SEMA News -- April 2009
REQUIRED READING

Magazines in and outside the United States are eager to highlight the newest specialty-equipment product offerings, and they often do so by including New Product Showcases in their magazine. This month’s “Required Reading” features a few of these columns and provides tips on how to increase your chances of being included.

How to Get Your New Product Included in the Showcase

There’s nothing like editorial coverage to get things rolling.

Arrive with materials ready to go. That means a press kit with detailed product information and high-resolution digital art, at the very least. Even better, add some technical background information—dyno testing or “how it works” information—that would bring a reporter up to speed on the concepts relating to your new product. A ready-to-go story about your own product might also get the ideas flowing in the editorial department of a national magazine. It’s also good to include some company history and, of course, contact information, which should also point to your website, assuming you have one that is fully functional and up-to-date.

Hold it together in a standard-size folder. Resist the temptation to package your media kit in a cute lunchbox, diamond-plate notebook or thermos. It needs to slip easily into a briefcase and be filed on a shelf for easy reference. Anything too bulky will likely be abandoned when it’s time for an editor or writer to repack and get on a plane.

Look into the media center. Your media kit should be made available at places where writers and editors can be found, such as an event’s press room. Check with event management to see where they should be placed, and replenish as necessary. Your press kit materials will need to be delivered, placed and serviced by your own team.

Consider all events. The SEMA Show is the premier industry event, but it’s important to consider other events to round out your public relations plan. Some events are even built around new-product news, such as the annual Motorsports Parts Manufacturers Council (MPMC) Media Trade Conference. The MPMC event is formatted so that members can meet dozens of editors over a three-day period. It’s a rare opportunity to generate coverage and exchange information about plans for the coming year.

Consider a press conference—but do it carefully. If your media plan entails just putting your new products out in your booth, you are leaving a lot to chance. Your exposure will depend on the right media migrating to your booth, identifying the new product and leaving with photography and information. You might consider staging a press conference to announce a new product, but unless you have a real breakthrough to offer—something truly newsworthy—a press conference might night not be the best method to get coverage.

The media is a valuable tool for building credibility and reaching the masses.

Look into programs, such as the New Products Showcase.

Take advantage of whatever announcements, programs or spotlight opportunities the show management creates. The SEMA Show New Products Showcase, for example, attracts media attention and exponentially increases your chances of appearing in magazines and newspapers. That’s because the program is set up to make it easy for editors to cover new products. Every new product is situated within an appropriate category, so media can easily locate the products they’re most interested in. All entries are attractively displayed and photographed for distribution to the media.

SEMA also organizes specific groups of media participants, such as international editors, to pick new products for awards. These visiting media use the New Product Showcase as their catalog of new ideas.

They select the best new products for their market—maybe China, Brazil or Sweden—vote on the winners and take the information home for use in their hometown publications. That creates export opportunities for the companies that participate and global product awareness that could open doors.

Review your SEMA Show Directory listing. Like many others, the SEMA Show Directory is an annual reference book. Writers and editors regularly look up contacts by turning to the part of the book that lists companies by product category. You want to make sure your company is listed in every appropriate product category. By cross-referencing, you make your company visible for consideration in a wider variety of product guides, product tests and product news releases. Because the SEMA Show Directory is also posted on www.SEMAShow.com, individual consumers who did not attend may also discover your new product.

Having a great idea can be the start of a new business, but creating the product is only the beginning. With a good press kit and a little help from event producers, you can shorten the time it takes for everyone to see your latest development.

SEMA News — April 2009

 Paralyzed or Energized—The Choice Is Yours

The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket

Most economists are predicting a longer-than-usual recovery after a very sharp entry into the current recession. In conjunction, the auto industry is predicted to be in for drastic changes, not only in what it will look like and how it does business, but also in the technologies that will emerge in new vehicles. In a recent interview, SEMA Vice President of Vehicle Technology John Waraniak detailed not only where the automotive world appears to be headed, but what the association is doing to help its members ready themselves for the coming opportunities.

SEMA News: What are some of the challenges and trends SEMA members should start preparing for now in order to take advantage of the opportunities that will surface in the coming months and years?

John Waraniak: Let me start with the business challenges first: Don’t waste this crisis. Due to the financial meltdown on Wall Street and the speed of change, we are in a crisis environment. And the instinct during a crisis is to wait out the uncertainty and become paralyzed. That strategy is wrong. Now is the time to be energized, prepare, challenge conventional wisdom with nontraditional thinking and create the preferred future. Leading through uncertainty is tough. There’s no script for running a company in this historic downturn. The range of possible futures confronting specialty-equipment businesses is great; however, companies with flexibility and situational awareness are more likely to survive this financial crisis than those that choose to ignore the consequences of inaction.

Today is a different world. The U.S. auto industry is undergoing serious structural changes, and the decisions SEMA members make today—as well as their understanding and knowledge about advanced vehicle technology challenges, solutions and opportunities—will impact their immediate and long-term futures. The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket.

A123 Systems aftermarket Hymotion plug-in battery pack can be installed in Toyota Prius hybrids. The company claims that converting to its battery back can yield more than 100 mpg.

This crisis is agnostic. No one is immune. It has affected every stakeholder in the automotive value chain and nearly every sector in the economy. A combined 988 dealerships went out of business or consolidated last year. Although most recessions are V-shaped, we seem to have entered this one rather quickly. I believe this recovery will take several years and resembles more of a Nike swoosh. Past financial crises have had very different effects on the economy, but they do provide insights and observations on how companies can survive this current crisis and prepare for the eventual recovery.

