industry communications and its market research. The most popular programs among all members are SEMA’s freight savings, now administered through UPS, and the CarCareONE credit-card program through GE Capital Retail Bank.

While no one can precisely predict the future of the industry, we hope that these indicators at least serve as food for thought within member companies and for executives charged with future planning.

SEMA News—April 2014

BUSINESS
By Steve Campbell

SEMA INDICATORS

A Look at Areas of Interest for Specialty-Equipment Companies

	At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

For this story, we have drawn upon information from a variety of sources that, taken together, may suggest business trends. SEMA’s trade show data, new-vehicle sales, educational tendencies and other indicators are some of these often-overlooked sources. What follows is a look at some of the areas of interest that may show where business is headed in the near future.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests.

SEMA Show Buyer, Exhibitor Behavior

For professionals in the automotive specialty-equipment industry, the SEMA Show data can be a goldmine of trends. It’s everything from a barometer of economic health and an indicator of the hottest vehicle segments to a portent of rising product types and a guide to vehicles that are most likely to be accessorized.

At the 2013 SEMA Show, more than 60,000 buyers joined nearly 50,000 exhibit personnel as well as thousands of media and other visitors to bring total attendance to more than 140,000 industry professionals and their guests. The totals were well above those from the 2012 Show, which was itself a banner trade event. The industry is showing record-level support of the Show, and the buyers are there to do business.

This year, we saw significantly more buyers make purchases or place orders than at the 2012 SEMA Show. Still, the majority do their research at the trade event and then buy later in the year. About 87% of the buyers in attendance said that they planned to make a purchase from an exhibitor in the next 12 months, and more than half of all buyers at the Show said that they would purchase a product that is either new to the market or at least new to their company. About three-quarters of those who made a purchase at the Show said that they took advantage of SEMA Show specials or discounts in doing so. They also said that they planned to share the information they gathered at the Show with more business contacts than they had in past years.

The single most scanned product at the SEMA Show’s New Products Showcase was the Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA. Second most popular was the 3in1 Truck Ties from PipeMaster Tools, and the OBDLink LX Bluetooth from ScanTool.net was the third most scanned.

Buyers said that product displays were the biggest stimulus in getting them to visit exhibitor booths, and nearly all of them said that they were influenced to attend the SEMA Show by their desire to see new products. Though most said that they come to the Show with a list of companies to see, 88% said that simply walking by an exhibitor’s booth was what drew them in. More than half were also influenced to visit exhibitors by displays in the New Products Showcase and by listings in the SEMA Show Directory.

Objectives for exhibitors center around generating leads, networking with existing customers and increasing awareness of their companies within the industry. A substantially larger number of exhibitors said that they had more than 500 visitors this year than in 2012.

Exhibitors also said that they were taking more orders on average than they did at the 2012 Show, and 44% of Show sales were to new customers. Exhibitors were also more optimistic about the number of future sales and orders than they were in 2012, with many estimating 100 or more post-Show sales.

One method of gauging interest in new products is the number of scans by buyers and media at the New Products Showcase. Electronic scanners that read and record information from bar codes on each Showcase display allow users to quickly and efficiently gather information. At the 2013 SEMA Show, products in the Exterior category received the greatest number of scans, Performance Street products were second, Off-Road products were third and Performance Racing Products were fourth. The top 10 most-scanned products were:

• Utility Light Bar With Two Rechargeable LED Flashlights from AnzoUSA
• 3in1 Truck Ties from PipeMaster Tools
• OBDLink LX Bluetooth from ScanTool.net
• JDM Series Gauges from Prosport Gauges Inc.
• Arc Bar from Bulldog LED Lighting
• OBDLink MX Wi-Fi from ScanTool.net
• FAST EZ-EFI 2.0 Engine Control System, Base Kit Packaging from COMP Performance Group
• SmartNav 5 from App-Tronics LLC
• Espresso Veloce from Espresso Veloce
• OE Fit Third Brake Light Rearview Camera from Auto-i (Canada) Corp.

New-Vehicle Sales

For most of 2013, new-vehicle sales were an economic bright spot as they continued to rebound, but they hit a bit of a stumbling block in December and early in 2014. Even though the 2013 full-year numbers were strongly positive, delivering gains that took the industry over 15 million units sold for the first time since 2007, GM and Toyota missed their December forecasts, and Ford had only a moderate gain. Every major automaker reported year-over-year improvements compared with 2012, and Chrysler even bucked the trend to perform well in December. But a February 10, 2014, story in Automotive News was headlined “Clouds on the Auto Sales Horizon.”

“Supplies of unsold vehicles have ballooned to the highest level since the recession,” the story’s lead said, “and U.S. sales growth has slowed significantly in the past five months. It’s an ominous combination that could mean a return of bigger discounts and lower profit margins throughout 2014.”

While bad weather may have been at least partly to blame, the Automotive News report quoted Morgan Stanley analyst Adam Jonas as fearing that the market may be shifting.

“The industry stands at a crossroads,” the Jonas quote read. “We really think the best of the U.S. auto replacement cycle is over. The incremental buyer is moving from someone who needs to replace their car to one who just wants to, making financial willingness to lend and credit availability more important than ever.”

Still, the succession of nasty winter storms that froze much of the Midwest, the Southeast and the Eastern seaboard undoubtedly put a crimp on the public’s willingness to go shopping. The weather forced many consumers to stay inside and also hit them in the pocketbook as the cost of home heating escalated.

	The Ford F-Series took the top sales slot for 2013 with 713,960 units. The Chevrolet Silverado was second at 480,414, and the Toyota Camry was third with 408,261. However, Automotive News reported that vehicle inventories are building significantly, which may not bode well for the industry.

Auto manufacturers, dealers and specialty-equipment companies will have to keep a close eye on sales figures as the year progresses and the weather becomes less of a factor. For 2013, these were the top 10 best sellers, according to WardsAuto:

• Ford F-Series—713,960
• Chevrolet Silverado—480,414
• Toyota Camry—408,261
• Honda Accord—365,986
• RAM Pickup—344,772
• Honda Civic—334,805
• Nissan Altima—320,723
• Honda CR-V—303,827
• Ford Escape—295,993
• Ford Fusion—295,280

Measuring Sessions

SEMA’s Measuring Sessions programs may be seen as an adjunct to new-vehicle sales data. Manufacturing companies attend these sessions, which allow SEMA-member manufacturing companies to use both electronic and traditional tools to measure for new parts and accessories and to check component fitments on near-production prototypes of new vehicle releases. The sessions provide the attending manufacturers with advance product-development opportunities before the vehicles hit showroom floors.

In 2013, more than 300 companies took advantage of measuring sessions, which are generally held for vehicles that are projected to be the most popular and best-selling models. The top three categories of member interest were suspension, engine and interior components, and the three most requested vehicles were the Chevrolet Silverado, the Toyota Tundra and the Scion FR-S.

Measuring-session vehicles also appear frequently at the SEMA Show each year, reflecting the manufacturers’ beliefs that products for those vehicles will be popular with buyers and, eventually, consumers. For the 2013 SEMA Show, vehicle models that were the subject of measuring sessions and subsequently showed up at the SEMA Show in significant numbers included the Chevy Silverado, the Acura RLX, the Mazda3, the Ford TransitConnect, the Jeep Cherokee, the Ram 1500, the Honda Civic, the Ford Focus and the Ford Fiesta, among others. In fact, almost all of the vehicles that SEMA offers sessions for end up at the Show because of the tendency to feature popular models that offer the possibility of product sales.

Spy Photos

SEMA also tries to keep abreast of pre-release vehicles that are under development. Through the services of outside spy photographers, the association offers readers of SEMA News and SEMA eNews preview images of developmental vehicles captured during test runs. The number of clicks on these images in eNews may indicate the level of industry interest in the vehicle and, by extrapolation, an indicator of how popular the vehicle may become.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). The most popular overall category was performance cars.

The three most clicked spy photos for 2013 were of the ’15 Ford Expedition and Lincoln Navigator (13,576), the ’15 Dodge Charger SRT8 (13,009) and the ’14 C7 Corvette (10,560). Perhaps indicative of an enthusiast bias, the performance car category was the most popular, including not only the Charger and Corvette but also the ’15 Dodge Challenger, with 8,264 clicks. Next in overall category popularity were light trucks, including a top-three list that featured the ’15 Nissan Titan (5,004), the ’15 Ford Raptor (4,878) and the ’14 GMC Sierra Denali (4,551).

The most clicked luxury vehicles included the ’15 Porsche Cayenne (2,293), the Lamborghini Aventador (2,164) and the U.S. Spec Hyundai Equus (2,083). In addition to the Expedition/Navigator, the top SUV selections included the ’14 Acura MDX (2,494) and the ’15 Audi Q7 (2,469).

Education

SEMA offers a variety of educational opportunities through the SEMA Education Institute (SEI). SEI encompasses all of SEMA’s educational efforts, including both online opportunities, such as webinars and the eLearning center (www.sema.org/sei/library-courses) and live events such as Education Days at the SEMA Show and the SEMA Product Development Conference. The most popular topics at these offerings provide some insights about where the industry currently places its emphasis.

The most popular seminars during Education Days were those focused on marketing, business management, customer service and sales. The single best-attended session at the 2013 SEMA Show was “Are You a Boss or Leader?”

SEMA members are requesting more educational sessions on automotive technology. The best-attended SEMA webinars deal with customer service, sales and online marketing.

Attendees are asked to suggest future topics and provide feedback on topics of interest in all SEMA post-event evaluations. Typically, the responses are reflective of the session topic being presented, but there appears to be a specific trend for more sessions on automotive technology. That notion has been buttressed in recent SEMA-member commentaries such as those contained in this issue’s “Truck, SUV & Off-Road Gear” (see p. 24) listings, and this issue contains an extensive look at the topic featuring many insights from SEMA Vice President of Vehicle Technology John Waraniak (see p. 84).

The best-attended webinar topics deal with customer service, sales and online marketing. The single most downloaded webinar for 2013 was “The Psychology of Search and The Find-ability Formula: What Is Really in the Mind of the Online Searcher?” And a recent SEMA Town Hall in Sacramento, California, revealed that online marketing continues to be an area of high interest for the industry.

SEMA also gathers information from the industry in various types of surveys. Recent findings show that the most challenging issues facing the industry continue to be hiring qualified employees, concerns about the economy, increasing costs and regulatory issues.

SEMA’s councils and networks also provide feedback that is used to develop relevant educational topics. In recent months, for instance, the Motorsports Parts Manufacturers Council (MPMC) took on minimum advertised pricing (MAP) issues through a seminar entitled “Debunking the Myths: Resale Price and MAP Policies to Control Resale Price Erosion.” The Professional Restylers Organization (PRO) helped develop sessions for the Auto Dealer Track at the SEMA Show and sponsored a webinar from the Automotive Industry Action Group about working with top auto manufacturers.

SEMA Membership

SEMA has 26 member categories that range from manufacturers and retailers to warehouse distributors and publishers. Since 2009, the restorer category has seen the largest growth, with a 48% increase. On the other hand, the number of truck accessory retailers declined by about 43% during the same period, but that category had been decimated during the recession and is now trending upward again.

The top reasons member companies give for joining SEMA are the association’s business resources and solutions, access to its industry communications and its market research. The most popular programs among all members are SEMA’s freight savings, now administered through UPS, and the CarCareONE credit-card program through GE Capital Retail Bank.

While no one can precisely predict the future of the industry, we hope that these indicators at least serve as food for thought within member companies and for executives charged with future planning.

SEMA News—April 2014

BUSINESS
By Mike Imlay

A Look At The Racing and Performance Powertrain Market

	Making motor adjustments at Ed Pink Engines in Van Nuys, California. Established in 1960, the engine crafter supplies a wide range of powertrain solutions.

Racers, street performance enthusiasts, four wheelers, restorers and boat owners all need engines, which means that, at some point, they tap into the performance niche occupied by engine builders and, more often than not, the specialty shops that install replacement engines. It’s a segment composed of small businesses, not-so-small businesses and by OEM crate-engine distributors—all offering powertrain solutions.

In fact, use of ready-made drop-in crate engines with known horsepower and torque specifications has become a driving force in the marketplace in recent years. In particular, the GM LS series has become a favored choice of racers and other enthusiasts. This has engendered some controversy among engine customizers, creating opportunities for some and complicating business for others. To be sure, not every engine supplier is opposed to the crate-engine trend. Some would even argue that the development of parts for such engines—especially the LS series—has picked up and provided fresh opportunities for individual manufacturers in the racing and performance arena. To gain a greater handle on this trend, SEMA News asked a variety of sources for their perspectives on the current state of the marketplace and the nature of customer needs as well as ways engine suppliers and installers are responding to a growing demand for crate units.

