SEMA News - June 2009
SEMA Legislative and Technical Affairs

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

State Update

California

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

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

Massachusetts

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

Oregon

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

Texas

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

Utah

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

West Virginia

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

FEDERAL UPDATE

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

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

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

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

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

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

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

SEMA News - June 2009
SEMA Legislative and Technical Affairs

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

State Update

California

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

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

Massachusetts

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

Oregon

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

Texas

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

Utah

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

West Virginia

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

FEDERAL UPDATE

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

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

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

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

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

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

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

SEMA News - June 2009
SEMA Legislative and Technical Affairs

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

State Update

California

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

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

Massachusetts

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

Oregon

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

Texas

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

Utah

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

West Virginia

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

FEDERAL UPDATE

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

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

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

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

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

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

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

SEMA News - June 2009
SEMA Legislative and Technical Affairs

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

State Update

California

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

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

Massachusetts

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

Oregon

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

Texas

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

Utah

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

West Virginia

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

FEDERAL UPDATE

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

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

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

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

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

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

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

SEMA News - June 2009
RESEARCH

By Ty Michael and Zack Krelle

Numbers Add Up to a Substantial Number of Specialty-Equipment Prospects

For the first quarter of the year, automotive industry analysts made pessimistic forecasts for new-vehicle sales volume for 2009. In February, J.D. Power and Associates predicted that total new-vehicle sales would reach a mere 10.4 million units—down 1 million units from the company’s forecast just a month prior and 6 million under the annual average during the past decade. And, in late March, R.L. Polk & Co. released results from a survey showing that 70% of consumers plan to purchase used vehicles as their next vehicle purchase. These same consumers also noted plans to retain their current vehicles more than half a year longer—56.3 months compared to 49 from responses collected six years earlier. In short, consumers are either holding on to the vehicles they currently own longer or, if they need to buy another vehicle, are planning to look toward the used market.

Table 1: Responses from the 2008 Automotive Lifestyles database revealed these popular used-vehicle choices.		Table 2: Used-vehicle owners held a heavier preference for performance parts upgrades. Power and warrenty issues aside, enthusiasts cited fuel economy as a motivator.

Enthusiast Buying Trends

SEMA is able to follow enthusiast trends via its Automotive Lifestyles Study—an intensive annual database that compiles data from active consumers in the hobby. Each year, subscribers to enthusiast magazines and members of popular automotive-focused communities are rigorously surveyed about personal automotive and specialty-equipment buying habits. On average, more than 3,000 enthusiasts have been surveyed each year. For the third consecutive year, the percentage of enthusiasts who said that they originally purchased their vehicles used has grown: 72% of enthusiasts drove used cars in 2008, up from 67% in 2007 and 54% in 2005.

Table 1 (above) shows the top 21 used vehicles purchased in 2008 by enthusiasts surveyed.

Used-vehicle buying enthusiasts continued spending after their initial purchase. For the 2008 survey, 93% of those who purchased a used vehicle within the previous 12-month period purchased specialty equipment for their vehicles, and 83% began purchasing within the first two months of ownership. Comparing those enthusiasts to new-vehicle buyers who purchased within the previous 12 month shows that used-vehicle buyers were more inclined to make performance upgrades.

Table 2 (above) shows the top 10 specialty-equipment purchases made by both used- and new-vehicle buyers. Notice that used-vehicle owners purchased more performance upgrades, such as air intake and exhaust upgrades, versus new-vehicle buyers, who purchased more accessories. Aside from the obvious desire for speed and power, one possible reason for some of the performance parts purchases by used-vehicle owners could involve a perceived need to improve fuel economy. Around 47% of used-vehicle owners noted that one reason they chose to purchase specialty equipment was to improve fuel economy. One thing to mention, however, is that this survey was conducted when regular gasoline averaged $3.74 a gallon.

More recent survey results still show that enthusiasts have purchased and plan to purchase used vehicles instead of new ones. In April of 2009, automotive enthusiasts were surveyed in order to find out whether their vehicle buying habits had changed as a result of the deepening economic downturn. About 32% said that they purchased a vehicle during the previous six months, and a majority of them (69%) said that they purchased a used vehicle. The top reason, by far, was the price of a used vehicle compared to a new one.