Automakers and the aftermarket are certainly going to experience some tough times over the next 12–18 months, however, it’s not all doom and gloom. The automotive industry has long been and will continue to be one of the most important sectors in the U.S. economy. The automotive and motor-vehicle aftermarket parts industries also represent one of the biggest economic multipliers of any sector of the economy. There’s a little bit of the auto industry in nearly every congressional district. In many states, employment in automotive and automotive-parts manufacturing ranks among the top three manufacturing industries. I’m confident that there will be many new and exciting opportunities for SEMA members to continue making vehicles go farther and faster as the auto industry restructures and new technologies are deployed. Innovation does not come from the discovery of technology, but from being the first to use technology to meet customer needs.

Regarding technology trends and changes, I see four megatrends impacting the automotive aftermarket—driving green, driving connected, driving safe and driving cool—and vehicle technology is integral to all four. These four megatrends represent significant challenges, but even greater opportunities for SEMA companies developing products and services in the areas of aerodynamics, weight reduction, fuel efficiency, electronics, start-stop technology and personalization applications.

More than half of all new U.S. vehicles now offer iPod connectivity.

SN: What do you see these technologies and trends doing to vehicle systems and product-development processes and their impact on SEMA-member companies?

JW: Powertrain efficiency, vehicle electrification, software and electronics integration for infotainment and active safety have significant impacts on SEMA-member companies today and well into the future. More and more hardware systems are becoming commodities or are being replaced with electronic and software systems with higher reliability and lower cost. The electronics content of today’s vehicles has increased by 50% in the past five years. More than half of all new U.S. vehicles now offer iPod connectivity, and more than 80% offer Bluetooth connectivity. Consumers want seamless on-board vehicle connectivity with their homes, offices and the rest of the world. They want simple and intuitive ways to operate cell phones and entertainment systems, connect to weather and traffic reports, as well as access the information and content of electronic devices that are built in, brought in or beamed in to their vehicles. All three of these areas need to work together seamlessly to connect drivers to their world and the information they need. The challenges, opportunities and solutions for SEMA members lie in how effectively these features, devices and accessories can be integrated into the vehicle by OEMs, suppliers and specialty-equipment manufacturers, retailers and installers.

Flexible systems, open platform architectures and OEM-aftermarket collaboration are the way forward. Open architectures, interoperability and accessory-friendly systems drive integration, and integration drives innovation and growth. As vehicle electronics get more connected, consumers are demanding more control, as evidenced by the iPod revolution, mobile video, Bluetooth connectivity and systems that offer fully integrated, voice-activated communication and entertainment systems. OEMs realize that commoditization will not allow for consumer’s personalization needs. Neither will old business models and product-development processes.

Vegistroke is a self-contained, heated, automated flexible fuel system for the Ford Powerstroke developed by Dino Fuel Alternatives in Portland, Oregon. The one-piece aluminum billet block Vegistroke has been designed and tested and has now been released as the V3.

Toyota’s Scion is a proven example of the power of profitable personalization, and Sync is a great example of Ford’s connectivity, collaboration and personalization strategy. Ford is working hard to be the automotive leader in infotainment and connectivity by working with the automotive aftermarket and consumer electronics industries. Alan Mulally, Ford’s CEO, recently stated that “…we are a car company, but we are learning to think like an electronics company when it comes to bringing fresh, new and innovative technologies and products to market.” Sync is a very successful competitive differentiator, but more importantly, it represents an electronic platform that is more capable than ever for integrating aftermarket products and applications into the vehicle faster, better and more profitably.
Product-development processes based on lean customization principles and open architectures are creating new opportunities as vehicle manufacturers are driven to commonize and reduce the complexity of vehicles while simultaneously developing the flexibility to build more models off fewer platforms.

Successful OEMs will rely more on flexible global platforms and the aftermarket to reach new markets and quickly address fragmenting market segments with increased personalization and lower costs. Lean customization can make the difference between built-in profits and reverse-engineered costs. Open architecture approaches recognize that the most valuable applications may not yet be apparent. Decoupled development, standard interfaces and open collaboration are reasons why SEMA formed an alliance with the Consumer Electronics Association (CEA) and created the Automotive Electronics Connectivity Committee (AECC).

Enlightened OEMs and SEMA-member companies need to work together to ensure that they can add future capability profitably. Open systems, standardization, authentication and collaboration are essential to getting infotainment systems safely integrated and installed in vehicles while simultaneously achieving increased consumer satisfaction and allowing for later system upgrades. The tipping point for the social utility of connected vehicles is the commercialization of these technologies, applications and services. I’m confident that specialty-equipment companies will play a key role in accelerating the commercialization, deployment and acceptance of connected vehicle technologies as well as alternative powertrain technologies.

SN: Do technologies exist now—or are there some under development—to enhance the performance of vehicles, such as the Toyota Prius and other hybrids and electric vehicles?

The Making Green Cool Zone at the 2008 SEMA Show featured displays and information about a multitude of technology developments, including this Corvette powered by cellulosic E85R ethanol made from wood.

JW: Lithium-ion batteries and hybrid vehicles are a very hot technology and an opportunity now and for the future of customization. Hybrid vehicle production will reach 1.7 million per year by 2012–2013 and reach a production rate of more than 50% of all new vehicles by 2015. SEMA companies, such as A123 System’s aftermarket division, Hymotion, recognize lithium-ion batteries as one of the most important technologies for powering electric motors in vehicles and announced at last year’s SEMA Green Performance Technology Briefing Program that it has teamed with Galpin Auto Sports to provide aftermarket battery packs for Prius cruisers, hot-rod hybrids and muscle electrics.

After years of development for automotive applications and use in cell phones and power tools, lithium-ion batteries are being readied for automotive mass production. The main advantage they offer over conventional nickel-metal hydride batteries is that they are compact and offer superior performance. Unfortunately, they are also quite expensive. The lithium-ion battery pack for the Chevy Volt, for example, will cost somewhere between $5,000–$10,000.