Race-Driven Demand

It’s not that the average car builder is necessarily opting to drop a ready-made LS engine into his project vehicle at a higher rate than those put together by traditional engine builders. It’s that those who race have become increasingly mandated to do so. And this is proving unsettling to engine builders for both motorsporting as well as financial reasons.

As Speedway Illustrated Publisher Karl Fredrickson explained, sanctioning bodies began the push toward crate engines a little over a decade ago. The basic idea was to limit horsepower, give every racer the same engine advantage and ultimately lower costs for entry-level and low-budget competitors.

An LS crate unit by Blueprint Engines in Kearney, Nebraska. Blueprint owner Norris Marshall sees a generational aspect to the LS crate market, adding that demand for the units hasn’t hurt the company’s sales of other engine types.

“It’s inexpensive, and it seemed like the golden egg for motorsports because now we can tell these ‘confused’ racers, ‘Look, you have exactly what everyone else has, and now you’re on your way to stardom because only your talent shows, and it’s unaffected by your wallet,’” Fredrickson explained. “We’re always looking to do two things in racing, and that’s to lower the cost and level the playing field. I don’t know why we seek those things. Especially with the crate engine, we’ve gone as far in the wrong direction as we can imagine.”

Many engine builders share that opinion.

“Perhaps what troubles me most is the perception that the OE can achieve something in racing that the aftermarket cannot,” he said. “That’s not only wrong, but I also find it insulting. I believe in the aftermarket. I think our group is far more capable than some sanctioning bodies are giving it credit for.”

Dakota Engines owner Jim Beyer echoed Fredrickson’s sentiments.

“I’m not a fan of crate motors,” he said. “I understand [that racers] can buy such motors for around $5,400, put the motor in and go racing, but what they don’t tell you on a crate motor is that they want you to buy a certain header to get some power, a certain carburetor and certain fuel to make these crate engines run better and get more power and performance. The fuel is quite expensive; it’s $12 per gallon or more, depending on where you buy it.”

A large portion of Beyer’s customers are racers and performance-car builders in the tri-state area of Montana, South Dakota and Minnesota. The company dates to the early ’80s, and Beyer has seen many changes in the marketplace over the years.

“When we first started way back when, you could build a pretty fair modified engine for around $2,500 to $3,000,” he explained. “By today’s standards, you’re looking at anywhere from $12,000 to $20,000 for a very good modified engine, so the cost has gone up considerably. The knowledge needed has also changed considerably—there’s so much new stuff out on the market now such as camshafts and items like that. There’s just a lot of better stuff than there used to be years ago.

“Right where we’re located is a lot of Wissota racing, so we do a lot of those types of builds—a lot of A mods, some late-model stuff, a lot of street cars with stock components that you have to use. We do all kinds of builds. We also have people in this area who are into mud runners and truck pullers, so we do quite a few of those. The LS crate engine has affected our business a little bit. We have some customers who have bought crate engines where otherwise they might have bought an IMC motor from us.”

Impacting the Small Guy?

Beyer sees the LS crate engine taking more of a bite out of the smaller engine builder trying to eke out a living. He also sees an impact on broader manufacturers of aftermarket parts who face sales drops to traditional engine builders. However, he mostly objects to the LS for its impact on the local racer.

	The design table at Ed Pink Engines. The trick to survival for smaller engine builders may be the cultivation of a wider, more upscale street customer base while broadening their reputations and custom motor repertoire.

“If I have a customer who breaks down Friday night and needs some engine work, he can call me on the cell and I’ll meet him at the shop that night and see if I can get the engine back together—whatever it needs to get him back racing Saturday. With a crate [OE manufacturer], that’s not going to happen,” he explained.

Looking toward the future, Beyer foresees bigger trouble ahead for traditional engine builders as more and more sanctioning bodies mandate crate engines.

“There’s no doubt the crate engine is going to hurt us, and it’s going to hurt other engine builders more than us,” he said. “It depends upon where they’re located. I understand that the sanctioning bodies want to get the racing cheaper for the racer, but there are other ways they could have done this.”

For one, he said, sanctioning bodies could’ve mandated restrictor plates and given weight breaks.

“It wouldn’t hurt the engine builder, and it would’ve been cheaper,” he said. “You can buy a restrictor plate or have one made for around $125 to $130. It works in NASCAR—they have a restrictor plate when you go to the big track.”

In the long run, said Beyer, crate engines can also cost a racer more than advertised, since sanctioning bodies often will not allow their rebuilding.

“Right now, they’ve got them at a very appealing price, but I can’t see that it’s going to stay that way forever,” he observed. “If something wears out, you have to buy a new [engine]. These other ones, we can freshen them up. Granted, it’s probably going to cost you around $3,000 to $4,000 to freshen them, depending upon how you took care of them. Some people take care of their stuff and don’t need that much. Other people are a little lax in repairs, oil and maintenance, and it costs a little more.”

Back at Speedway Illustrated, Fredrickson agreed with Beyer’s analysis, adding that there was always a trickle-down market for parts in racing before mandated crate engines. At that time, more experienced and successful racers often sold their older or salvaged parts to lower-level racers, helping the broader aftermarket.

“If a crate engine is inserted anywhere in that chain, the wheels come off,” Fredrickson said. “If I can’t sell my old stuff, I can’t buy your new stuff.”

In any event, faced with the growing demand for LS engines, Beyer is working harder than ever to forge close relationships with his customers to maintain a competitive edge.

“We sponsor the local track, a lot of local racing and a lot of local drivers,” he said. “There are so many customers that we can’t give them a huge discount, but we do give them 5% or 10% off or sometimes a little more to help them out through the course of the year because they’re having bad luck or something. An OEM is not going to do that for you. We try to build a relationship and treat everyone not as a customer but as a good friend. We try to keep things kind of like a family.”

At Ed Pink Engines in Van Nuys, California, General Manager Frank Honsowetz also expressed strong feelings about LS crate engines.

“For sure, they’re affecting [the custom engine market],” he said. “There are some attractive packages. But if you want to have a very streetable, very drivable, big-output 572 Chevy that you want to be a 10:1 ratio compression running on pump gas but still want more than 700 hp, you’re not going to buy a crate engine.”

While conceding that a custom-built engine is “considerably more expensive,” Honsowetz noted that “if you want something different, it’s going to cost more.”

While larger, long-established engine builders, such as Ed Pink Engines, seem insulated from the trend, increasing mandates for LS crate engines by racing sanctioning bodies have some smaller builders fearing a squeeze on business.

In fact, the desire for “something different” continues to drive demand for Ed Pink engines even while smaller independent builders may be struggling against a growing onslaught of LS crate units. Established in 1960, the engine builder has garnered one of the best reputations in the industry for a wide range of powerplants.

“We don’t really have a specialty,” Honsowetz said. “We do a variety of projects—everything from design and engineering to production of prototype race engines to rebuilding a whole variety of race engines to vintage engines, some exotic collector car engines and some high-end hot-rod engines. We have everything here right now from a variable-compression Department of Energy research engine project that we’re doing machining on to a ’21 Duesenberg engine that’s going to Pebble Beach.”

Honsowetz readily admits that Ed Pink Engines may be more insulated from the growing crate-engine trend because of the company’s size, longevity, reputation and broad customer base. Still, he also believes that crate-engine economics will fail to add up for racers over time.

“If you have a spec engine formula, somebody will spend the money to make theirs better, and that raises the costs for everyone involved,” he said. “At the same time, they’ll run their engines harder, and the parts may not be as good as professional building shops will put into engines. I understand what track owners are trying to achieve, but I don’t think it really works as well as they think it does for them. Everything is cyclical. Eventually, you’ll see that the popularity of spec crate engines will probably go away, at least in the higher tiers of motorsports.”

In the end, Ed Pink Engines intends to continue doing what it has always done in the way of specialty engine building, regardless of LS crate engine trends.

“I believe we produce a modest number of engines for high-end hot-rod owners who have some discretionary money and want something better than a crate engine and want an Ed Pink engine,” Honsowetz said. “I think there’s a segment that absolutely wants an Ed Pink engine. I think there’s a segment that wants something truly unique that can’t be done by the average hot rod shop when it comes to engines. For that you have to go to a specialty engine shop.”

Another Perspective

Of course, not every aftermarket engine outfit shares a negative perspective on LS crate engines. Established in 2000, Mahle Motorsports has positioned itself as a leading supplier of forged racing pistons and rings while also offering a number of crate-engine programs.

A Ford 408 engine by Blueprint Engines. Just one of the broad varieties of crate engines available from the engine builder.

“They do well for us and the customers whom we supply,” said Mahle Sales and Marketing Manager Trey McFarland. “In terms of the LS category, our customer base is a little more well-read, understands what it’s looking for and will pay a little more for a quality part. The parts are a little more costly, but not hugely so.”

In fact, McFarland said, the LS market has become one of the company’s fastest-growing segments.

“The motor has been around over a decade now and has gone through a number
of iterations,” he observed. “We’ve had interests ranging from street performance to marine to off-road use. Motors are being transplanted into [many] different vehicles, and the scope of the engine is far-reaching.”

Despite this, McFarland noted that many still ironically view the LS as a relatively new engine, with many parts distributors seeing the segment as a niche market. Nevertheless, he emphasized that the buyer demographic “runs the gamut” from guys doing just a piston change to street rodders, drifters, performance racers and off-roaders running full-blown modified versions for their respective needs.

“That’s why, again, if a parts distributor were to let everyone know he has the parts, he could have people coming from multiple directions looking for the components,” McFarland said. “Trying to nail down a single niche that’s looking for LS parts is getting harder to do because the engine is finding its way into everything.”

		Executive Summary
		In recent years, more and more racing sanctioning bodies have called for the use of LS crate engines to level the racing playing field. An increasing number of traditional engine builders believe that this growing trend will hurt the custom engine business, if it hasn’t already. SEMA News interviews with engine shops suggest that, for now, the trend is limited to racing and budget customers in a younger demographic. Engine builders with a broad base of street customers, including older demographics with higher incomes, will likely weather the trend.

As for mandating LS packages in racing, McFarland doesn’t believe it’s necessarily a bad thing, depending upon application.

“Anything you can do to make racing more affordable is a positive, but it seems to erode once you get into it,” he asserted. “An LS-based motor is a great motor. You can drag race them. You can make some good strong horsepower out of them. But you put them into a road-racing or a circle-track application and start pushing them for long periods of time at maximum power and torque, and there are some things that need to be addressed. Once you start putting some of those components in place, the costs start coming up. The engines tend to start using themselves up. What you’ve got left is not a lot to start over—you pretty much have to start with a new motor.”

Meanwhile, in Kearney, Nebraska, Blueprint Engines has been building and supplying performance engines for more than 30 years while selling them exclusively under the Blueprint label for the last
two decades.

“We provide GM, Ford and Chrysler crate engines, from our smallest 262 all the way up to 632ci engines,” said Blueprint Engines President Shawn Sterling. “We also offer blocks, block casting and completed cylinder heads.”

Sources
Blueprint Engines 404 W. 8th St. Kearney, NE 68845 800-483-4263 www.blueprintengines.com Dakota Engines 2809 Hwy. 281 Jamestown ND 58401 701-252-2344 www.dakotaenginebuilders.com Ed Pink Engines 14612 Raymer St. Van Nuys, CA 91405 818-785-6740 www.edpink.com Mahle Motorsports 270 Rutledge Rd., Unit C Fletcher, NC 28732 888-255-1942 www.mahlemotorsports.com Speedway Illustrated 107 Elm St. Salisbury, MA 01952 978-465-9099 www.speedwayillustrated.com

Sterling said that the company has a broad customer base, including racers and other direct customers, engine builders who dress out the company’s crate engines and big catalog companies, resellers
and retailers.

“We have not seen LS engines hurt our business in any sense,” he said. “For example, in terms of the small-block Chevy, we have not seen a decrease there at all. We have seen growth. We launched our LS platform two to two and a half years ago, and we’ve just seen steady growth. It hasn’t been a detriment at all. I think it’s reaching a different segment of the market, probably the younger part. In the future, I think it will continue to grow, but I don’t know that it will be a detriment to the small-block Chevy.”

Blueprint owner Norris Marshall sees a generational aspect to LS sales as well.

“We could study a lot of human behavior, but I think people gravitate toward what the hot car was in their youth, so we sell a lot of small-block Chevrolet-variant engines to people who are well-heeled and can afford to scan their credit card and buy an engine and get their ’69–’70 Camaro or the like rebuilt,” Marshall said. “Certainly, if you look at social media and forums around the LS, it is a younger generation that has latched onto it.