“I was able to afford an overall better, more reliable vehicle with 29,000 miles on it that I would not have been able to afford new,” wrote one enthusiast. Another said that, “Due to the economy and not being able to retire and work on my street-rod projects, I decided to purchase a C5 FRC Corvette so my wife and I can still enjoy some performance cruising this summer.”

Some enthusiasts are choosing to buy used vehicles with the purpose of accessorizing them. One enthusiast commented that there are many aftermarket parts already available, while another purchased a used vehicle to “trick out.” Over half (58%) of those who said that they purchased used vehicles indicated that they purchased specialty equipment for their vehicles this year. And of the 20% who said that they plan to purchase vehicles within the next six months, over half (58%) plan to buy used vehicles. Table 3 (below) shows which vehicle segment types were purchased over the last six months or were planned for purchase by enthusiasts who were or are in the market for a used vehicle.

Table 3: Large-, mid- and small-size SUVs have lost some appeal while large pickups gained promise. Many enthusiasts are simply unsure about their plans, possibly resulting from economic uncertainty.		Table 4: Even as new-vehicle sales drop, the reality is that more than 27 million fullsize pickups are registered in the United States—a large market not to be ignored.

What It All Means

With the economy being down during the latter part of 2008 and the first half of 2009, it probably comes as no surprise that consumers are buying used instead of new vehicles. So how do SEMA members benefit from this shift? One way is to understand what vehicles are currently on the roads today (i.e., where the potential opportunities exist). SEMA members now have access to U.S. vehicle registration data supplied by Experian Automotive, which details a composite view of vehicles that are currently registered and their location. For example, Table 4 (above) shows the top 10 fullsize pickups that were registered at the close of 2008. While this is merely a snapshot of just one vehicle type registered in the United States, the complete database is available for all vehicles, even at a state level.

If 2009 ends the way analysts have predicted, it will be one of the worst on record. Keep in mind, however, that even in just this single situation, a total of 27 million vehicles accounts for a healthy consumer base. Consumers are either holding on to their vehicles longer or are choosing to buy used vehicles at higher rates than in years past. SEMA members have tools at their disposal to help determine what enthusiasts are buying or plan to buy as well as determine where these future potential customers are located.

Enthusiast Top 10 Used Vehicles These vehicles represent a snapshot of the top vehicles owned by enthusiasts surveyed who purchased a used vehicle within the last year.
Ford F-Series Powerstroke Diesel		Chevrolet Camaro
Chevrolet Corvette		Ford F Series
Ford Mustang		Nissan 240SX
Chevrolet Camaro SS		Dodge Ram
Lexus SC300		Ford Pickup

SEMA News - June 2009
RESEARCH

By Ty Michael and Zack Krelle

Numbers Add Up to a Substantial Number of Specialty-Equipment Prospects

For the first quarter of the year, automotive industry analysts made pessimistic forecasts for new-vehicle sales volume for 2009. In February, J.D. Power and Associates predicted that total new-vehicle sales would reach a mere 10.4 million units—down 1 million units from the company’s forecast just a month prior and 6 million under the annual average during the past decade. And, in late March, R.L. Polk & Co. released results from a survey showing that 70% of consumers plan to purchase used vehicles as their next vehicle purchase. These same consumers also noted plans to retain their current vehicles more than half a year longer—56.3 months compared to 49 from responses collected six years earlier. In short, consumers are either holding on to the vehicles they currently own longer or, if they need to buy another vehicle, are planning to look toward the used market.

Table 1: Responses from the 2008 Automotive Lifestyles database revealed these popular used-vehicle choices.		Table 2: Used-vehicle owners held a heavier preference for performance parts upgrades. Power and warrenty issues aside, enthusiasts cited fuel economy as a motivator.

Enthusiast Buying Trends

SEMA is able to follow enthusiast trends via its Automotive Lifestyles Study—an intensive annual database that compiles data from active consumers in the hobby. Each year, subscribers to enthusiast magazines and members of popular automotive-focused communities are rigorously surveyed about personal automotive and specialty-equipment buying habits. On average, more than 3,000 enthusiasts have been surveyed each year. For the third consecutive year, the percentage of enthusiasts who said that they originally purchased their vehicles used has grown: 72% of enthusiasts drove used cars in 2008, up from 67% in 2007 and 54% in 2005.