Plug-in vehicle technology development is being accelerated by the major auto manufacturers, and all of them have working prototypes of both plug-in hybrid-electric vehicles and plug-in electric vehicles that have small backup gas or diesel generators. Plug-in vehicles offer drivers the fuel-efficiency benefits of hybrid cars with the added feature of being able to plug in to household electricity when the car is not in use. This leads to increased mileage and fuel savings. Plug-in hybrid-electric vehicles also offer extended electric-only propulsion. Drivers can use the electric mode for short trips and switch to a blended mode of combined gas and electric once the battery runs low or if higher engine performance is needed. Automakers are focused on providing electric vehicles that can travel 40 miles on a single charge since 78% of consumers commute 40 miles or less each day.

One important note for SEMA companies to recognize is that connected vehicles, green performance, hybrid and electric vehicle technology are not just about new vehicles. The aftermarket biofuel systems technology developed by Dino Fuel Alternatives and the Linc Volt are good examples. The Linc Volt—a ’59 Lincoln Continental Mark IV, the car of American dreams of old—has been re-powered by musician Neil Young and builder Johnathan Goodwin with a new-series hybrid system to run on biodiesel and electricity, enabling it to achieve up to 100 miles per gallon. Johnathan, who will be participating in our Making Green Cool Zone (MGCZ) and Green Performance Technology Briefing Program again this year, truly embodies the performance-enthusiast lifestyle. His goal is to inspire this generation as well as the next by creating a clean automobile propulsion technology that serves the needs of the 21st century and delivers performance that is a reflection of the SEMA spirit for years to come.

SN: Fuel efficiency and green technologies don’t center only on engine and powertrain development. What part do aerodynamics, new materials and other technologies play in aftermarket green technologies?

JW: Only 20% of the fuel energy is used to power today’s vehicles. There are many technology and process areas that offer reasons for increased optimism for SEMA members in the areas of new materials for weight reduction; body kits with reduced drag; lubrication systems; bearings and hubs that reduce friction; wheels and tires with less rolling resistance; optical systems and cameras that replace sensors; and batteries and energy storage devices with increased performance. SEMA-member companies focused on these technologies as well as developments that increase total performance, reduce and recover lost energy from, say, braking and convert it to electricity for storage or to power other vehicle systems will do well with consumers demanding increased mileage without sacrificing performance and the cool factor.

SN: SEMA has produced webinars, seminars and other presentations to help educate association members about the technological changes on the horizon. What programs does SEMA currently provide, and what new initiatives are in the works?

JW: Much of SEMA’s success through the years can be attributed to our members’, the industry’s and the association’s capability and willingness to adapt and change. Our Making Green Cool Zone this past year as well as our new-product program represent examples and opportunities for members to showcase their products and demonstrate that horsepower and green power can coexist. To better understand advanced vehicle technology and proactively respond to a number of external factors affecting our members’ future growth, SEMA is also conducting a comprehensive industry research study with the Center for Automotive Research (CAR) in Ann Arbor, Michigan. This study provides forward-looking information and strategic guideposts for vehicle technology and business planning support to SEMA members. The preliminary findings of the study were reviewed at the inaugural SEMA CEO Roundtable at the Council Summit last July and most recently in a nationwide webinar on January 15. The CAR study findings and forecasts provide critical and timely insights and input to scenario-planning processes to define potential challenges, opportunities and solutions, which can then be used by SEMA-member companies to develop their own technology roadmaps and business plans.

Johnson Controls will supply the new SmartGauge with EcoGuide product for vehicles produced by Ford Motor Co. The cluster helps hybrid owners attain better fuel efficiency by coaching them on how to optimize performance.

Due to the success of our inaugural MGCZ this past year, we are expanding it for SEMA 2009 and are offering three SuperSessions focused on green performance, connected vehicles and automotive electronics integration and vehicle dynamics as part of our Vehicle Technology Briefing Program. These three-hour sessions will feature leading experts from across the automotive engineering community and will focus on creating solutions and building relationships that benefit SEMA members. We will also be hosting the Mobile Electronics Industry Awards this year. The awards reception will host 400 attendees and will be integrated with our connected vehicle and automotive electronics integration SuperSession on that day as well as our AECC annual meeting.

The AECC consists of members from CEA, Mobile Enhancement Retailers Association (MERA) and SEMA and acts as a catalyst to accelerate collaboration, integration and interoperability between consumers and automotive electronics. Having the AECC annual meeting and Mobile Electronics Industry Awards presented at the SEMA Show will provide additional value for members and reinforce SEMA as the premiere go-to place for aftermarket mobile-electronics integration and business innovation.

We are also working on several exciting initiatives that combine Hardware-in-the Loop (HIL) testing with math model simulation through our CarSim software license for vehicle dynamics performance that incorporates actual SEMA-member product data directly into a vehicle’s body and chassis control modules. It’s the closest thing to physical testing, but at a fraction of the cost. This initiative supports our vehicle-technology strategic goals, the ESC Work Group, Suspension Task Force and ProPledge efforts. Current plans are to have an HIL demonstration at the SEMA Show as part of our vehicle dynamics SuperSession on November 5, along with an electronic stability control simulator provided by Mechanical Simulations. We are also part of a new program with Michigan International Speedway and the Michigan Department of Transportation that will allow SEMA members to road test their connected vehicle products and electronics solutions.

The financial crisis has some companies questioning the value and relevance of trade shows and auto shows. The SEMA Board of Directors and the association staff understand this very well and are working hard to ensure that SEMA and the SEMA Show continue to provide exceptional value and relevance to members.