“When I look at the people involved with the LS engines and the shops that have the notoriety, they’re guys that just specialize in LS engines. The run-of-the-mill guy who has been making his bread and butter off small- and big-block Chevys didn’t realize that there was some kid with a tuning program around the corner who became the LS expert and has graduated now into doing engines, having a dyno. It’s really been interesting for me to watch that, but it’s not only a different generation of customer; it’s a different generation of service provider.”

Meanwhile, Sterling has reservations about the theory that LS crate engines adversely affect the entire aftermarket parts chain.

“The parts are being sold with the engine, so I think they’re still being sold,” he said. “Instead of the engine builder buying the parts from various manufacturers and assembling the engine there, we’re buying the parts from the manufacturers and assembling the engines.”

As in any segment that is experiencing change, the powertrain marketplace is likely to see some ups and downs, some winners and some losers. Especially if sanctioning bodies continue to mandate crate engines, smaller, traditional engine builders may need to adjust to growing competition by cultivating a wider, more upscale base and providing superior customer service while broadening their engine-building repertoire.

 

SEMA News—April 2014

BUSINESS
By Mike Imlay

A Look At The Racing and Performance Powertrain Market

	Making motor adjustments at Ed Pink Engines in Van Nuys, California. Established in 1960, the engine crafter supplies a wide range of powertrain solutions.

Racers, street performance enthusiasts, four wheelers, restorers and boat owners all need engines, which means that, at some point, they tap into the performance niche occupied by engine builders and, more often than not, the specialty shops that install replacement engines. It’s a segment composed of small businesses, not-so-small businesses and by OEM crate-engine distributors—all offering powertrain solutions.

In fact, use of ready-made drop-in crate engines with known horsepower and torque specifications has become a driving force in the marketplace in recent years. In particular, the GM LS series has become a favored choice of racers and other enthusiasts. This has engendered some controversy among engine customizers, creating opportunities for some and complicating business for others. To be sure, not every engine supplier is opposed to the crate-engine trend. Some would even argue that the development of parts for such engines—especially the LS series—has picked up and provided fresh opportunities for individual manufacturers in the racing and performance arena. To gain a greater handle on this trend, SEMA News asked a variety of sources for their perspectives on the current state of the marketplace and the nature of customer needs as well as ways engine suppliers and installers are responding to a growing demand for crate units.

Race-Driven Demand

It’s not that the average car builder is necessarily opting to drop a ready-made LS engine into his project vehicle at a higher rate than those put together by traditional engine builders. It’s that those who race have become increasingly mandated to do so. And this is proving unsettling to engine builders for both motorsporting as well as financial reasons.

As Speedway Illustrated Publisher Karl Fredrickson explained, sanctioning bodies began the push toward crate engines a little over a decade ago. The basic idea was to limit horsepower, give every racer the same engine advantage and ultimately lower costs for entry-level and low-budget competitors.

An LS crate unit by Blueprint Engines in Kearney, Nebraska. Blueprint owner Norris Marshall sees a generational aspect to the LS crate market, adding that demand for the units hasn’t hurt the company’s sales of other engine types.

“It’s inexpensive, and it seemed like the golden egg for motorsports because now we can tell these ‘confused’ racers, ‘Look, you have exactly what everyone else has, and now you’re on your way to stardom because only your talent shows, and it’s unaffected by your wallet,’” Fredrickson explained. “We’re always looking to do two things in racing, and that’s to lower the cost and level the playing field. I don’t know why we seek those things. Especially with the crate engine, we’ve gone as far in the wrong direction as we can imagine.”

Many engine builders share that opinion.

“Perhaps what troubles me most is the perception that the OE can achieve something in racing that the aftermarket cannot,” he said. “That’s not only wrong, but I also find it insulting. I believe in the aftermarket. I think our group is far more capable than some sanctioning bodies are giving it credit for.”

Dakota Engines owner Jim Beyer echoed Fredrickson’s sentiments.

“I’m not a fan of crate motors,” he said. “I understand [that racers] can buy such motors for around $5,400, put the motor in and go racing, but what they don’t tell you on a crate motor is that they want you to buy a certain header to get some power, a certain carburetor and certain fuel to make these crate engines run better and get more power and performance. The fuel is quite expensive; it’s $12 per gallon or more, depending on where you buy it.”

A large portion of Beyer’s customers are racers and performance-car builders in the tri-state area of Montana, South Dakota and Minnesota. The company dates to the early ’80s, and Beyer has seen many changes in the marketplace over the years.

“When we first started way back when, you could build a pretty fair modified engine for around $2,500 to $3,000,” he explained. “By today’s standards, you’re looking at anywhere from $12,000 to $20,000 for a very good modified engine, so the cost has gone up considerably. The knowledge needed has also changed considerably—there’s so much new stuff out on the market now such as camshafts and items like that. There’s just a lot of better stuff than there used to be years ago.

“Right where we’re located is a lot of Wissota racing, so we do a lot of those types of builds—a lot of A mods, some late-model stuff, a lot of street cars with stock components that you have to use. We do all kinds of builds. We also have people in this area who are into mud runners and truck pullers, so we do quite a few of those. The LS crate engine has affected our business a little bit. We have some customers who have bought crate engines where otherwise they might have bought an IMC motor from us.”

Impacting the Small Guy?

Beyer sees the LS crate engine taking more of a bite out of the smaller engine builder trying to eke out a living. He also sees an impact on broader manufacturers of aftermarket parts who face sales drops to traditional engine builders. However, he mostly objects to the LS for its impact on the local racer.

	The design table at Ed Pink Engines. The trick to survival for smaller engine builders may be the cultivation of a wider, more upscale street customer base while broadening their reputations and custom motor repertoire.

“If I have a customer who breaks down Friday night and needs some engine work, he can call me on the cell and I’ll meet him at the shop that night and see if I can get the engine back together—whatever it needs to get him back racing Saturday. With a crate [OE manufacturer], that’s not going to happen,” he explained.

Looking toward the future, Beyer foresees bigger trouble ahead for traditional engine builders as more and more sanctioning bodies mandate crate engines.

“There’s no doubt the crate engine is going to hurt us, and it’s going to hurt other engine builders more than us,” he said. “It depends upon where they’re located. I understand that the sanctioning bodies want to get the racing cheaper for the racer, but there are other ways they could have done this.”

For one, he said, sanctioning bodies could’ve mandated restrictor plates and given weight breaks.

“It wouldn’t hurt the engine builder, and it would’ve been cheaper,” he said. “You can buy a restrictor plate or have one made for around $125 to $130. It works in NASCAR—they have a restrictor plate when you go to the big track.”

In the long run, said Beyer, crate engines can also cost a racer more than advertised, since sanctioning bodies often will not allow their rebuilding.

“Right now, they’ve got them at a very appealing price, but I can’t see that it’s going to stay that way forever,” he observed. “If something wears out, you have to buy a new [engine]. These other ones, we can freshen them up. Granted, it’s probably going to cost you around $3,000 to $4,000 to freshen them, depending upon how you took care of them. Some people take care of their stuff and don’t need that much. Other people are a little lax in repairs, oil and maintenance, and it costs a little more.”

Back at Speedway Illustrated, Fredrickson agreed with Beyer’s analysis, adding that there was always a trickle-down market for parts in racing before mandated crate engines. At that time, more experienced and successful racers often sold their older or salvaged parts to lower-level racers, helping the broader aftermarket.

“If a crate engine is inserted anywhere in that chain, the wheels come off,” Fredrickson said. “If I can’t sell my old stuff, I can’t buy your new stuff.”

In any event, faced with the growing demand for LS engines, Beyer is working harder than ever to forge close relationships with his customers to maintain a competitive edge.

“We sponsor the local track, a lot of local racing and a lot of local drivers,” he said. “There are so many customers that we can’t give them a huge discount, but we do give them 5% or 10% off or sometimes a little more to help them out through the course of the year because they’re having bad luck or something. An OEM is not going to do that for you. We try to build a relationship and treat everyone not as a customer but as a good friend. We try to keep things kind of like a family.”

At Ed Pink Engines in Van Nuys, California, General Manager Frank Honsowetz also expressed strong feelings about LS crate engines.

“For sure, they’re affecting [the custom engine market],” he said. “There are some attractive packages. But if you want to have a very streetable, very drivable, big-output 572 Chevy that you want to be a 10:1 ratio compression running on pump gas but still want more than 700 hp, you’re not going to buy a crate engine.”

While conceding that a custom-built engine is “considerably more expensive,” Honsowetz noted that “if you want something different, it’s going to cost more.”

While larger, long-established engine builders, such as Ed Pink Engines, seem insulated from the trend, increasing mandates for LS crate engines by racing sanctioning bodies have some smaller builders fearing a squeeze on business.

In fact, the desire for “something different” continues to drive demand for Ed Pink engines even while smaller independent builders may be struggling against a growing onslaught of LS crate units. Established in 1960, the engine builder has garnered one of the best reputations in the industry for a wide range of powerplants.

“We don’t really have a specialty,” Honsowetz said. “We do a variety of projects—everything from design and engineering to production of prototype race engines to rebuilding a whole variety of race engines to vintage engines, some exotic collector car engines and some high-end hot-rod engines. We have everything here right now from a variable-compression Department of Energy research engine project that we’re doing machining on to a ’21 Duesenberg engine that’s going to Pebble Beach.”

Honsowetz readily admits that Ed Pink Engines may be more insulated from the growing crate-engine trend because of the company’s size, longevity, reputation and broad customer base. Still, he also believes that crate-engine economics will fail to add up for racers over time.

“If you have a spec engine formula, somebody will spend the money to make theirs better, and that raises the costs for everyone involved,” he said. “At the same time, they’ll run their engines harder, and the parts may not be as good as professional building shops will put into engines. I understand what track owners are trying to achieve, but I don’t think it really works as well as they think it does for them. Everything is cyclical. Eventually, you’ll see that the popularity of spec crate engines will probably go away, at least in the higher tiers of motorsports.”

In the end, Ed Pink Engines intends to continue doing what it has always done in the way of specialty engine building, regardless of LS crate engine trends.

“I believe we produce a modest number of engines for high-end hot-rod owners who have some discretionary money and want something better than a crate engine and want an Ed Pink engine,” Honsowetz said. “I think there’s a segment that absolutely wants an Ed Pink engine. I think there’s a segment that wants something truly unique that can’t be done by the average hot rod shop when it comes to engines. For that you have to go to a specialty engine shop.”

Another Perspective

Of course, not every aftermarket engine outfit shares a negative perspective on LS crate engines. Established in 2000, Mahle Motorsports has positioned itself as a leading supplier of forged racing pistons and rings while also offering a number of crate-engine programs.

A Ford 408 engine by Blueprint Engines. Just one of the broad varieties of crate engines available from the engine builder.

“They do well for us and the customers whom we supply,” said Mahle Sales and Marketing Manager Trey McFarland. “In terms of the LS category, our customer base is a little more well-read, understands what it’s looking for and will pay a little more for a quality part. The parts are a little more costly, but not hugely so.”

In fact, McFarland said, the LS market has become one of the company’s fastest-growing segments.

“The motor has been around over a decade now and has gone through a number
of iterations,” he observed. “We’ve had interests ranging from street performance to marine to off-road use. Motors are being transplanted into [many] different vehicles, and the scope of the engine is far-reaching.”

Despite this, McFarland noted that many still ironically view the LS as a relatively new engine, with many parts distributors seeing the segment as a niche market. Nevertheless, he emphasized that the buyer demographic “runs the gamut” from guys doing just a piston change to street rodders, drifters, performance racers and off-roaders running full-blown modified versions for their respective needs.

“That’s why, again, if a parts distributor were to let everyone know he has the parts, he could have people coming from multiple directions looking for the components,” McFarland said. “Trying to nail down a single niche that’s looking for LS parts is getting harder to do because the engine is finding its way into everything.”

		Executive Summary
		In recent years, more and more racing sanctioning bodies have called for the use of LS crate engines to level the racing playing field. An increasing number of traditional engine builders believe that this growing trend will hurt the custom engine business, if it hasn’t already. SEMA News interviews with engine shops suggest that, for now, the trend is limited to racing and budget customers in a younger demographic. Engine builders with a broad base of street customers, including older demographics with higher incomes, will likely weather the trend.

As for mandating LS packages in racing, McFarland doesn’t believe it’s necessarily a bad thing, depending upon application.