Table 1 (above) shows the top 21 used vehicles purchased in 2008 by enthusiasts surveyed.

Used-vehicle buying enthusiasts continued spending after their initial purchase. For the 2008 survey, 93% of those who purchased a used vehicle within the previous 12-month period purchased specialty equipment for their vehicles, and 83% began purchasing within the first two months of ownership. Comparing those enthusiasts to new-vehicle buyers who purchased within the previous 12 month shows that used-vehicle buyers were more inclined to make performance upgrades.

Table 2 (above) shows the top 10 specialty-equipment purchases made by both used- and new-vehicle buyers. Notice that used-vehicle owners purchased more performance upgrades, such as air intake and exhaust upgrades, versus new-vehicle buyers, who purchased more accessories. Aside from the obvious desire for speed and power, one possible reason for some of the performance parts purchases by used-vehicle owners could involve a perceived need to improve fuel economy. Around 47% of used-vehicle owners noted that one reason they chose to purchase specialty equipment was to improve fuel economy. One thing to mention, however, is that this survey was conducted when regular gasoline averaged $3.74 a gallon.

More recent survey results still show that enthusiasts have purchased and plan to purchase used vehicles instead of new ones. In April of 2009, automotive enthusiasts were surveyed in order to find out whether their vehicle buying habits had changed as a result of the deepening economic downturn. About 32% said that they purchased a vehicle during the previous six months, and a majority of them (69%) said that they purchased a used vehicle. The top reason, by far, was the price of a used vehicle compared to a new one.

“I was able to afford an overall better, more reliable vehicle with 29,000 miles on it that I would not have been able to afford new,” wrote one enthusiast. Another said that, “Due to the economy and not being able to retire and work on my street-rod projects, I decided to purchase a C5 FRC Corvette so my wife and I can still enjoy some performance cruising this summer.”

Some enthusiasts are choosing to buy used vehicles with the purpose of accessorizing them. One enthusiast commented that there are many aftermarket parts already available, while another purchased a used vehicle to “trick out.” Over half (58%) of those who said that they purchased used vehicles indicated that they purchased specialty equipment for their vehicles this year. And of the 20% who said that they plan to purchase vehicles within the next six months, over half (58%) plan to buy used vehicles. Table 3 (below) shows which vehicle segment types were purchased over the last six months or were planned for purchase by enthusiasts who were or are in the market for a used vehicle.

Table 3: Large-, mid- and small-size SUVs have lost some appeal while large pickups gained promise. Many enthusiasts are simply unsure about their plans, possibly resulting from economic uncertainty.		Table 4: Even as new-vehicle sales drop, the reality is that more than 27 million fullsize pickups are registered in the United States—a large market not to be ignored.

What It All Means

With the economy being down during the latter part of 2008 and the first half of 2009, it probably comes as no surprise that consumers are buying used instead of new vehicles. So how do SEMA members benefit from this shift? One way is to understand what vehicles are currently on the roads today (i.e., where the potential opportunities exist). SEMA members now have access to U.S. vehicle registration data supplied by Experian Automotive, which details a composite view of vehicles that are currently registered and their location. For example, Table 4 (above) shows the top 10 fullsize pickups that were registered at the close of 2008. While this is merely a snapshot of just one vehicle type registered in the United States, the complete database is available for all vehicles, even at a state level.

If 2009 ends the way analysts have predicted, it will be one of the worst on record. Keep in mind, however, that even in just this single situation, a total of 27 million vehicles accounts for a healthy consumer base. Consumers are either holding on to their vehicles longer or are choosing to buy used vehicles at higher rates than in years past. SEMA members have tools at their disposal to help determine what enthusiasts are buying or plan to buy as well as determine where these future potential customers are located.