Vehicles are more than products. They represent who we are. They are works of art, fun, power and access. The Detroit Auto Show focuses on the automotive business. The Los Angeles Auto Show focuses on automotive green technologies. The SEMA Show showcases, celebrates and focuses on the automotive enthusiast lifestyle and the future of customization.

SN: We’ve heard the term “scenario planning” in conjunction with new technologies and business planning. What is scenario planning and how can SEMA help with it?

SEMA Vice President of Vehicle Technology John Waraniak details where the automotive industry appears to be headed as well as four megatrends impacting the future of the specialty-equipment market and what SEMA is doing to help its members ready themselves for the coming opportunities.

JW: Scenario planning is the bridge between strategic thinking and business plans. It is a critical step toward developing an adaptive set of actions that can allow your organization to survive and even grow in nearly any future market environment. Scenario planning can give your company a competitive advantage as the auto industry struggles with overcapacity, increasing market complexity and ongoing uncertainty.

The purpose of scenario planning is to describe what potential futures may occur. The result is a comprehensive set of scenarios or possible futures that provide a framework for understanding the challenges and opportunities that are coming down the road as well as an increased awareness and a knowledge base for determining how to deal with each of the scenarios. Think of scenario planning as both a business planning dashboard for monitoring what’s currently happening as well as an organizational compass to determine which direction to drive your company. Let me give you an example.

One of the biggest challenges facing automakers today is that the global automotive OEM industry is way too fat. It has the capacity to build 94 million vehicles a year, which is 34 million more vehicles than consumers want to buy and equivalent to nearly 100 assembly plants too many. With the U.S. market bouncing around 10–11 million vehicles this year and 12–14 million for the next few years, that creates a lot of uncertainty and risk that scenario planning can help manage.

Managing risk and uncertainty does not mean making your organization more risk averse by simply reducing your forecasts by a random 20% over your competition. Scenario planning enhances coordination, communication and collaboration across an organization. It helps you better understand industry and market dynamics as well as your competitive strategies and positioning. Most importantly, it helps you create or seize opportunities that your competitors either don’t see or don’t have the capabilities to capitalize on.

It’s interesting to note that 65% of executives believe that their companies are high performers when actually only 5% to 20% are top performers. A recent survey also indicated that 88% of organizational missteps are controllable and only 12% are uncontrollable. Scenario planning is a powerful tool to help SEMA companies control what they can and react quickly to what they cannot. Scenario planning cannot predict the future, but it certainly can help shape it.

SEMA News — April 2009

 Paralyzed or Energized—The Choice Is Yours

The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket

Most economists are predicting a longer-than-usual recovery after a very sharp entry into the current recession. In conjunction, the auto industry is predicted to be in for drastic changes, not only in what it will look like and how it does business, but also in the technologies that will emerge in new vehicles. In a recent interview, SEMA Vice President of Vehicle Technology John Waraniak detailed not only where the automotive world appears to be headed, but what the association is doing to help its members ready themselves for the coming opportunities.

SEMA News: What are some of the challenges and trends SEMA members should start preparing for now in order to take advantage of the opportunities that will surface in the coming months and years?

John Waraniak: Let me start with the business challenges first: Don’t waste this crisis. Due to the financial meltdown on Wall Street and the speed of change, we are in a crisis environment. And the instinct during a crisis is to wait out the uncertainty and become paralyzed. That strategy is wrong. Now is the time to be energized, prepare, challenge conventional wisdom with nontraditional thinking and create the preferred future. Leading through uncertainty is tough. There’s no script for running a company in this historic downturn. The range of possible futures confronting specialty-equipment businesses is great; however, companies with flexibility and situational awareness are more likely to survive this financial crisis than those that choose to ignore the consequences of inaction.

Today is a different world. The U.S. auto industry is undergoing serious structural changes, and the decisions SEMA members make today—as well as their understanding and knowledge about advanced vehicle technology challenges, solutions and opportunities—will impact their immediate and long-term futures. The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket.

A123 Systems aftermarket Hymotion plug-in battery pack can be installed in Toyota Prius hybrids. The company claims that converting to its battery back can yield more than 100 mpg.

This crisis is agnostic. No one is immune. It has affected every stakeholder in the automotive value chain and nearly every sector in the economy. A combined 988 dealerships went out of business or consolidated last year. Although most recessions are V-shaped, we seem to have entered this one rather quickly. I believe this recovery will take several years and resembles more of a Nike swoosh. Past financial crises have had very different effects on the economy, but they do provide insights and observations on how companies can survive this current crisis and prepare for the eventual recovery.

Automakers and the aftermarket are certainly going to experience some tough times over the next 12–18 months, however, it’s not all doom and gloom. The automotive industry has long been and will continue to be one of the most important sectors in the U.S. economy. The automotive and motor-vehicle aftermarket parts industries also represent one of the biggest economic multipliers of any sector of the economy. There’s a little bit of the auto industry in nearly every congressional district. In many states, employment in automotive and automotive-parts manufacturing ranks among the top three manufacturing industries. I’m confident that there will be many new and exciting opportunities for SEMA members to continue making vehicles go farther and faster as the auto industry restructures and new technologies are deployed. Innovation does not come from the discovery of technology, but from being the first to use technology to meet customer needs.

Regarding technology trends and changes, I see four megatrends impacting the automotive aftermarket—driving green, driving connected, driving safe and driving cool—and vehicle technology is integral to all four. These four megatrends represent significant challenges, but even greater opportunities for SEMA companies developing products and services in the areas of aerodynamics, weight reduction, fuel efficiency, electronics, start-stop technology and personalization applications.