“Anything you can do to make racing more affordable is a positive, but it seems to erode once you get into it,” he asserted. “An LS-based motor is a great motor. You can drag race them. You can make some good strong horsepower out of them. But you put them into a road-racing or a circle-track application and start pushing them for long periods of time at maximum power and torque, and there are some things that need to be addressed. Once you start putting some of those components in place, the costs start coming up. The engines tend to start using themselves up. What you’ve got left is not a lot to start over—you pretty much have to start with a new motor.”

Meanwhile, in Kearney, Nebraska, Blueprint Engines has been building and supplying performance engines for more than 30 years while selling them exclusively under the Blueprint label for the last
two decades.

“We provide GM, Ford and Chrysler crate engines, from our smallest 262 all the way up to 632ci engines,” said Blueprint Engines President Shawn Sterling. “We also offer blocks, block casting and completed cylinder heads.”

Sources
Blueprint Engines 404 W. 8th St. Kearney, NE 68845 800-483-4263 www.blueprintengines.com Dakota Engines 2809 Hwy. 281 Jamestown ND 58401 701-252-2344 www.dakotaenginebuilders.com Ed Pink Engines 14612 Raymer St. Van Nuys, CA 91405 818-785-6740 www.edpink.com Mahle Motorsports 270 Rutledge Rd., Unit C Fletcher, NC 28732 888-255-1942 www.mahlemotorsports.com Speedway Illustrated 107 Elm St. Salisbury, MA 01952 978-465-9099 www.speedwayillustrated.com

Sterling said that the company has a broad customer base, including racers and other direct customers, engine builders who dress out the company’s crate engines and big catalog companies, resellers
and retailers.

“We have not seen LS engines hurt our business in any sense,” he said. “For example, in terms of the small-block Chevy, we have not seen a decrease there at all. We have seen growth. We launched our LS platform two to two and a half years ago, and we’ve just seen steady growth. It hasn’t been a detriment at all. I think it’s reaching a different segment of the market, probably the younger part. In the future, I think it will continue to grow, but I don’t know that it will be a detriment to the small-block Chevy.”

Blueprint owner Norris Marshall sees a generational aspect to LS sales as well.

“We could study a lot of human behavior, but I think people gravitate toward what the hot car was in their youth, so we sell a lot of small-block Chevrolet-variant engines to people who are well-heeled and can afford to scan their credit card and buy an engine and get their ’69–’70 Camaro or the like rebuilt,” Marshall said. “Certainly, if you look at social media and forums around the LS, it is a younger generation that has latched onto it.

“When I look at the people involved with the LS engines and the shops that have the notoriety, they’re guys that just specialize in LS engines. The run-of-the-mill guy who has been making his bread and butter off small- and big-block Chevys didn’t realize that there was some kid with a tuning program around the corner who became the LS expert and has graduated now into doing engines, having a dyno. It’s really been interesting for me to watch that, but it’s not only a different generation of customer; it’s a different generation of service provider.”

Meanwhile, Sterling has reservations about the theory that LS crate engines adversely affect the entire aftermarket parts chain.

“The parts are being sold with the engine, so I think they’re still being sold,” he said. “Instead of the engine builder buying the parts from various manufacturers and assembling the engine there, we’re buying the parts from the manufacturers and assembling the engines.”

As in any segment that is experiencing change, the powertrain marketplace is likely to see some ups and downs, some winners and some losers. Especially if sanctioning bodies continue to mandate crate engines, smaller, traditional engine builders may need to adjust to growing competition by cultivating a wider, more upscale base and providing superior customer service while broadening their engine-building repertoire.

 

SEMA News—April 2014

BUSINESS
By Mike Imlay

A Look At The Racing and Performance Powertrain Market

	Making motor adjustments at Ed Pink Engines in Van Nuys, California. Established in 1960, the engine crafter supplies a wide range of powertrain solutions.

Racers, street performance enthusiasts, four wheelers, restorers and boat owners all need engines, which means that, at some point, they tap into the performance niche occupied by engine builders and, more often than not, the specialty shops that install replacement engines. It’s a segment composed of small businesses, not-so-small businesses and by OEM crate-engine distributors—all offering powertrain solutions.

In fact, use of ready-made drop-in crate engines with known horsepower and torque specifications has become a driving force in the marketplace in recent years. In particular, the GM LS series has become a favored choice of racers and other enthusiasts. This has engendered some controversy among engine customizers, creating opportunities for some and complicating business for others. To be sure, not every engine supplier is opposed to the crate-engine trend. Some would even argue that the development of parts for such engines—especially the LS series—has picked up and provided fresh opportunities for individual manufacturers in the racing and performance arena. To gain a greater handle on this trend, SEMA News asked a variety of sources for their perspectives on the current state of the marketplace and the nature of customer needs as well as ways engine suppliers and installers are responding to a growing demand for crate units.

Race-Driven Demand

It’s not that the average car builder is necessarily opting to drop a ready-made LS engine into his project vehicle at a higher rate than those put together by traditional engine builders. It’s that those who race have become increasingly mandated to do so. And this is proving unsettling to engine builders for both motorsporting as well as financial reasons.

As Speedway Illustrated Publisher Karl Fredrickson explained, sanctioning bodies began the push toward crate engines a little over a decade ago. The basic idea was to limit horsepower, give every racer the same engine advantage and ultimately lower costs for entry-level and low-budget competitors.

An LS crate unit by Blueprint Engines in Kearney, Nebraska. Blueprint owner Norris Marshall sees a generational aspect to the LS crate market, adding that demand for the units hasn’t hurt the company’s sales of other engine types.

“It’s inexpensive, and it seemed like the golden egg for motorsports because now we can tell these ‘confused’ racers, ‘Look, you have exactly what everyone else has, and now you’re on your way to stardom because only your talent shows, and it’s unaffected by your wallet,’” Fredrickson explained. “We’re always looking to do two things in racing, and that’s to lower the cost and level the playing field. I don’t know why we seek those things. Especially with the crate engine, we’ve gone as far in the wrong direction as we can imagine.”

Many engine builders share that opinion.

“Perhaps what troubles me most is the perception that the OE can achieve something in racing that the aftermarket cannot,” he said. “That’s not only wrong, but I also find it insulting. I believe in the aftermarket. I think our group is far more capable than some sanctioning bodies are giving it credit for.”

Dakota Engines owner Jim Beyer echoed Fredrickson’s sentiments.

“I’m not a fan of crate motors,” he said. “I understand [that racers] can buy such motors for around $5,400, put the motor in and go racing, but what they don’t tell you on a crate motor is that they want you to buy a certain header to get some power, a certain carburetor and certain fuel to make these crate engines run better and get more power and performance. The fuel is quite expensive; it’s $12 per gallon or more, depending on where you buy it.”

A large portion of Beyer’s customers are racers and performance-car builders in the tri-state area of Montana, South Dakota and Minnesota. The company dates to the early ’80s, and Beyer has seen many changes in the marketplace over the years.

“When we first started way back when, you could build a pretty fair modified engine for around $2,500 to $3,000,” he explained. “By today’s standards, you’re looking at anywhere from $12,000 to $20,000 for a very good modified engine, so the cost has gone up considerably. The knowledge needed has also changed considerably—there’s so much new stuff out on the market now such as camshafts and items like that. There’s just a lot of better stuff than there used to be years ago.

“Right where we’re located is a lot of Wissota racing, so we do a lot of those types of builds—a lot of A mods, some late-model stuff, a lot of street cars with stock components that you have to use. We do all kinds of builds. We also have people in this area who are into mud runners and truck pullers, so we do quite a few of those. The LS crate engine has affected our business a little bit. We have some customers who have bought crate engines where otherwise they might have bought an IMC motor from us.”

Impacting the Small Guy?

Beyer sees the LS crate engine taking more of a bite out of the smaller engine builder trying to eke out a living. He also sees an impact on broader manufacturers of aftermarket parts who face sales drops to traditional engine builders. However, he mostly objects to the LS for its impact on the local racer.

	The design table at Ed Pink Engines. The trick to survival for smaller engine builders may be the cultivation of a wider, more upscale street customer base while broadening their reputations and custom motor repertoire.

“If I have a customer who breaks down Friday night and needs some engine work, he can call me on the cell and I’ll meet him at the shop that night and see if I can get the engine back together—whatever it needs to get him back racing Saturday. With a crate [OE manufacturer], that’s not going to happen,” he explained.

Looking toward the future, Beyer foresees bigger trouble ahead for traditional engine builders as more and more sanctioning bodies mandate crate engines.

“There’s no doubt the crate engine is going to hurt us, and it’s going to hurt other engine builders more than us,” he said. “It depends upon where they’re located. I understand that the sanctioning bodies want to get the racing cheaper for the racer, but there are other ways they could have done this.”

For one, he said, sanctioning bodies could’ve mandated restrictor plates and given weight breaks.

“It wouldn’t hurt the engine builder, and it would’ve been cheaper,” he said. “You can buy a restrictor plate or have one made for around $125 to $130. It works in NASCAR—they have a restrictor plate when you go to the big track.”

In the long run, said Beyer, crate engines can also cost a racer more than advertised, since sanctioning bodies often will not allow their rebuilding.

“Right now, they’ve got them at a very appealing price, but I can’t see that it’s going to stay that way forever,” he observed. “If something wears out, you have to buy a new [engine]. These other ones, we can freshen them up. Granted, it’s probably going to cost you around $3,000 to $4,000 to freshen them, depending upon how you took care of them. Some people take care of their stuff and don’t need that much. Other people are a little lax in repairs, oil and maintenance, and it costs a little more.”

Back at Speedway Illustrated, Fredrickson agreed with Beyer’s analysis, adding that there was always a trickle-down market for parts in racing before mandated crate engines. At that time, more experienced and successful racers often sold their older or salvaged parts to lower-level racers, helping the broader aftermarket.

“If a crate engine is inserted anywhere in that chain, the wheels come off,” Fredrickson said. “If I can’t sell my old stuff, I can’t buy your new stuff.”

In any event, faced with the growing demand for LS engines, Beyer is working harder than ever to forge close relationships with his customers to maintain a competitive edge.

“We sponsor the local track, a lot of local racing and a lot of local drivers,” he said. “There are so many customers that we can’t give them a huge discount, but we do give them 5% or 10% off or sometimes a little more to help them out through the course of the year because they’re having bad luck or something. An OEM is not going to do that for you. We try to build a relationship and treat everyone not as a customer but as a good friend. We try to keep things kind of like a family.”

At Ed Pink Engines in Van Nuys, California, General Manager Frank Honsowetz also expressed strong feelings about LS crate engines.

“For sure, they’re affecting [the custom engine market],” he said. “There are some attractive packages. But if you want to have a very streetable, very drivable, big-output 572 Chevy that you want to be a 10:1 ratio compression running on pump gas but still want more than 700 hp, you’re not going to buy a crate engine.”

While conceding that a custom-built engine is “considerably more expensive,” Honsowetz noted that “if you want something different, it’s going to cost more.”

While larger, long-established engine builders, such as Ed Pink Engines, seem insulated from the trend, increasing mandates for LS crate engines by racing sanctioning bodies have some smaller builders fearing a squeeze on business.

In fact, the desire for “something different” continues to drive demand for Ed Pink engines even while smaller independent builders may be struggling against a growing onslaught of LS crate units. Established in 1960, the engine builder has garnered one of the best reputations in the industry for a wide range of powerplants.

“We don’t really have a specialty,” Honsowetz said. “We do a variety of projects—everything from design and engineering to production of prototype race engines to rebuilding a whole variety of race engines to vintage engines, some exotic collector car engines and some high-end hot-rod engines. We have everything here right now from a variable-compression Department of Energy research engine project that we’re doing machining on to a ’21 Duesenberg engine that’s going to Pebble Beach.”

Honsowetz readily admits that Ed Pink Engines may be more insulated from the growing crate-engine trend because of the company’s size, longevity, reputation and broad customer base. Still, he also believes that crate-engine economics will fail to add up for racers over time.

“If you have a spec engine formula, somebody will spend the money to make theirs better, and that raises the costs for everyone involved,” he said. “At the same time, they’ll run their engines harder, and the parts may not be as good as professional building shops will put into engines. I understand what track owners are trying to achieve, but I don’t think it really works as well as they think it does for them. Everything is cyclical. Eventually, you’ll see that the popularity of spec crate engines will probably go away, at least in the higher tiers of motorsports.”

In the end, Ed Pink Engines intends to continue doing what it has always done in the way of specialty engine building, regardless of LS crate engine trends.