Enthusiast Top 10 Used Vehicles These vehicles represent a snapshot of the top vehicles owned by enthusiasts surveyed who purchased a used vehicle within the last year.
Ford F-Series Powerstroke Diesel		Chevrolet Camaro
Chevrolet Corvette		Ford F Series
Ford Mustang		Nissan 240SX
Chevrolet Camaro SS		Dodge Ram
Lexus SC300		Ford Pickup

SEMA News - June 2009
RESEARCH

By Ty Michael and Zack Krelle

Numbers Add Up to a Substantial Number of Specialty-Equipment Prospects

For the first quarter of the year, automotive industry analysts made pessimistic forecasts for new-vehicle sales volume for 2009. In February, J.D. Power and Associates predicted that total new-vehicle sales would reach a mere 10.4 million units—down 1 million units from the company’s forecast just a month prior and 6 million under the annual average during the past decade. And, in late March, R.L. Polk & Co. released results from a survey showing that 70% of consumers plan to purchase used vehicles as their next vehicle purchase. These same consumers also noted plans to retain their current vehicles more than half a year longer—56.3 months compared to 49 from responses collected six years earlier. In short, consumers are either holding on to the vehicles they currently own longer or, if they need to buy another vehicle, are planning to look toward the used market.

Table 1: Responses from the 2008 Automotive Lifestyles database revealed these popular used-vehicle choices.		Table 2: Used-vehicle owners held a heavier preference for performance parts upgrades. Power and warrenty issues aside, enthusiasts cited fuel economy as a motivator.

Enthusiast Buying Trends

SEMA is able to follow enthusiast trends via its Automotive Lifestyles Study—an intensive annual database that compiles data from active consumers in the hobby. Each year, subscribers to enthusiast magazines and members of popular automotive-focused communities are rigorously surveyed about personal automotive and specialty-equipment buying habits. On average, more than 3,000 enthusiasts have been surveyed each year. For the third consecutive year, the percentage of enthusiasts who said that they originally purchased their vehicles used has grown: 72% of enthusiasts drove used cars in 2008, up from 67% in 2007 and 54% in 2005.

Table 1 (above) shows the top 21 used vehicles purchased in 2008 by enthusiasts surveyed.

Used-vehicle buying enthusiasts continued spending after their initial purchase. For the 2008 survey, 93% of those who purchased a used vehicle within the previous 12-month period purchased specialty equipment for their vehicles, and 83% began purchasing within the first two months of ownership. Comparing those enthusiasts to new-vehicle buyers who purchased within the previous 12 month shows that used-vehicle buyers were more inclined to make performance upgrades.

Table 2 (above) shows the top 10 specialty-equipment purchases made by both used- and new-vehicle buyers. Notice that used-vehicle owners purchased more performance upgrades, such as air intake and exhaust upgrades, versus new-vehicle buyers, who purchased more accessories. Aside from the obvious desire for speed and power, one possible reason for some of the performance parts purchases by used-vehicle owners could involve a perceived need to improve fuel economy. Around 47% of used-vehicle owners noted that one reason they chose to purchase specialty equipment was to improve fuel economy. One thing to mention, however, is that this survey was conducted when regular gasoline averaged $3.74 a gallon.

More recent survey results still show that enthusiasts have purchased and plan to purchase used vehicles instead of new ones. In April of 2009, automotive enthusiasts were surveyed in order to find out whether their vehicle buying habits had changed as a result of the deepening economic downturn. About 32% said that they purchased a vehicle during the previous six months, and a majority of them (69%) said that they purchased a used vehicle. The top reason, by far, was the price of a used vehicle compared to a new one.

“I was able to afford an overall better, more reliable vehicle with 29,000 miles on it that I would not have been able to afford new,” wrote one enthusiast. Another said that, “Due to the economy and not being able to retire and work on my street-rod projects, I decided to purchase a C5 FRC Corvette so my wife and I can still enjoy some performance cruising this summer.”

Some enthusiasts are choosing to buy used vehicles with the purpose of accessorizing them. One enthusiast commented that there are many aftermarket parts already available, while another purchased a used vehicle to “trick out.” Over half (58%) of those who said that they purchased used vehicles indicated that they purchased specialty equipment for their vehicles this year. And of the 20% who said that they plan to purchase vehicles within the next six months, over half (58%) plan to buy used vehicles. Table 3 (below) shows which vehicle segment types were purchased over the last six months or were planned for purchase by enthusiasts who were or are in the market for a used vehicle.