More than half of all new U.S. vehicles now offer iPod connectivity.

SN: What do you see these technologies and trends doing to vehicle systems and product-development processes and their impact on SEMA-member companies?

JW: Powertrain efficiency, vehicle electrification, software and electronics integration for infotainment and active safety have significant impacts on SEMA-member companies today and well into the future. More and more hardware systems are becoming commodities or are being replaced with electronic and software systems with higher reliability and lower cost. The electronics content of today’s vehicles has increased by 50% in the past five years. More than half of all new U.S. vehicles now offer iPod connectivity, and more than 80% offer Bluetooth connectivity. Consumers want seamless on-board vehicle connectivity with their homes, offices and the rest of the world. They want simple and intuitive ways to operate cell phones and entertainment systems, connect to weather and traffic reports, as well as access the information and content of electronic devices that are built in, brought in or beamed in to their vehicles. All three of these areas need to work together seamlessly to connect drivers to their world and the information they need. The challenges, opportunities and solutions for SEMA members lie in how effectively these features, devices and accessories can be integrated into the vehicle by OEMs, suppliers and specialty-equipment manufacturers, retailers and installers.

Flexible systems, open platform architectures and OEM-aftermarket collaboration are the way forward. Open architectures, interoperability and accessory-friendly systems drive integration, and integration drives innovation and growth. As vehicle electronics get more connected, consumers are demanding more control, as evidenced by the iPod revolution, mobile video, Bluetooth connectivity and systems that offer fully integrated, voice-activated communication and entertainment systems. OEMs realize that commoditization will not allow for consumer’s personalization needs. Neither will old business models and product-development processes.

Vegistroke is a self-contained, heated, automated flexible fuel system for the Ford Powerstroke developed by Dino Fuel Alternatives in Portland, Oregon. The one-piece aluminum billet block Vegistroke has been designed and tested and has now been released as the V3.

Toyota’s Scion is a proven example of the power of profitable personalization, and Sync is a great example of Ford’s connectivity, collaboration and personalization strategy. Ford is working hard to be the automotive leader in infotainment and connectivity by working with the automotive aftermarket and consumer electronics industries. Alan Mulally, Ford’s CEO, recently stated that “…we are a car company, but we are learning to think like an electronics company when it comes to bringing fresh, new and innovative technologies and products to market.” Sync is a very successful competitive differentiator, but more importantly, it represents an electronic platform that is more capable than ever for integrating aftermarket products and applications into the vehicle faster, better and more profitably.
Product-development processes based on lean customization principles and open architectures are creating new opportunities as vehicle manufacturers are driven to commonize and reduce the complexity of vehicles while simultaneously developing the flexibility to build more models off fewer platforms.

Successful OEMs will rely more on flexible global platforms and the aftermarket to reach new markets and quickly address fragmenting market segments with increased personalization and lower costs. Lean customization can make the difference between built-in profits and reverse-engineered costs. Open architecture approaches recognize that the most valuable applications may not yet be apparent. Decoupled development, standard interfaces and open collaboration are reasons why SEMA formed an alliance with the Consumer Electronics Association (CEA) and created the Automotive Electronics Connectivity Committee (AECC).

Enlightened OEMs and SEMA-member companies need to work together to ensure that they can add future capability profitably. Open systems, standardization, authentication and collaboration are essential to getting infotainment systems safely integrated and installed in vehicles while simultaneously achieving increased consumer satisfaction and allowing for later system upgrades. The tipping point for the social utility of connected vehicles is the commercialization of these technologies, applications and services. I’m confident that specialty-equipment companies will play a key role in accelerating the commercialization, deployment and acceptance of connected vehicle technologies as well as alternative powertrain technologies.

SN: Do technologies exist now—or are there some under development—to enhance the performance of vehicles, such as the Toyota Prius and other hybrids and electric vehicles?

The Making Green Cool Zone at the 2008 SEMA Show featured displays and information about a multitude of technology developments, including this Corvette powered by cellulosic E85R ethanol made from wood.

JW: Lithium-ion batteries and hybrid vehicles are a very hot technology and an opportunity now and for the future of customization. Hybrid vehicle production will reach 1.7 million per year by 2012–2013 and reach a production rate of more than 50% of all new vehicles by 2015. SEMA companies, such as A123 System’s aftermarket division, Hymotion, recognize lithium-ion batteries as one of the most important technologies for powering electric motors in vehicles and announced at last year’s SEMA Green Performance Technology Briefing Program that it has teamed with Galpin Auto Sports to provide aftermarket battery packs for Prius cruisers, hot-rod hybrids and muscle electrics.

After years of development for automotive applications and use in cell phones and power tools, lithium-ion batteries are being readied for automotive mass production. The main advantage they offer over conventional nickel-metal hydride batteries is that they are compact and offer superior performance. Unfortunately, they are also quite expensive. The lithium-ion battery pack for the Chevy Volt, for example, will cost somewhere between $5,000–$10,000.

Plug-in vehicle technology development is being accelerated by the major auto manufacturers, and all of them have working prototypes of both plug-in hybrid-electric vehicles and plug-in electric vehicles that have small backup gas or diesel generators. Plug-in vehicles offer drivers the fuel-efficiency benefits of hybrid cars with the added feature of being able to plug in to household electricity when the car is not in use. This leads to increased mileage and fuel savings. Plug-in hybrid-electric vehicles also offer extended electric-only propulsion. Drivers can use the electric mode for short trips and switch to a blended mode of combined gas and electric once the battery runs low or if higher engine performance is needed. Automakers are focused on providing electric vehicles that can travel 40 miles on a single charge since 78% of consumers commute 40 miles or less each day.