“I believe we produce a modest number of engines for high-end hot-rod owners who have some discretionary money and want something better than a crate engine and want an Ed Pink engine,” Honsowetz said. “I think there’s a segment that absolutely wants an Ed Pink engine. I think there’s a segment that wants something truly unique that can’t be done by the average hot rod shop when it comes to engines. For that you have to go to a specialty engine shop.”

Another Perspective

Of course, not every aftermarket engine outfit shares a negative perspective on LS crate engines. Established in 2000, Mahle Motorsports has positioned itself as a leading supplier of forged racing pistons and rings while also offering a number of crate-engine programs.

A Ford 408 engine by Blueprint Engines. Just one of the broad varieties of crate engines available from the engine builder.

“They do well for us and the customers whom we supply,” said Mahle Sales and Marketing Manager Trey McFarland. “In terms of the LS category, our customer base is a little more well-read, understands what it’s looking for and will pay a little more for a quality part. The parts are a little more costly, but not hugely so.”

In fact, McFarland said, the LS market has become one of the company’s fastest-growing segments.

“The motor has been around over a decade now and has gone through a number
of iterations,” he observed. “We’ve had interests ranging from street performance to marine to off-road use. Motors are being transplanted into [many] different vehicles, and the scope of the engine is far-reaching.”

Despite this, McFarland noted that many still ironically view the LS as a relatively new engine, with many parts distributors seeing the segment as a niche market. Nevertheless, he emphasized that the buyer demographic “runs the gamut” from guys doing just a piston change to street rodders, drifters, performance racers and off-roaders running full-blown modified versions for their respective needs.

“That’s why, again, if a parts distributor were to let everyone know he has the parts, he could have people coming from multiple directions looking for the components,” McFarland said. “Trying to nail down a single niche that’s looking for LS parts is getting harder to do because the engine is finding its way into everything.”

		Executive Summary
		In recent years, more and more racing sanctioning bodies have called for the use of LS crate engines to level the racing playing field. An increasing number of traditional engine builders believe that this growing trend will hurt the custom engine business, if it hasn’t already. SEMA News interviews with engine shops suggest that, for now, the trend is limited to racing and budget customers in a younger demographic. Engine builders with a broad base of street customers, including older demographics with higher incomes, will likely weather the trend.

As for mandating LS packages in racing, McFarland doesn’t believe it’s necessarily a bad thing, depending upon application.

“Anything you can do to make racing more affordable is a positive, but it seems to erode once you get into it,” he asserted. “An LS-based motor is a great motor. You can drag race them. You can make some good strong horsepower out of them. But you put them into a road-racing or a circle-track application and start pushing them for long periods of time at maximum power and torque, and there are some things that need to be addressed. Once you start putting some of those components in place, the costs start coming up. The engines tend to start using themselves up. What you’ve got left is not a lot to start over—you pretty much have to start with a new motor.”

Meanwhile, in Kearney, Nebraska, Blueprint Engines has been building and supplying performance engines for more than 30 years while selling them exclusively under the Blueprint label for the last
two decades.

“We provide GM, Ford and Chrysler crate engines, from our smallest 262 all the way up to 632ci engines,” said Blueprint Engines President Shawn Sterling. “We also offer blocks, block casting and completed cylinder heads.”

Sources
Blueprint Engines 404 W. 8th St. Kearney, NE 68845 800-483-4263 www.blueprintengines.com Dakota Engines 2809 Hwy. 281 Jamestown ND 58401 701-252-2344 www.dakotaenginebuilders.com Ed Pink Engines 14612 Raymer St. Van Nuys, CA 91405 818-785-6740 www.edpink.com Mahle Motorsports 270 Rutledge Rd., Unit C Fletcher, NC 28732 888-255-1942 www.mahlemotorsports.com Speedway Illustrated 107 Elm St. Salisbury, MA 01952 978-465-9099 www.speedwayillustrated.com

Sterling said that the company has a broad customer base, including racers and other direct customers, engine builders who dress out the company’s crate engines and big catalog companies, resellers
and retailers.

“We have not seen LS engines hurt our business in any sense,” he said. “For example, in terms of the small-block Chevy, we have not seen a decrease there at all. We have seen growth. We launched our LS platform two to two and a half years ago, and we’ve just seen steady growth. It hasn’t been a detriment at all. I think it’s reaching a different segment of the market, probably the younger part. In the future, I think it will continue to grow, but I don’t know that it will be a detriment to the small-block Chevy.”

Blueprint owner Norris Marshall sees a generational aspect to LS sales as well.

“We could study a lot of human behavior, but I think people gravitate toward what the hot car was in their youth, so we sell a lot of small-block Chevrolet-variant engines to people who are well-heeled and can afford to scan their credit card and buy an engine and get their ’69–’70 Camaro or the like rebuilt,” Marshall said. “Certainly, if you look at social media and forums around the LS, it is a younger generation that has latched onto it.

“When I look at the people involved with the LS engines and the shops that have the notoriety, they’re guys that just specialize in LS engines. The run-of-the-mill guy who has been making his bread and butter off small- and big-block Chevys didn’t realize that there was some kid with a tuning program around the corner who became the LS expert and has graduated now into doing engines, having a dyno. It’s really been interesting for me to watch that, but it’s not only a different generation of customer; it’s a different generation of service provider.”

Meanwhile, Sterling has reservations about the theory that LS crate engines adversely affect the entire aftermarket parts chain.

“The parts are being sold with the engine, so I think they’re still being sold,” he said. “Instead of the engine builder buying the parts from various manufacturers and assembling the engine there, we’re buying the parts from the manufacturers and assembling the engines.”

As in any segment that is experiencing change, the powertrain marketplace is likely to see some ups and downs, some winners and some losers. Especially if sanctioning bodies continue to mandate crate engines, smaller, traditional engine builders may need to adjust to growing competition by cultivating a wider, more upscale base and providing superior customer service while broadening their engine-building repertoire.

 

SEMA News—April 2014

BUSINESS
By Mike Imlay

A Look At The Racing and Performance Powertrain Market

	Making motor adjustments at Ed Pink Engines in Van Nuys, California. Established in 1960, the engine crafter supplies a wide range of powertrain solutions.

Racers, street performance enthusiasts, four wheelers, restorers and boat owners all need engines, which means that, at some point, they tap into the performance niche occupied by engine builders and, more often than not, the specialty shops that install replacement engines. It’s a segment composed of small businesses, not-so-small businesses and by OEM crate-engine distributors—all offering powertrain solutions.

In fact, use of ready-made drop-in crate engines with known horsepower and torque specifications has become a driving force in the marketplace in recent years. In particular, the GM LS series has become a favored choice of racers and other enthusiasts. This has engendered some controversy among engine customizers, creating opportunities for some and complicating business for others. To be sure, not every engine supplier is opposed to the crate-engine trend. Some would even argue that the development of parts for such engines—especially the LS series—has picked up and provided fresh opportunities for individual manufacturers in the racing and performance arena. To gain a greater handle on this trend, SEMA News asked a variety of sources for their perspectives on the current state of the marketplace and the nature of customer needs as well as ways engine suppliers and installers are responding to a growing demand for crate units.

Race-Driven Demand

It’s not that the average car builder is necessarily opting to drop a ready-made LS engine into his project vehicle at a higher rate than those put together by traditional engine builders. It’s that those who race have become increasingly mandated to do so. And this is proving unsettling to engine builders for both motorsporting as well as financial reasons.

As Speedway Illustrated Publisher Karl Fredrickson explained, sanctioning bodies began the push toward crate engines a little over a decade ago. The basic idea was to limit horsepower, give every racer the same engine advantage and ultimately lower costs for entry-level and low-budget competitors.

An LS crate unit by Blueprint Engines in Kearney, Nebraska. Blueprint owner Norris Marshall sees a generational aspect to the LS crate market, adding that demand for the units hasn’t hurt the company’s sales of other engine types.

“It’s inexpensive, and it seemed like the golden egg for motorsports because now we can tell these ‘confused’ racers, ‘Look, you have exactly what everyone else has, and now you’re on your way to stardom because only your talent shows, and it’s unaffected by your wallet,’” Fredrickson explained. “We’re always looking to do two things in racing, and that’s to lower the cost and level the playing field. I don’t know why we seek those things. Especially with the crate engine, we’ve gone as far in the wrong direction as we can imagine.”

Many engine builders share that opinion.

“Perhaps what troubles me most is the perception that the OE can achieve something in racing that the aftermarket cannot,” he said. “That’s not only wrong, but I also find it insulting. I believe in the aftermarket. I think our group is far more capable than some sanctioning bodies are giving it credit for.”

Dakota Engines owner Jim Beyer echoed Fredrickson’s sentiments.

“I’m not a fan of crate motors,” he said. “I understand [that racers] can buy such motors for around $5,400, put the motor in and go racing, but what they don’t tell you on a crate motor is that they want you to buy a certain header to get some power, a certain carburetor and certain fuel to make these crate engines run better and get more power and performance. The fuel is quite expensive; it’s $12 per gallon or more, depending on where you buy it.”

A large portion of Beyer’s customers are racers and performance-car builders in the tri-state area of Montana, South Dakota and Minnesota. The company dates to the early ’80s, and Beyer has seen many changes in the marketplace over the years.

“When we first started way back when, you could build a pretty fair modified engine for around $2,500 to $3,000,” he explained. “By today’s standards, you’re looking at anywhere from $12,000 to $20,000 for a very good modified engine, so the cost has gone up considerably. The knowledge needed has also changed considerably—there’s so much new stuff out on the market now such as camshafts and items like that. There’s just a lot of better stuff than there used to be years ago.

“Right where we’re located is a lot of Wissota racing, so we do a lot of those types of builds—a lot of A mods, some late-model stuff, a lot of street cars with stock components that you have to use. We do all kinds of builds. We also have people in this area who are into mud runners and truck pullers, so we do quite a few of those. The LS crate engine has affected our business a little bit. We have some customers who have bought crate engines where otherwise they might have bought an IMC motor from us.”

Impacting the Small Guy?

Beyer sees the LS crate engine taking more of a bite out of the smaller engine builder trying to eke out a living. He also sees an impact on broader manufacturers of aftermarket parts who face sales drops to traditional engine builders. However, he mostly objects to the LS for its impact on the local racer.

	The design table at Ed Pink Engines. The trick to survival for smaller engine builders may be the cultivation of a wider, more upscale street customer base while broadening their reputations and custom motor repertoire.

“If I have a customer who breaks down Friday night and needs some engine work, he can call me on the cell and I’ll meet him at the shop that night and see if I can get the engine back together—whatever it needs to get him back racing Saturday. With a crate [OE manufacturer], that’s not going to happen,” he explained.

Looking toward the future, Beyer foresees bigger trouble ahead for traditional engine builders as more and more sanctioning bodies mandate crate engines.

“There’s no doubt the crate engine is going to hurt us, and it’s going to hurt other engine builders more than us,” he said. “It depends upon where they’re located. I understand that the sanctioning bodies want to get the racing cheaper for the racer, but there are other ways they could have done this.”

For one, he said, sanctioning bodies could’ve mandated restrictor plates and given weight breaks.

“It wouldn’t hurt the engine builder, and it would’ve been cheaper,” he said. “You can buy a restrictor plate or have one made for around $125 to $130. It works in NASCAR—they have a restrictor plate when you go to the big track.”

In the long run, said Beyer, crate engines can also cost a racer more than advertised, since sanctioning bodies often will not allow their rebuilding.

“Right now, they’ve got them at a very appealing price, but I can’t see that it’s going to stay that way forever,” he observed. “If something wears out, you have to buy a new [engine]. These other ones, we can freshen them up. Granted, it’s probably going to cost you around $3,000 to $4,000 to freshen them, depending upon how you took care of them. Some people take care of their stuff and don’t need that much. Other people are a little lax in repairs, oil and maintenance, and it costs a little more.”

Back at Speedway Illustrated, Fredrickson agreed with Beyer’s analysis, adding that there was always a trickle-down market for parts in racing before mandated crate engines. At that time, more experienced and successful racers often sold their older or salvaged parts to lower-level racers, helping the broader aftermarket.

“If a crate engine is inserted anywhere in that chain, the wheels come off,” Fredrickson said. “If I can’t sell my old stuff, I can’t buy your new stuff.”

In any event, faced with the growing demand for LS engines, Beyer is working harder than ever to forge close relationships with his customers to maintain a competitive edge.

“We sponsor the local track, a lot of local racing and a lot of local drivers,” he said. “There are so many customers that we can’t give them a huge discount, but we do give them 5% or 10% off or sometimes a little more to help them out through the course of the year because they’re having bad luck or something. An OEM is not going to do that for you. We try to build a relationship and treat everyone not as a customer but as a good friend. We try to keep things kind of like a family.”