Table 3: Large-, mid- and small-size SUVs have lost some appeal while large pickups gained promise. Many enthusiasts are simply unsure about their plans, possibly resulting from economic uncertainty.		Table 4: Even as new-vehicle sales drop, the reality is that more than 27 million fullsize pickups are registered in the United States—a large market not to be ignored.

What It All Means

With the economy being down during the latter part of 2008 and the first half of 2009, it probably comes as no surprise that consumers are buying used instead of new vehicles. So how do SEMA members benefit from this shift? One way is to understand what vehicles are currently on the roads today (i.e., where the potential opportunities exist). SEMA members now have access to U.S. vehicle registration data supplied by Experian Automotive, which details a composite view of vehicles that are currently registered and their location. For example, Table 4 (above) shows the top 10 fullsize pickups that were registered at the close of 2008. While this is merely a snapshot of just one vehicle type registered in the United States, the complete database is available for all vehicles, even at a state level.

If 2009 ends the way analysts have predicted, it will be one of the worst on record. Keep in mind, however, that even in just this single situation, a total of 27 million vehicles accounts for a healthy consumer base. Consumers are either holding on to their vehicles longer or are choosing to buy used vehicles at higher rates than in years past. SEMA members have tools at their disposal to help determine what enthusiasts are buying or plan to buy as well as determine where these future potential customers are located.

Enthusiast Top 10 Used Vehicles These vehicles represent a snapshot of the top vehicles owned by enthusiasts surveyed who purchased a used vehicle within the last year.
Ford F-Series Powerstroke Diesel		Chevrolet Camaro
Chevrolet Corvette		Ford F Series
Ford Mustang		Nissan 240SX
Chevrolet Camaro SS		Dodge Ram
Lexus SC300		Ford Pickup

SEMA News - June 2009
RESEARCH

By Ty Michael and Zack Krelle

Numbers Add Up to a Substantial Number of Specialty-Equipment Prospects

For the first quarter of the year, automotive industry analysts made pessimistic forecasts for new-vehicle sales volume for 2009. In February, J.D. Power and Associates predicted that total new-vehicle sales would reach a mere 10.4 million units—down 1 million units from the company’s forecast just a month prior and 6 million under the annual average during the past decade. And, in late March, R.L. Polk & Co. released results from a survey showing that 70% of consumers plan to purchase used vehicles as their next vehicle purchase. These same consumers also noted plans to retain their current vehicles more than half a year longer—56.3 months compared to 49 from responses collected six years earlier. In short, consumers are either holding on to the vehicles they currently own longer or, if they need to buy another vehicle, are planning to look toward the used market.

Table 1: Responses from the 2008 Automotive Lifestyles database revealed these popular used-vehicle choices.		Table 2: Used-vehicle owners held a heavier preference for performance parts upgrades. Power and warrenty issues aside, enthusiasts cited fuel economy as a motivator.

Enthusiast Buying Trends

SEMA is able to follow enthusiast trends via its Automotive Lifestyles Study—an intensive annual database that compiles data from active consumers in the hobby. Each year, subscribers to enthusiast magazines and members of popular automotive-focused communities are rigorously surveyed about personal automotive and specialty-equipment buying habits. On average, more than 3,000 enthusiasts have been surveyed each year. For the third consecutive year, the percentage of enthusiasts who said that they originally purchased their vehicles used has grown: 72% of enthusiasts drove used cars in 2008, up from 67% in 2007 and 54% in 2005.

Table 1 (above) shows the top 21 used vehicles purchased in 2008 by enthusiasts surveyed.

Used-vehicle buying enthusiasts continued spending after their initial purchase. For the 2008 survey, 93% of those who purchased a used vehicle within the previous 12-month period purchased specialty equipment for their vehicles, and 83% began purchasing within the first two months of ownership. Comparing those enthusiasts to new-vehicle buyers who purchased within the previous 12 month shows that used-vehicle buyers were more inclined to make performance upgrades.