One important note for SEMA companies to recognize is that connected vehicles, green performance, hybrid and electric vehicle technology are not just about new vehicles. The aftermarket biofuel systems technology developed by Dino Fuel Alternatives and the Linc Volt are good examples. The Linc Volt—a ’59 Lincoln Continental Mark IV, the car of American dreams of old—has been re-powered by musician Neil Young and builder Johnathan Goodwin with a new-series hybrid system to run on biodiesel and electricity, enabling it to achieve up to 100 miles per gallon. Johnathan, who will be participating in our Making Green Cool Zone (MGCZ) and Green Performance Technology Briefing Program again this year, truly embodies the performance-enthusiast lifestyle. His goal is to inspire this generation as well as the next by creating a clean automobile propulsion technology that serves the needs of the 21st century and delivers performance that is a reflection of the SEMA spirit for years to come.

SN: Fuel efficiency and green technologies don’t center only on engine and powertrain development. What part do aerodynamics, new materials and other technologies play in aftermarket green technologies?

JW: Only 20% of the fuel energy is used to power today’s vehicles. There are many technology and process areas that offer reasons for increased optimism for SEMA members in the areas of new materials for weight reduction; body kits with reduced drag; lubrication systems; bearings and hubs that reduce friction; wheels and tires with less rolling resistance; optical systems and cameras that replace sensors; and batteries and energy storage devices with increased performance. SEMA-member companies focused on these technologies as well as developments that increase total performance, reduce and recover lost energy from, say, braking and convert it to electricity for storage or to power other vehicle systems will do well with consumers demanding increased mileage without sacrificing performance and the cool factor.

SN: SEMA has produced webinars, seminars and other presentations to help educate association members about the technological changes on the horizon. What programs does SEMA currently provide, and what new initiatives are in the works?

JW: Much of SEMA’s success through the years can be attributed to our members’, the industry’s and the association’s capability and willingness to adapt and change. Our Making Green Cool Zone this past year as well as our new-product program represent examples and opportunities for members to showcase their products and demonstrate that horsepower and green power can coexist. To better understand advanced vehicle technology and proactively respond to a number of external factors affecting our members’ future growth, SEMA is also conducting a comprehensive industry research study with the Center for Automotive Research (CAR) in Ann Arbor, Michigan. This study provides forward-looking information and strategic guideposts for vehicle technology and business planning support to SEMA members. The preliminary findings of the study were reviewed at the inaugural SEMA CEO Roundtable at the Council Summit last July and most recently in a nationwide webinar on January 15. The CAR study findings and forecasts provide critical and timely insights and input to scenario-planning processes to define potential challenges, opportunities and solutions, which can then be used by SEMA-member companies to develop their own technology roadmaps and business plans.

Johnson Controls will supply the new SmartGauge with EcoGuide product for vehicles produced by Ford Motor Co. The cluster helps hybrid owners attain better fuel efficiency by coaching them on how to optimize performance.

Due to the success of our inaugural MGCZ this past year, we are expanding it for SEMA 2009 and are offering three SuperSessions focused on green performance, connected vehicles and automotive electronics integration and vehicle dynamics as part of our Vehicle Technology Briefing Program. These three-hour sessions will feature leading experts from across the automotive engineering community and will focus on creating solutions and building relationships that benefit SEMA members. We will also be hosting the Mobile Electronics Industry Awards this year. The awards reception will host 400 attendees and will be integrated with our connected vehicle and automotive electronics integration SuperSession on that day as well as our AECC annual meeting.

The AECC consists of members from CEA, Mobile Enhancement Retailers Association (MERA) and SEMA and acts as a catalyst to accelerate collaboration, integration and interoperability between consumers and automotive electronics. Having the AECC annual meeting and Mobile Electronics Industry Awards presented at the SEMA Show will provide additional value for members and reinforce SEMA as the premiere go-to place for aftermarket mobile-electronics integration and business innovation.

We are also working on several exciting initiatives that combine Hardware-in-the Loop (HIL) testing with math model simulation through our CarSim software license for vehicle dynamics performance that incorporates actual SEMA-member product data directly into a vehicle’s body and chassis control modules. It’s the closest thing to physical testing, but at a fraction of the cost. This initiative supports our vehicle-technology strategic goals, the ESC Work Group, Suspension Task Force and ProPledge efforts. Current plans are to have an HIL demonstration at the SEMA Show as part of our vehicle dynamics SuperSession on November 5, along with an electronic stability control simulator provided by Mechanical Simulations. We are also part of a new program with Michigan International Speedway and the Michigan Department of Transportation that will allow SEMA members to road test their connected vehicle products and electronics solutions.

The financial crisis has some companies questioning the value and relevance of trade shows and auto shows. The SEMA Board of Directors and the association staff understand this very well and are working hard to ensure that SEMA and the SEMA Show continue to provide exceptional value and relevance to members.

Vehicles are more than products. They represent who we are. They are works of art, fun, power and access. The Detroit Auto Show focuses on the automotive business. The Los Angeles Auto Show focuses on automotive green technologies. The SEMA Show showcases, celebrates and focuses on the automotive enthusiast lifestyle and the future of customization.

SN: We’ve heard the term “scenario planning” in conjunction with new technologies and business planning. What is scenario planning and how can SEMA help with it?

SEMA Vice President of Vehicle Technology John Waraniak details where the automotive industry appears to be headed as well as four megatrends impacting the future of the specialty-equipment market and what SEMA is doing to help its members ready themselves for the coming opportunities.

JW: Scenario planning is the bridge between strategic thinking and business plans. It is a critical step toward developing an adaptive set of actions that can allow your organization to survive and even grow in nearly any future market environment. Scenario planning can give your company a competitive advantage as the auto industry struggles with overcapacity, increasing market complexity and ongoing uncertainty.