At Ed Pink Engines in Van Nuys, California, General Manager Frank Honsowetz also expressed strong feelings about LS crate engines.

“For sure, they’re affecting [the custom engine market],” he said. “There are some attractive packages. But if you want to have a very streetable, very drivable, big-output 572 Chevy that you want to be a 10:1 ratio compression running on pump gas but still want more than 700 hp, you’re not going to buy a crate engine.”

While conceding that a custom-built engine is “considerably more expensive,” Honsowetz noted that “if you want something different, it’s going to cost more.”

While larger, long-established engine builders, such as Ed Pink Engines, seem insulated from the trend, increasing mandates for LS crate engines by racing sanctioning bodies have some smaller builders fearing a squeeze on business.

In fact, the desire for “something different” continues to drive demand for Ed Pink engines even while smaller independent builders may be struggling against a growing onslaught of LS crate units. Established in 1960, the engine builder has garnered one of the best reputations in the industry for a wide range of powerplants.

“We don’t really have a specialty,” Honsowetz said. “We do a variety of projects—everything from design and engineering to production of prototype race engines to rebuilding a whole variety of race engines to vintage engines, some exotic collector car engines and some high-end hot-rod engines. We have everything here right now from a variable-compression Department of Energy research engine project that we’re doing machining on to a ’21 Duesenberg engine that’s going to Pebble Beach.”

Honsowetz readily admits that Ed Pink Engines may be more insulated from the growing crate-engine trend because of the company’s size, longevity, reputation and broad customer base. Still, he also believes that crate-engine economics will fail to add up for racers over time.

“If you have a spec engine formula, somebody will spend the money to make theirs better, and that raises the costs for everyone involved,” he said. “At the same time, they’ll run their engines harder, and the parts may not be as good as professional building shops will put into engines. I understand what track owners are trying to achieve, but I don’t think it really works as well as they think it does for them. Everything is cyclical. Eventually, you’ll see that the popularity of spec crate engines will probably go away, at least in the higher tiers of motorsports.”

In the end, Ed Pink Engines intends to continue doing what it has always done in the way of specialty engine building, regardless of LS crate engine trends.

“I believe we produce a modest number of engines for high-end hot-rod owners who have some discretionary money and want something better than a crate engine and want an Ed Pink engine,” Honsowetz said. “I think there’s a segment that absolutely wants an Ed Pink engine. I think there’s a segment that wants something truly unique that can’t be done by the average hot rod shop when it comes to engines. For that you have to go to a specialty engine shop.”

Another Perspective

Of course, not every aftermarket engine outfit shares a negative perspective on LS crate engines. Established in 2000, Mahle Motorsports has positioned itself as a leading supplier of forged racing pistons and rings while also offering a number of crate-engine programs.

A Ford 408 engine by Blueprint Engines. Just one of the broad varieties of crate engines available from the engine builder.

“They do well for us and the customers whom we supply,” said Mahle Sales and Marketing Manager Trey McFarland. “In terms of the LS category, our customer base is a little more well-read, understands what it’s looking for and will pay a little more for a quality part. The parts are a little more costly, but not hugely so.”

In fact, McFarland said, the LS market has become one of the company’s fastest-growing segments.

“The motor has been around over a decade now and has gone through a number
of iterations,” he observed. “We’ve had interests ranging from street performance to marine to off-road use. Motors are being transplanted into [many] different vehicles, and the scope of the engine is far-reaching.”

Despite this, McFarland noted that many still ironically view the LS as a relatively new engine, with many parts distributors seeing the segment as a niche market. Nevertheless, he emphasized that the buyer demographic “runs the gamut” from guys doing just a piston change to street rodders, drifters, performance racers and off-roaders running full-blown modified versions for their respective needs.

“That’s why, again, if a parts distributor were to let everyone know he has the parts, he could have people coming from multiple directions looking for the components,” McFarland said. “Trying to nail down a single niche that’s looking for LS parts is getting harder to do because the engine is finding its way into everything.”

		Executive Summary
		In recent years, more and more racing sanctioning bodies have called for the use of LS crate engines to level the racing playing field. An increasing number of traditional engine builders believe that this growing trend will hurt the custom engine business, if it hasn’t already. SEMA News interviews with engine shops suggest that, for now, the trend is limited to racing and budget customers in a younger demographic. Engine builders with a broad base of street customers, including older demographics with higher incomes, will likely weather the trend.

As for mandating LS packages in racing, McFarland doesn’t believe it’s necessarily a bad thing, depending upon application.

“Anything you can do to make racing more affordable is a positive, but it seems to erode once you get into it,” he asserted. “An LS-based motor is a great motor. You can drag race them. You can make some good strong horsepower out of them. But you put them into a road-racing or a circle-track application and start pushing them for long periods of time at maximum power and torque, and there are some things that need to be addressed. Once you start putting some of those components in place, the costs start coming up. The engines tend to start using themselves up. What you’ve got left is not a lot to start over—you pretty much have to start with a new motor.”

Meanwhile, in Kearney, Nebraska, Blueprint Engines has been building and supplying performance engines for more than 30 years while selling them exclusively under the Blueprint label for the last
two decades.

“We provide GM, Ford and Chrysler crate engines, from our smallest 262 all the way up to 632ci engines,” said Blueprint Engines President Shawn Sterling. “We also offer blocks, block casting and completed cylinder heads.”

Sources
Blueprint Engines 404 W. 8th St. Kearney, NE 68845 800-483-4263 www.blueprintengines.com Dakota Engines 2809 Hwy. 281 Jamestown ND 58401 701-252-2344 www.dakotaenginebuilders.com Ed Pink Engines 14612 Raymer St. Van Nuys, CA 91405 818-785-6740 www.edpink.com Mahle Motorsports 270 Rutledge Rd., Unit C Fletcher, NC 28732 888-255-1942 www.mahlemotorsports.com Speedway Illustrated 107 Elm St. Salisbury, MA 01952 978-465-9099 www.speedwayillustrated.com

Sterling said that the company has a broad customer base, including racers and other direct customers, engine builders who dress out the company’s crate engines and big catalog companies, resellers
and retailers.

“We have not seen LS engines hurt our business in any sense,” he said. “For example, in terms of the small-block Chevy, we have not seen a decrease there at all. We have seen growth. We launched our LS platform two to two and a half years ago, and we’ve just seen steady growth. It hasn’t been a detriment at all. I think it’s reaching a different segment of the market, probably the younger part. In the future, I think it will continue to grow, but I don’t know that it will be a detriment to the small-block Chevy.”

Blueprint owner Norris Marshall sees a generational aspect to LS sales as well.

“We could study a lot of human behavior, but I think people gravitate toward what the hot car was in their youth, so we sell a lot of small-block Chevrolet-variant engines to people who are well-heeled and can afford to scan their credit card and buy an engine and get their ’69–’70 Camaro or the like rebuilt,” Marshall said. “Certainly, if you look at social media and forums around the LS, it is a younger generation that has latched onto it.

“When I look at the people involved with the LS engines and the shops that have the notoriety, they’re guys that just specialize in LS engines. The run-of-the-mill guy who has been making his bread and butter off small- and big-block Chevys didn’t realize that there was some kid with a tuning program around the corner who became the LS expert and has graduated now into doing engines, having a dyno. It’s really been interesting for me to watch that, but it’s not only a different generation of customer; it’s a different generation of service provider.”

Meanwhile, Sterling has reservations about the theory that LS crate engines adversely affect the entire aftermarket parts chain.

“The parts are being sold with the engine, so I think they’re still being sold,” he said. “Instead of the engine builder buying the parts from various manufacturers and assembling the engine there, we’re buying the parts from the manufacturers and assembling the engines.”

As in any segment that is experiencing change, the powertrain marketplace is likely to see some ups and downs, some winners and some losers. Especially if sanctioning bodies continue to mandate crate engines, smaller, traditional engine builders may need to adjust to growing competition by cultivating a wider, more upscale base and providing superior customer service while broadening their engine-building repertoire.

 

SEMA News—April 2014

BUSINESS
By Mike Imlay

A Look At The Racing and Performance Powertrain Market

	Making motor adjustments at Ed Pink Engines in Van Nuys, California. Established in 1960, the engine crafter supplies a wide range of powertrain solutions.

Racers, street performance enthusiasts, four wheelers, restorers and boat owners all need engines, which means that, at some point, they tap into the performance niche occupied by engine builders and, more often than not, the specialty shops that install replacement engines. It’s a segment composed of small businesses, not-so-small businesses and by OEM crate-engine distributors—all offering powertrain solutions.

In fact, use of ready-made drop-in crate engines with known horsepower and torque specifications has become a driving force in the marketplace in recent years. In particular, the GM LS series has become a favored choice of racers and other enthusiasts. This has engendered some controversy among engine customizers, creating opportunities for some and complicating business for others. To be sure, not every engine supplier is opposed to the crate-engine trend. Some would even argue that the development of parts for such engines—especially the LS series—has picked up and provided fresh opportunities for individual manufacturers in the racing and performance arena. To gain a greater handle on this trend, SEMA News asked a variety of sources for their perspectives on the current state of the marketplace and the nature of customer needs as well as ways engine suppliers and installers are responding to a growing demand for crate units.

Race-Driven Demand

It’s not that the average car builder is necessarily opting to drop a ready-made LS engine into his project vehicle at a higher rate than those put together by traditional engine builders. It’s that those who race have become increasingly mandated to do so. And this is proving unsettling to engine builders for both motorsporting as well as financial reasons.

As Speedway Illustrated Publisher Karl Fredrickson explained, sanctioning bodies began the push toward crate engines a little over a decade ago. The basic idea was to limit horsepower, give every racer the same engine advantage and ultimately lower costs for entry-level and low-budget competitors.

An LS crate unit by Blueprint Engines in Kearney, Nebraska. Blueprint owner Norris Marshall sees a generational aspect to the LS crate market, adding that demand for the units hasn’t hurt the company’s sales of other engine types.

“It’s inexpensive, and it seemed like the golden egg for motorsports because now we can tell these ‘confused’ racers, ‘Look, you have exactly what everyone else has, and now you’re on your way to stardom because only your talent shows, and it’s unaffected by your wallet,’” Fredrickson explained. “We’re always looking to do two things in racing, and that’s to lower the cost and level the playing field. I don’t know why we seek those things. Especially with the crate engine, we’ve gone as far in the wrong direction as we can imagine.”

Many engine builders share that opinion.

“Perhaps what troubles me most is the perception that the OE can achieve something in racing that the aftermarket cannot,” he said. “That’s not only wrong, but I also find it insulting. I believe in the aftermarket. I think our group is far more capable than some sanctioning bodies are giving it credit for.”

Dakota Engines owner Jim Beyer echoed Fredrickson’s sentiments.

“I’m not a fan of crate motors,” he said. “I understand [that racers] can buy such motors for around $5,400, put the motor in and go racing, but what they don’t tell you on a crate motor is that they want you to buy a certain header to get some power, a certain carburetor and certain fuel to make these crate engines run better and get more power and performance. The fuel is quite expensive; it’s $12 per gallon or more, depending on where you buy it.”

A large portion of Beyer’s customers are racers and performance-car builders in the tri-state area of Montana, South Dakota and Minnesota. The company dates to the early ’80s, and Beyer has seen many changes in the marketplace over the years.

“When we first started way back when, you could build a pretty fair modified engine for around $2,500 to $3,000,” he explained. “By today’s standards, you’re looking at anywhere from $12,000 to $20,000 for a very good modified engine, so the cost has gone up considerably. The knowledge needed has also changed considerably—there’s so much new stuff out on the market now such as camshafts and items like that. There’s just a lot of better stuff than there used to be years ago.

“Right where we’re located is a lot of Wissota racing, so we do a lot of those types of builds—a lot of A mods, some late-model stuff, a lot of street cars with stock components that you have to use. We do all kinds of builds. We also have people in this area who are into mud runners and truck pullers, so we do quite a few of those. The LS crate engine has affected our business a little bit. We have some customers who have bought crate engines where otherwise they might have bought an IMC motor from us.”

Impacting the Small Guy?

Beyer sees the LS crate engine taking more of a bite out of the smaller engine builder trying to eke out a living. He also sees an impact on broader manufacturers of aftermarket parts who face sales drops to traditional engine builders. However, he mostly objects to the LS for its impact on the local racer.

	The design table at Ed Pink Engines. The trick to survival for smaller engine builders may be the cultivation of a wider, more upscale street customer base while broadening their reputations and custom motor repertoire.