Table 2 (above) shows the top 10 specialty-equipment purchases made by both used- and new-vehicle buyers. Notice that used-vehicle owners purchased more performance upgrades, such as air intake and exhaust upgrades, versus new-vehicle buyers, who purchased more accessories. Aside from the obvious desire for speed and power, one possible reason for some of the performance parts purchases by used-vehicle owners could involve a perceived need to improve fuel economy. Around 47% of used-vehicle owners noted that one reason they chose to purchase specialty equipment was to improve fuel economy. One thing to mention, however, is that this survey was conducted when regular gasoline averaged $3.74 a gallon.

More recent survey results still show that enthusiasts have purchased and plan to purchase used vehicles instead of new ones. In April of 2009, automotive enthusiasts were surveyed in order to find out whether their vehicle buying habits had changed as a result of the deepening economic downturn. About 32% said that they purchased a vehicle during the previous six months, and a majority of them (69%) said that they purchased a used vehicle. The top reason, by far, was the price of a used vehicle compared to a new one.

“I was able to afford an overall better, more reliable vehicle with 29,000 miles on it that I would not have been able to afford new,” wrote one enthusiast. Another said that, “Due to the economy and not being able to retire and work on my street-rod projects, I decided to purchase a C5 FRC Corvette so my wife and I can still enjoy some performance cruising this summer.”

Some enthusiasts are choosing to buy used vehicles with the purpose of accessorizing them. One enthusiast commented that there are many aftermarket parts already available, while another purchased a used vehicle to “trick out.” Over half (58%) of those who said that they purchased used vehicles indicated that they purchased specialty equipment for their vehicles this year. And of the 20% who said that they plan to purchase vehicles within the next six months, over half (58%) plan to buy used vehicles. Table 3 (below) shows which vehicle segment types were purchased over the last six months or were planned for purchase by enthusiasts who were or are in the market for a used vehicle.

Table 3: Large-, mid- and small-size SUVs have lost some appeal while large pickups gained promise. Many enthusiasts are simply unsure about their plans, possibly resulting from economic uncertainty.		Table 4: Even as new-vehicle sales drop, the reality is that more than 27 million fullsize pickups are registered in the United States—a large market not to be ignored.

What It All Means

With the economy being down during the latter part of 2008 and the first half of 2009, it probably comes as no surprise that consumers are buying used instead of new vehicles. So how do SEMA members benefit from this shift? One way is to understand what vehicles are currently on the roads today (i.e., where the potential opportunities exist). SEMA members now have access to U.S. vehicle registration data supplied by Experian Automotive, which details a composite view of vehicles that are currently registered and their location. For example, Table 4 (above) shows the top 10 fullsize pickups that were registered at the close of 2008. While this is merely a snapshot of just one vehicle type registered in the United States, the complete database is available for all vehicles, even at a state level.

If 2009 ends the way analysts have predicted, it will be one of the worst on record. Keep in mind, however, that even in just this single situation, a total of 27 million vehicles accounts for a healthy consumer base. Consumers are either holding on to their vehicles longer or are choosing to buy used vehicles at higher rates than in years past. SEMA members have tools at their disposal to help determine what enthusiasts are buying or plan to buy as well as determine where these future potential customers are located.

Enthusiast Top 10 Used Vehicles These vehicles represent a snapshot of the top vehicles owned by enthusiasts surveyed who purchased a used vehicle within the last year.
Ford F-Series Powerstroke Diesel		Chevrolet Camaro
Chevrolet Corvette		Ford F Series
Ford Mustang		Nissan 240SX
Chevrolet Camaro SS		Dodge Ram
Lexus SC300		Ford Pickup

SEMA News - June 2009
RESEARCH

By Ty Michael and Zack Krelle

Numbers Add Up to a Substantial Number of Specialty-Equipment Prospects

For the first quarter of the year, automotive industry analysts made pessimistic forecasts for new-vehicle sales volume for 2009. In February, J.D. Power and Associates predicted that total new-vehicle sales would reach a mere 10.4 million units—down 1 million units from the company’s forecast just a month prior and 6 million under the annual average during the past decade. And, in late March, R.L. Polk & Co. released results from a survey showing that 70% of consumers plan to purchase used vehicles as their next vehicle purchase. These same consumers also noted plans to retain their current vehicles more than half a year longer—56.3 months compared to 49 from responses collected six years earlier. In short, consumers are either holding on to the vehicles they currently own longer or, if they need to buy another vehicle, are planning to look toward the used market.