The purpose of scenario planning is to describe what potential futures may occur. The result is a comprehensive set of scenarios or possible futures that provide a framework for understanding the challenges and opportunities that are coming down the road as well as an increased awareness and a knowledge base for determining how to deal with each of the scenarios. Think of scenario planning as both a business planning dashboard for monitoring what’s currently happening as well as an organizational compass to determine which direction to drive your company. Let me give you an example.

One of the biggest challenges facing automakers today is that the global automotive OEM industry is way too fat. It has the capacity to build 94 million vehicles a year, which is 34 million more vehicles than consumers want to buy and equivalent to nearly 100 assembly plants too many. With the U.S. market bouncing around 10–11 million vehicles this year and 12–14 million for the next few years, that creates a lot of uncertainty and risk that scenario planning can help manage.

Managing risk and uncertainty does not mean making your organization more risk averse by simply reducing your forecasts by a random 20% over your competition. Scenario planning enhances coordination, communication and collaboration across an organization. It helps you better understand industry and market dynamics as well as your competitive strategies and positioning. Most importantly, it helps you create or seize opportunities that your competitors either don’t see or don’t have the capabilities to capitalize on.

It’s interesting to note that 65% of executives believe that their companies are high performers when actually only 5% to 20% are top performers. A recent survey also indicated that 88% of organizational missteps are controllable and only 12% are uncontrollable. Scenario planning is a powerful tool to help SEMA companies control what they can and react quickly to what they cannot. Scenario planning cannot predict the future, but it certainly can help shape it.

SEMA News — April 2009

 Paralyzed or Energized—The Choice Is Yours

The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket

Most economists are predicting a longer-than-usual recovery after a very sharp entry into the current recession. In conjunction, the auto industry is predicted to be in for drastic changes, not only in what it will look like and how it does business, but also in the technologies that will emerge in new vehicles. In a recent interview, SEMA Vice President of Vehicle Technology John Waraniak detailed not only where the automotive world appears to be headed, but what the association is doing to help its members ready themselves for the coming opportunities.

SEMA News: What are some of the challenges and trends SEMA members should start preparing for now in order to take advantage of the opportunities that will surface in the coming months and years?

John Waraniak: Let me start with the business challenges first: Don’t waste this crisis. Due to the financial meltdown on Wall Street and the speed of change, we are in a crisis environment. And the instinct during a crisis is to wait out the uncertainty and become paralyzed. That strategy is wrong. Now is the time to be energized, prepare, challenge conventional wisdom with nontraditional thinking and create the preferred future. Leading through uncertainty is tough. There’s no script for running a company in this historic downturn. The range of possible futures confronting specialty-equipment businesses is great; however, companies with flexibility and situational awareness are more likely to survive this financial crisis than those that choose to ignore the consequences of inaction.

Today is a different world. The U.S. auto industry is undergoing serious structural changes, and the decisions SEMA members make today—as well as their understanding and knowledge about advanced vehicle technology challenges, solutions and opportunities—will impact their immediate and long-term futures. The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket.

A123 Systems aftermarket Hymotion plug-in battery pack can be installed in Toyota Prius hybrids. The company claims that converting to its battery back can yield more than 100 mpg.

This crisis is agnostic. No one is immune. It has affected every stakeholder in the automotive value chain and nearly every sector in the economy. A combined 988 dealerships went out of business or consolidated last year. Although most recessions are V-shaped, we seem to have entered this one rather quickly. I believe this recovery will take several years and resembles more of a Nike swoosh. Past financial crises have had very different effects on the economy, but they do provide insights and observations on how companies can survive this current crisis and prepare for the eventual recovery.

Automakers and the aftermarket are certainly going to experience some tough times over the next 12–18 months, however, it’s not all doom and gloom. The automotive industry has long been and will continue to be one of the most important sectors in the U.S. economy. The automotive and motor-vehicle aftermarket parts industries also represent one of the biggest economic multipliers of any sector of the economy. There’s a little bit of the auto industry in nearly every congressional district. In many states, employment in automotive and automotive-parts manufacturing ranks among the top three manufacturing industries. I’m confident that there will be many new and exciting opportunities for SEMA members to continue making vehicles go farther and faster as the auto industry restructures and new technologies are deployed. Innovation does not come from the discovery of technology, but from being the first to use technology to meet customer needs.

Regarding technology trends and changes, I see four megatrends impacting the automotive aftermarket—driving green, driving connected, driving safe and driving cool—and vehicle technology is integral to all four. These four megatrends represent significant challenges, but even greater opportunities for SEMA companies developing products and services in the areas of aerodynamics, weight reduction, fuel efficiency, electronics, start-stop technology and personalization applications.

More than half of all new U.S. vehicles now offer iPod connectivity.

SN: What do you see these technologies and trends doing to vehicle systems and product-development processes and their impact on SEMA-member companies?

JW: Powertrain efficiency, vehicle electrification, software and electronics integration for infotainment and active safety have significant impacts on SEMA-member companies today and well into the future. More and more hardware systems are becoming commodities or are being replaced with electronic and software systems with higher reliability and lower cost. The electronics content of today’s vehicles has increased by 50% in the past five years. More than half of all new U.S. vehicles now offer iPod connectivity, and more than 80% offer Bluetooth connectivity. Consumers want seamless on-board vehicle connectivity with their homes, offices and the rest of the world. They want simple and intuitive ways to operate cell phones and entertainment systems, connect to weather and traffic reports, as well as access the information and content of electronic devices that are built in, brought in or beamed in to their vehicles. All three of these areas need to work together seamlessly to connect drivers to their world and the information they need. The challenges, opportunities and solutions for SEMA members lie in how effectively these features, devices and accessories can be integrated into the vehicle by OEMs, suppliers and specialty-equipment manufacturers, retailers and installers.