“If I have a customer who breaks down Friday night and needs some engine work, he can call me on the cell and I’ll meet him at the shop that night and see if I can get the engine back together—whatever it needs to get him back racing Saturday. With a crate [OE manufacturer], that’s not going to happen,” he explained.

Looking toward the future, Beyer foresees bigger trouble ahead for traditional engine builders as more and more sanctioning bodies mandate crate engines.

“There’s no doubt the crate engine is going to hurt us, and it’s going to hurt other engine builders more than us,” he said. “It depends upon where they’re located. I understand that the sanctioning bodies want to get the racing cheaper for the racer, but there are other ways they could have done this.”

For one, he said, sanctioning bodies could’ve mandated restrictor plates and given weight breaks.

“It wouldn’t hurt the engine builder, and it would’ve been cheaper,” he said. “You can buy a restrictor plate or have one made for around $125 to $130. It works in NASCAR—they have a restrictor plate when you go to the big track.”

In the long run, said Beyer, crate engines can also cost a racer more than advertised, since sanctioning bodies often will not allow their rebuilding.

“Right now, they’ve got them at a very appealing price, but I can’t see that it’s going to stay that way forever,” he observed. “If something wears out, you have to buy a new [engine]. These other ones, we can freshen them up. Granted, it’s probably going to cost you around $3,000 to $4,000 to freshen them, depending upon how you took care of them. Some people take care of their stuff and don’t need that much. Other people are a little lax in repairs, oil and maintenance, and it costs a little more.”

Back at Speedway Illustrated, Fredrickson agreed with Beyer’s analysis, adding that there was always a trickle-down market for parts in racing before mandated crate engines. At that time, more experienced and successful racers often sold their older or salvaged parts to lower-level racers, helping the broader aftermarket.

“If a crate engine is inserted anywhere in that chain, the wheels come off,” Fredrickson said. “If I can’t sell my old stuff, I can’t buy your new stuff.”

In any event, faced with the growing demand for LS engines, Beyer is working harder than ever to forge close relationships with his customers to maintain a competitive edge.

“We sponsor the local track, a lot of local racing and a lot of local drivers,” he said. “There are so many customers that we can’t give them a huge discount, but we do give them 5% or 10% off or sometimes a little more to help them out through the course of the year because they’re having bad luck or something. An OEM is not going to do that for you. We try to build a relationship and treat everyone not as a customer but as a good friend. We try to keep things kind of like a family.”

At Ed Pink Engines in Van Nuys, California, General Manager Frank Honsowetz also expressed strong feelings about LS crate engines.

“For sure, they’re affecting [the custom engine market],” he said. “There are some attractive packages. But if you want to have a very streetable, very drivable, big-output 572 Chevy that you want to be a 10:1 ratio compression running on pump gas but still want more than 700 hp, you’re not going to buy a crate engine.”

While conceding that a custom-built engine is “considerably more expensive,” Honsowetz noted that “if you want something different, it’s going to cost more.”

While larger, long-established engine builders, such as Ed Pink Engines, seem insulated from the trend, increasing mandates for LS crate engines by racing sanctioning bodies have some smaller builders fearing a squeeze on business.

In fact, the desire for “something different” continues to drive demand for Ed Pink engines even while smaller independent builders may be struggling against a growing onslaught of LS crate units. Established in 1960, the engine builder has garnered one of the best reputations in the industry for a wide range of powerplants.

“We don’t really have a specialty,” Honsowetz said. “We do a variety of projects—everything from design and engineering to production of prototype race engines to rebuilding a whole variety of race engines to vintage engines, some exotic collector car engines and some high-end hot-rod engines. We have everything here right now from a variable-compression Department of Energy research engine project that we’re doing machining on to a ’21 Duesenberg engine that’s going to Pebble Beach.”

Honsowetz readily admits that Ed Pink Engines may be more insulated from the growing crate-engine trend because of the company’s size, longevity, reputation and broad customer base. Still, he also believes that crate-engine economics will fail to add up for racers over time.

“If you have a spec engine formula, somebody will spend the money to make theirs better, and that raises the costs for everyone involved,” he said. “At the same time, they’ll run their engines harder, and the parts may not be as good as professional building shops will put into engines. I understand what track owners are trying to achieve, but I don’t think it really works as well as they think it does for them. Everything is cyclical. Eventually, you’ll see that the popularity of spec crate engines will probably go away, at least in the higher tiers of motorsports.”

In the end, Ed Pink Engines intends to continue doing what it has always done in the way of specialty engine building, regardless of LS crate engine trends.

“I believe we produce a modest number of engines for high-end hot-rod owners who have some discretionary money and want something better than a crate engine and want an Ed Pink engine,” Honsowetz said. “I think there’s a segment that absolutely wants an Ed Pink engine. I think there’s a segment that wants something truly unique that can’t be done by the average hot rod shop when it comes to engines. For that you have to go to a specialty engine shop.”

Another Perspective

Of course, not every aftermarket engine outfit shares a negative perspective on LS crate engines. Established in 2000, Mahle Motorsports has positioned itself as a leading supplier of forged racing pistons and rings while also offering a number of crate-engine programs.

A Ford 408 engine by Blueprint Engines. Just one of the broad varieties of crate engines available from the engine builder.

“They do well for us and the customers whom we supply,” said Mahle Sales and Marketing Manager Trey McFarland. “In terms of the LS category, our customer base is a little more well-read, understands what it’s looking for and will pay a little more for a quality part. The parts are a little more costly, but not hugely so.”

In fact, McFarland said, the LS market has become one of the company’s fastest-growing segments.

“The motor has been around over a decade now and has gone through a number
of iterations,” he observed. “We’ve had interests ranging from street performance to marine to off-road use. Motors are being transplanted into [many] different vehicles, and the scope of the engine is far-reaching.”

Despite this, McFarland noted that many still ironically view the LS as a relatively new engine, with many parts distributors seeing the segment as a niche market. Nevertheless, he emphasized that the buyer demographic “runs the gamut” from guys doing just a piston change to street rodders, drifters, performance racers and off-roaders running full-blown modified versions for their respective needs.

“That’s why, again, if a parts distributor were to let everyone know he has the parts, he could have people coming from multiple directions looking for the components,” McFarland said. “Trying to nail down a single niche that’s looking for LS parts is getting harder to do because the engine is finding its way into everything.”

		Executive Summary
		In recent years, more and more racing sanctioning bodies have called for the use of LS crate engines to level the racing playing field. An increasing number of traditional engine builders believe that this growing trend will hurt the custom engine business, if it hasn’t already. SEMA News interviews with engine shops suggest that, for now, the trend is limited to racing and budget customers in a younger demographic. Engine builders with a broad base of street customers, including older demographics with higher incomes, will likely weather the trend.

As for mandating LS packages in racing, McFarland doesn’t believe it’s necessarily a bad thing, depending upon application.

“Anything you can do to make racing more affordable is a positive, but it seems to erode once you get into it,” he asserted. “An LS-based motor is a great motor. You can drag race them. You can make some good strong horsepower out of them. But you put them into a road-racing or a circle-track application and start pushing them for long periods of time at maximum power and torque, and there are some things that need to be addressed. Once you start putting some of those components in place, the costs start coming up. The engines tend to start using themselves up. What you’ve got left is not a lot to start over—you pretty much have to start with a new motor.”

Meanwhile, in Kearney, Nebraska, Blueprint Engines has been building and supplying performance engines for more than 30 years while selling them exclusively under the Blueprint label for the last
two decades.

“We provide GM, Ford and Chrysler crate engines, from our smallest 262 all the way up to 632ci engines,” said Blueprint Engines President Shawn Sterling. “We also offer blocks, block casting and completed cylinder heads.”

Sources
Blueprint Engines 404 W. 8th St. Kearney, NE 68845 800-483-4263 www.blueprintengines.com Dakota Engines 2809 Hwy. 281 Jamestown ND 58401 701-252-2344 www.dakotaenginebuilders.com Ed Pink Engines 14612 Raymer St. Van Nuys, CA 91405 818-785-6740 www.edpink.com Mahle Motorsports 270 Rutledge Rd., Unit C Fletcher, NC 28732 888-255-1942 www.mahlemotorsports.com Speedway Illustrated 107 Elm St. Salisbury, MA 01952 978-465-9099 www.speedwayillustrated.com

Sterling said that the company has a broad customer base, including racers and other direct customers, engine builders who dress out the company’s crate engines and big catalog companies, resellers
and retailers.

“We have not seen LS engines hurt our business in any sense,” he said. “For example, in terms of the small-block Chevy, we have not seen a decrease there at all. We have seen growth. We launched our LS platform two to two and a half years ago, and we’ve just seen steady growth. It hasn’t been a detriment at all. I think it’s reaching a different segment of the market, probably the younger part. In the future, I think it will continue to grow, but I don’t know that it will be a detriment to the small-block Chevy.”

Blueprint owner Norris Marshall sees a generational aspect to LS sales as well.

“We could study a lot of human behavior, but I think people gravitate toward what the hot car was in their youth, so we sell a lot of small-block Chevrolet-variant engines to people who are well-heeled and can afford to scan their credit card and buy an engine and get their ’69–’70 Camaro or the like rebuilt,” Marshall said. “Certainly, if you look at social media and forums around the LS, it is a younger generation that has latched onto it.

“When I look at the people involved with the LS engines and the shops that have the notoriety, they’re guys that just specialize in LS engines. The run-of-the-mill guy who has been making his bread and butter off small- and big-block Chevys didn’t realize that there was some kid with a tuning program around the corner who became the LS expert and has graduated now into doing engines, having a dyno. It’s really been interesting for me to watch that, but it’s not only a different generation of customer; it’s a different generation of service provider.”

Meanwhile, Sterling has reservations about the theory that LS crate engines adversely affect the entire aftermarket parts chain.

“The parts are being sold with the engine, so I think they’re still being sold,” he said. “Instead of the engine builder buying the parts from various manufacturers and assembling the engine there, we’re buying the parts from the manufacturers and assembling the engines.”

As in any segment that is experiencing change, the powertrain marketplace is likely to see some ups and downs, some winners and some losers. Especially if sanctioning bodies continue to mandate crate engines, smaller, traditional engine builders may need to adjust to growing competition by cultivating a wider, more upscale base and providing superior customer service while broadening their engine-building repertoire.

 

SEMA News—April 2014

BUSINESS
By Mike Imlay

A Look At The Racing and Performance Powertrain Market

	Making motor adjustments at Ed Pink Engines in Van Nuys, California. Established in 1960, the engine crafter supplies a wide range of powertrain solutions.

Racers, street performance enthusiasts, four wheelers, restorers and boat owners all need engines, which means that, at some point, they tap into the performance niche occupied by engine builders and, more often than not, the specialty shops that install replacement engines. It’s a segment composed of small businesses, not-so-small businesses and by OEM crate-engine distributors—all offering powertrain solutions.

In fact, use of ready-made drop-in crate engines with known horsepower and torque specifications has become a driving force in the marketplace in recent years. In particular, the GM LS series has become a favored choice of racers and other enthusiasts. This has engendered some controversy among engine customizers, creating opportunities for some and complicating business for others. To be sure, not every engine supplier is opposed to the crate-engine trend. Some would even argue that the development of parts for such engines—especially the LS series—has picked up and provided fresh opportunities for individual manufacturers in the racing and performance arena. To gain a greater handle on this trend, SEMA News asked a variety of sources for their perspectives on the current state of the marketplace and the nature of customer needs as well as ways engine suppliers and installers are responding to a growing demand for crate units.

Race-Driven Demand

It’s not that the average car builder is necessarily opting to drop a ready-made LS engine into his project vehicle at a higher rate than those put together by traditional engine builders. It’s that those who race have become increasingly mandated to do so. And this is proving unsettling to engine builders for both motorsporting as well as financial reasons.

As Speedway Illustrated Publisher Karl Fredrickson explained, sanctioning bodies began the push toward crate engines a little over a decade ago. The basic idea was to limit horsepower, give every racer the same engine advantage and ultimately lower costs for entry-level and low-budget competitors.

An LS crate unit by Blueprint Engines in Kearney, Nebraska. Blueprint owner Norris Marshall sees a generational aspect to the LS crate market, adding that demand for the units hasn’t hurt the company’s sales of other engine types.

“It’s inexpensive, and it seemed like the golden egg for motorsports because now we can tell these ‘confused’ racers, ‘Look, you have exactly what everyone else has, and now you’re on your way to stardom because only your talent shows, and it’s unaffected by your wallet,’” Fredrickson explained. “We’re always looking to do two things in racing, and that’s to lower the cost and level the playing field. I don’t know why we seek those things. Especially with the crate engine, we’ve gone as far in the wrong direction as we can imagine.”