Table 1: Responses from the 2008 Automotive Lifestyles database revealed these popular used-vehicle choices.		Table 2: Used-vehicle owners held a heavier preference for performance parts upgrades. Power and warrenty issues aside, enthusiasts cited fuel economy as a motivator.

Enthusiast Buying Trends

SEMA is able to follow enthusiast trends via its Automotive Lifestyles Study—an intensive annual database that compiles data from active consumers in the hobby. Each year, subscribers to enthusiast magazines and members of popular automotive-focused communities are rigorously surveyed about personal automotive and specialty-equipment buying habits. On average, more than 3,000 enthusiasts have been surveyed each year. For the third consecutive year, the percentage of enthusiasts who said that they originally purchased their vehicles used has grown: 72% of enthusiasts drove used cars in 2008, up from 67% in 2007 and 54% in 2005.

Table 1 (above) shows the top 21 used vehicles purchased in 2008 by enthusiasts surveyed.

Used-vehicle buying enthusiasts continued spending after their initial purchase. For the 2008 survey, 93% of those who purchased a used vehicle within the previous 12-month period purchased specialty equipment for their vehicles, and 83% began purchasing within the first two months of ownership. Comparing those enthusiasts to new-vehicle buyers who purchased within the previous 12 month shows that used-vehicle buyers were more inclined to make performance upgrades.

Table 2 (above) shows the top 10 specialty-equipment purchases made by both used- and new-vehicle buyers. Notice that used-vehicle owners purchased more performance upgrades, such as air intake and exhaust upgrades, versus new-vehicle buyers, who purchased more accessories. Aside from the obvious desire for speed and power, one possible reason for some of the performance parts purchases by used-vehicle owners could involve a perceived need to improve fuel economy. Around 47% of used-vehicle owners noted that one reason they chose to purchase specialty equipment was to improve fuel economy. One thing to mention, however, is that this survey was conducted when regular gasoline averaged $3.74 a gallon.

More recent survey results still show that enthusiasts have purchased and plan to purchase used vehicles instead of new ones. In April of 2009, automotive enthusiasts were surveyed in order to find out whether their vehicle buying habits had changed as a result of the deepening economic downturn. About 32% said that they purchased a vehicle during the previous six months, and a majority of them (69%) said that they purchased a used vehicle. The top reason, by far, was the price of a used vehicle compared to a new one.

“I was able to afford an overall better, more reliable vehicle with 29,000 miles on it that I would not have been able to afford new,” wrote one enthusiast. Another said that, “Due to the economy and not being able to retire and work on my street-rod projects, I decided to purchase a C5 FRC Corvette so my wife and I can still enjoy some performance cruising this summer.”

Some enthusiasts are choosing to buy used vehicles with the purpose of accessorizing them. One enthusiast commented that there are many aftermarket parts already available, while another purchased a used vehicle to “trick out.” Over half (58%) of those who said that they purchased used vehicles indicated that they purchased specialty equipment for their vehicles this year. And of the 20% who said that they plan to purchase vehicles within the next six months, over half (58%) plan to buy used vehicles. Table 3 (below) shows which vehicle segment types were purchased over the last six months or were planned for purchase by enthusiasts who were or are in the market for a used vehicle.

Table 3: Large-, mid- and small-size SUVs have lost some appeal while large pickups gained promise. Many enthusiasts are simply unsure about their plans, possibly resulting from economic uncertainty.		Table 4: Even as new-vehicle sales drop, the reality is that more than 27 million fullsize pickups are registered in the United States—a large market not to be ignored.

What It All Means

With the economy being down during the latter part of 2008 and the first half of 2009, it probably comes as no surprise that consumers are buying used instead of new vehicles. So how do SEMA members benefit from this shift? One way is to understand what vehicles are currently on the roads today (i.e., where the potential opportunities exist). SEMA members now have access to U.S. vehicle registration data supplied by Experian Automotive, which details a composite view of vehicles that are currently registered and their location. For example, Table 4 (above) shows the top 10 fullsize pickups that were registered at the close of 2008. While this is merely a snapshot of just one vehicle type registered in the United States, the complete database is available for all vehicles, even at a state level.