Many engine builders share that opinion.

“Perhaps what troubles me most is the perception that the OE can achieve something in racing that the aftermarket cannot,” he said. “That’s not only wrong, but I also find it insulting. I believe in the aftermarket. I think our group is far more capable than some sanctioning bodies are giving it credit for.”

Dakota Engines owner Jim Beyer echoed Fredrickson’s sentiments.

“I’m not a fan of crate motors,” he said. “I understand [that racers] can buy such motors for around $5,400, put the motor in and go racing, but what they don’t tell you on a crate motor is that they want you to buy a certain header to get some power, a certain carburetor and certain fuel to make these crate engines run better and get more power and performance. The fuel is quite expensive; it’s $12 per gallon or more, depending on where you buy it.”

A large portion of Beyer’s customers are racers and performance-car builders in the tri-state area of Montana, South Dakota and Minnesota. The company dates to the early ’80s, and Beyer has seen many changes in the marketplace over the years.

“When we first started way back when, you could build a pretty fair modified engine for around $2,500 to $3,000,” he explained. “By today’s standards, you’re looking at anywhere from $12,000 to $20,000 for a very good modified engine, so the cost has gone up considerably. The knowledge needed has also changed considerably—there’s so much new stuff out on the market now such as camshafts and items like that. There’s just a lot of better stuff than there used to be years ago.

“Right where we’re located is a lot of Wissota racing, so we do a lot of those types of builds—a lot of A mods, some late-model stuff, a lot of street cars with stock components that you have to use. We do all kinds of builds. We also have people in this area who are into mud runners and truck pullers, so we do quite a few of those. The LS crate engine has affected our business a little bit. We have some customers who have bought crate engines where otherwise they might have bought an IMC motor from us.”

Impacting the Small Guy?

Beyer sees the LS crate engine taking more of a bite out of the smaller engine builder trying to eke out a living. He also sees an impact on broader manufacturers of aftermarket parts who face sales drops to traditional engine builders. However, he mostly objects to the LS for its impact on the local racer.

	The design table at Ed Pink Engines. The trick to survival for smaller engine builders may be the cultivation of a wider, more upscale street customer base while broadening their reputations and custom motor repertoire.

“If I have a customer who breaks down Friday night and needs some engine work, he can call me on the cell and I’ll meet him at the shop that night and see if I can get the engine back together—whatever it needs to get him back racing Saturday. With a crate [OE manufacturer], that’s not going to happen,” he explained.

Looking toward the future, Beyer foresees bigger trouble ahead for traditional engine builders as more and more sanctioning bodies mandate crate engines.

“There’s no doubt the crate engine is going to hurt us, and it’s going to hurt other engine builders more than us,” he said. “It depends upon where they’re located. I understand that the sanctioning bodies want to get the racing cheaper for the racer, but there are other ways they could have done this.”

For one, he said, sanctioning bodies could’ve mandated restrictor plates and given weight breaks.

“It wouldn’t hurt the engine builder, and it would’ve been cheaper,” he said. “You can buy a restrictor plate or have one made for around $125 to $130. It works in NASCAR—they have a restrictor plate when you go to the big track.”

In the long run, said Beyer, crate engines can also cost a racer more than advertised, since sanctioning bodies often will not allow their rebuilding.

“Right now, they’ve got them at a very appealing price, but I can’t see that it’s going to stay that way forever,” he observed. “If something wears out, you have to buy a new [engine]. These other ones, we can freshen them up. Granted, it’s probably going to cost you around $3,000 to $4,000 to freshen them, depending upon how you took care of them. Some people take care of their stuff and don’t need that much. Other people are a little lax in repairs, oil and maintenance, and it costs a little more.”

Back at Speedway Illustrated, Fredrickson agreed with Beyer’s analysis, adding that there was always a trickle-down market for parts in racing before mandated crate engines. At that time, more experienced and successful racers often sold their older or salvaged parts to lower-level racers, helping the broader aftermarket.

“If a crate engine is inserted anywhere in that chain, the wheels come off,” Fredrickson said. “If I can’t sell my old stuff, I can’t buy your new stuff.”

In any event, faced with the growing demand for LS engines, Beyer is working harder than ever to forge close relationships with his customers to maintain a competitive edge.

“We sponsor the local track, a lot of local racing and a lot of local drivers,” he said. “There are so many customers that we can’t give them a huge discount, but we do give them 5% or 10% off or sometimes a little more to help them out through the course of the year because they’re having bad luck or something. An OEM is not going to do that for you. We try to build a relationship and treat everyone not as a customer but as a good friend. We try to keep things kind of like a family.”

At Ed Pink Engines in Van Nuys, California, General Manager Frank Honsowetz also expressed strong feelings about LS crate engines.

“For sure, they’re affecting [the custom engine market],” he said. “There are some attractive packages. But if you want to have a very streetable, very drivable, big-output 572 Chevy that you want to be a 10:1 ratio compression running on pump gas but still want more than 700 hp, you’re not going to buy a crate engine.”

While conceding that a custom-built engine is “considerably more expensive,” Honsowetz noted that “if you want something different, it’s going to cost more.”

While larger, long-established engine builders, such as Ed Pink Engines, seem insulated from the trend, increasing mandates for LS crate engines by racing sanctioning bodies have some smaller builders fearing a squeeze on business.

In fact, the desire for “something different” continues to drive demand for Ed Pink engines even while smaller independent builders may be struggling against a growing onslaught of LS crate units. Established in 1960, the engine builder has garnered one of the best reputations in the industry for a wide range of powerplants.

“We don’t really have a specialty,” Honsowetz said. “We do a variety of projects—everything from design and engineering to production of prototype race engines to rebuilding a whole variety of race engines to vintage engines, some exotic collector car engines and some high-end hot-rod engines. We have everything here right now from a variable-compression Department of Energy research engine project that we’re doing machining on to a ’21 Duesenberg engine that’s going to Pebble Beach.”

Honsowetz readily admits that Ed Pink Engines may be more insulated from the growing crate-engine trend because of the company’s size, longevity, reputation and broad customer base. Still, he also believes that crate-engine economics will fail to add up for racers over time.

“If you have a spec engine formula, somebody will spend the money to make theirs better, and that raises the costs for everyone involved,” he said. “At the same time, they’ll run their engines harder, and the parts may not be as good as professional building shops will put into engines. I understand what track owners are trying to achieve, but I don’t think it really works as well as they think it does for them. Everything is cyclical. Eventually, you’ll see that the popularity of spec crate engines will probably go away, at least in the higher tiers of motorsports.”

In the end, Ed Pink Engines intends to continue doing what it has always done in the way of specialty engine building, regardless of LS crate engine trends.

“I believe we produce a modest number of engines for high-end hot-rod owners who have some discretionary money and want something better than a crate engine and want an Ed Pink engine,” Honsowetz said. “I think there’s a segment that absolutely wants an Ed Pink engine. I think there’s a segment that wants something truly unique that can’t be done by the average hot rod shop when it comes to engines. For that you have to go to a specialty engine shop.”

Another Perspective

Of course, not every aftermarket engine outfit shares a negative perspective on LS crate engines. Established in 2000, Mahle Motorsports has positioned itself as a leading supplier of forged racing pistons and rings while also offering a number of crate-engine programs.

A Ford 408 engine by Blueprint Engines. Just one of the broad varieties of crate engines available from the engine builder.

“They do well for us and the customers whom we supply,” said Mahle Sales and Marketing Manager Trey McFarland. “In terms of the LS category, our customer base is a little more well-read, understands what it’s looking for and will pay a little more for a quality part. The parts are a little more costly, but not hugely so.”

In fact, McFarland said, the LS market has become one of the company’s fastest-growing segments.

“The motor has been around over a decade now and has gone through a number
of iterations,” he observed. “We’ve had interests ranging from street performance to marine to off-road use. Motors are being transplanted into [many] different vehicles, and the scope of the engine is far-reaching.”

Despite this, McFarland noted that many still ironically view the LS as a relatively new engine, with many parts distributors seeing the segment as a niche market. Nevertheless, he emphasized that the buyer demographic “runs the gamut” from guys doing just a piston change to street rodders, drifters, performance racers and off-roaders running full-blown modified versions for their respective needs.

“That’s why, again, if a parts distributor were to let everyone know he has the parts, he could have people coming from multiple directions looking for the components,” McFarland said. “Trying to nail down a single niche that’s looking for LS parts is getting harder to do because the engine is finding its way into everything.”

		Executive Summary
		In recent years, more and more racing sanctioning bodies have called for the use of LS crate engines to level the racing playing field. An increasing number of traditional engine builders believe that this growing trend will hurt the custom engine business, if it hasn’t already. SEMA News interviews with engine shops suggest that, for now, the trend is limited to racing and budget customers in a younger demographic. Engine builders with a broad base of street customers, including older demographics with higher incomes, will likely weather the trend.

As for mandating LS packages in racing, McFarland doesn’t believe it’s necessarily a bad thing, depending upon application.

“Anything you can do to make racing more affordable is a positive, but it seems to erode once you get into it,” he asserted. “An LS-based motor is a great motor. You can drag race them. You can make some good strong horsepower out of them. But you put them into a road-racing or a circle-track application and start pushing them for long periods of time at maximum power and torque, and there are some things that need to be addressed. Once you start putting some of those components in place, the costs start coming up. The engines tend to start using themselves up. What you’ve got left is not a lot to start over—you pretty much have to start with a new motor.”

Meanwhile, in Kearney, Nebraska, Blueprint Engines has been building and supplying performance engines for more than 30 years while selling them exclusively under the Blueprint label for the last
two decades.

“We provide GM, Ford and Chrysler crate engines, from our smallest 262 all the way up to 632ci engines,” said Blueprint Engines President Shawn Sterling. “We also offer blocks, block casting and completed cylinder heads.”

Sources
Blueprint Engines 404 W. 8th St. Kearney, NE 68845 800-483-4263 www.blueprintengines.com Dakota Engines 2809 Hwy. 281 Jamestown ND 58401 701-252-2344 www.dakotaenginebuilders.com Ed Pink Engines 14612 Raymer St. Van Nuys, CA 91405 818-785-6740 www.edpink.com Mahle Motorsports 270 Rutledge Rd., Unit C Fletcher, NC 28732 888-255-1942 www.mahlemotorsports.com Speedway Illustrated 107 Elm St. Salisbury, MA 01952 978-465-9099 www.speedwayillustrated.com

Sterling said that the company has a broad customer base, including racers and other direct customers, engine builders who dress out the company’s crate engines and big catalog companies, resellers
and retailers.

“We have not seen LS engines hurt our business in any sense,” he said. “For example, in terms of the small-block Chevy, we have not seen a decrease there at all. We have seen growth. We launched our LS platform two to two and a half years ago, and we’ve just seen steady growth. It hasn’t been a detriment at all. I think it’s reaching a different segment of the market, probably the younger part. In the future, I think it will continue to grow, but I don’t know that it will be a detriment to the small-block Chevy.”

Blueprint owner Norris Marshall sees a generational aspect to LS sales as well.

“We could study a lot of human behavior, but I think people gravitate toward what the hot car was in their youth, so we sell a lot of small-block Chevrolet-variant engines to people who are well-heeled and can afford to scan their credit card and buy an engine and get their ’69–’70 Camaro or the like rebuilt,” Marshall said. “Certainly, if you look at social media and forums around the LS, it is a younger generation that has latched onto it.

“When I look at the people involved with the LS engines and the shops that have the notoriety, they’re guys that just specialize in LS engines. The run-of-the-mill guy who has been making his bread and butter off small- and big-block Chevys didn’t realize that there was some kid with a tuning program around the corner who became the LS expert and has graduated now into doing engines, having a dyno. It’s really been interesting for me to watch that, but it’s not only a different generation of customer; it’s a different generation of service provider.”

Meanwhile, Sterling has reservations about the theory that LS crate engines adversely affect the entire aftermarket parts chain.

“The parts are being sold with the engine, so I think they’re still being sold,” he said. “Instead of the engine builder buying the parts from various manufacturers and assembling the engine there, we’re buying the parts from the manufacturers and assembling the engines.”

As in any segment that is experiencing change, the powertrain marketplace is likely to see some ups and downs, some winners and some losers. Especially if sanctioning bodies continue to mandate crate engines, smaller, traditional engine builders may need to adjust to growing competition by cultivating a wider, more upscale base and providing superior customer service while broadening their engine-building repertoire.