If 2009 ends the way analysts have predicted, it will be one of the worst on record. Keep in mind, however, that even in just this single situation, a total of 27 million vehicles accounts for a healthy consumer base. Consumers are either holding on to their vehicles longer or are choosing to buy used vehicles at higher rates than in years past. SEMA members have tools at their disposal to help determine what enthusiasts are buying or plan to buy as well as determine where these future potential customers are located.

Enthusiast Top 10 Used Vehicles These vehicles represent a snapshot of the top vehicles owned by enthusiasts surveyed who purchased a used vehicle within the last year.
Ford F-Series Powerstroke Diesel		Chevrolet Camaro
Chevrolet Corvette		Ford F Series
Ford Mustang		Nissan 240SX
Chevrolet Camaro SS		Dodge Ram
Lexus SC300		Ford Pickup

SEMA News - June 2009
Inside SEMA

SEMA Vice President of Administration

SEMA News: Can you briefly explain your role and the role of your department at SEMA?

Linda Czarkowski: The administration department’s focus is primarily on the internal operations of the association. Every program or service offered by SEMA will come through or affect this department at some time, in some fashion. The department consists of the executive office, accounting, budgeting, finance, insurance, human resources, benefits, equipment, the mail room and facilities maintenance. I am the liaison to the audit review, budget review and investment committees as well as the internal safety committee, and I participate on various internal cross-functional teams.

SN: What are some of the programs and initiatives you and your staff are working on?

LC: We have been working for some time on the implementation of NetForum, an Internet-based management system. We will be going live with this system for our membership billing in June. Once fully implemented, the system will allow new members to complete their applications and pay for their memberships online. In addition, current members will be able to manage and update their membership information online.

We are also working with the SEMA Educational Institute (SEI), developing procedures to include management of agreements as well as online payment processing and making sure that we have the appropriate insurance coverage.

Internally, this is the time of year when we review all of our insurance policies, ensuring that we have appropriate coverage at the best available price. We also are diligently working on developing our annual budget for fiscal-year 2010. Additionally, we are looking at our own practices to see where we can implement new or improved ones to find cost-saving opportunities or eliminate waste.

SN: What advice can you give to member companies that are dealing with the challenging economy?

LC: I would advise member companies to focus on relationships. Relationships with their banks can be very beneficial. Make sure that you are in a bank that caters to the size of your company. There are several banks that cater to the needs of small- to midsize companies, providing a more personal touch. I would also advise companies to look at the services their banks offer. For example, is it cost effective to take advantage of an eDeposit system? With this system, you scan the checks in your own office and get same-day credit to your account. It’s a great opportunity to increase your cash flow.

Additionally, pay attention to your merchant statement if you are a credit-card merchant. There are often erroneous charges to these accounts.

There are service providers that will analyze your merchant statements on a monthly basis, working with your credit-card processor to correct errors. These service providers typically charge a 50% fee on any savings that they find, and their agreements are usually for a period of two years. SEMA utilized this service over the past two years and recovered several thousand dollars in erroneous charges. These companies will also assist you in negotiating with your credit-card processor.

If you are having cash-flow problems, keep the lines of communication open with your creditors. Many times, you may find that they are open to offering special payment terms. This is beneficial to both parties involved. It is SEMA’s experience that it is better to have a company on a payment plan rather than having to send that company to collections.

SN: What do you see as the greatest opportunities the association offers its members?

LC: SEMA offers members a variety of programs and services, from market research to our efforts on regulatory activity as well as the opportunity to get involved. I think involvement is one of the greatest opportunities we can offer. For younger people in the industry, the Young Executives Network (YEN) is a great opportunity to network and become involved with your peers. SEMA also has two political action committees (PAC)—a federal and a California state PAC. Get involved with the PACs to help SEMA promote the causes of the industry to both state and congressional leaders. Involvement in any capacity with any SEMA program could mean a nomination and election to the SEMA Board of Directors. What better place to have your voice heard and have a hand in molding the future of the association?