Flexible systems, open platform architectures and OEM-aftermarket collaboration are the way forward. Open architectures, interoperability and accessory-friendly systems drive integration, and integration drives innovation and growth. As vehicle electronics get more connected, consumers are demanding more control, as evidenced by the iPod revolution, mobile video, Bluetooth connectivity and systems that offer fully integrated, voice-activated communication and entertainment systems. OEMs realize that commoditization will not allow for consumer’s personalization needs. Neither will old business models and product-development processes.

Vegistroke is a self-contained, heated, automated flexible fuel system for the Ford Powerstroke developed by Dino Fuel Alternatives in Portland, Oregon. The one-piece aluminum billet block Vegistroke has been designed and tested and has now been released as the V3.

Toyota’s Scion is a proven example of the power of profitable personalization, and Sync is a great example of Ford’s connectivity, collaboration and personalization strategy. Ford is working hard to be the automotive leader in infotainment and connectivity by working with the automotive aftermarket and consumer electronics industries. Alan Mulally, Ford’s CEO, recently stated that “…we are a car company, but we are learning to think like an electronics company when it comes to bringing fresh, new and innovative technologies and products to market.” Sync is a very successful competitive differentiator, but more importantly, it represents an electronic platform that is more capable than ever for integrating aftermarket products and applications into the vehicle faster, better and more profitably.
Product-development processes based on lean customization principles and open architectures are creating new opportunities as vehicle manufacturers are driven to commonize and reduce the complexity of vehicles while simultaneously developing the flexibility to build more models off fewer platforms.

Successful OEMs will rely more on flexible global platforms and the aftermarket to reach new markets and quickly address fragmenting market segments with increased personalization and lower costs. Lean customization can make the difference between built-in profits and reverse-engineered costs. Open architecture approaches recognize that the most valuable applications may not yet be apparent. Decoupled development, standard interfaces and open collaboration are reasons why SEMA formed an alliance with the Consumer Electronics Association (CEA) and created the Automotive Electronics Connectivity Committee (AECC).

Enlightened OEMs and SEMA-member companies need to work together to ensure that they can add future capability profitably. Open systems, standardization, authentication and collaboration are essential to getting infotainment systems safely integrated and installed in vehicles while simultaneously achieving increased consumer satisfaction and allowing for later system upgrades. The tipping point for the social utility of connected vehicles is the commercialization of these technologies, applications and services. I’m confident that specialty-equipment companies will play a key role in accelerating the commercialization, deployment and acceptance of connected vehicle technologies as well as alternative powertrain technologies.

SN: Do technologies exist now—or are there some under development—to enhance the performance of vehicles, such as the Toyota Prius and other hybrids and electric vehicles?

The Making Green Cool Zone at the 2008 SEMA Show featured displays and information about a multitude of technology developments, including this Corvette powered by cellulosic E85R ethanol made from wood.

JW: Lithium-ion batteries and hybrid vehicles are a very hot technology and an opportunity now and for the future of customization. Hybrid vehicle production will reach 1.7 million per year by 2012–2013 and reach a production rate of more than 50% of all new vehicles by 2015. SEMA companies, such as A123 System’s aftermarket division, Hymotion, recognize lithium-ion batteries as one of the most important technologies for powering electric motors in vehicles and announced at last year’s SEMA Green Performance Technology Briefing Program that it has teamed with Galpin Auto Sports to provide aftermarket battery packs for Prius cruisers, hot-rod hybrids and muscle electrics.

After years of development for automotive applications and use in cell phones and power tools, lithium-ion batteries are being readied for automotive mass production. The main advantage they offer over conventional nickel-metal hydride batteries is that they are compact and offer superior performance. Unfortunately, they are also quite expensive. The lithium-ion battery pack for the Chevy Volt, for example, will cost somewhere between $5,000–$10,000.

Plug-in vehicle technology development is being accelerated by the major auto manufacturers, and all of them have working prototypes of both plug-in hybrid-electric vehicles and plug-in electric vehicles that have small backup gas or diesel generators. Plug-in vehicles offer drivers the fuel-efficiency benefits of hybrid cars with the added feature of being able to plug in to household electricity when the car is not in use. This leads to increased mileage and fuel savings. Plug-in hybrid-electric vehicles also offer extended electric-only propulsion. Drivers can use the electric mode for short trips and switch to a blended mode of combined gas and electric once the battery runs low or if higher engine performance is needed. Automakers are focused on providing electric vehicles that can travel 40 miles on a single charge since 78% of consumers commute 40 miles or less each day.

One important note for SEMA companies to recognize is that connected vehicles, green performance, hybrid and electric vehicle technology are not just about new vehicles. The aftermarket biofuel systems technology developed by Dino Fuel Alternatives and the Linc Volt are good examples. The Linc Volt—a ’59 Lincoln Continental Mark IV, the car of American dreams of old—has been re-powered by musician Neil Young and builder Johnathan Goodwin with a new-series hybrid system to run on biodiesel and electricity, enabling it to achieve up to 100 miles per gallon. Johnathan, who will be participating in our Making Green Cool Zone (MGCZ) and Green Performance Technology Briefing Program again this year, truly embodies the performance-enthusiast lifestyle. His goal is to inspire this generation as well as the next by creating a clean automobile propulsion technology that serves the needs of the 21st century and delivers performance that is a reflection of the SEMA spirit for years to come.

SN: Fuel efficiency and green technologies don’t center only on engine and powertrain development. What part do aerodynamics, new materials and other technologies play in aftermarket green technologies?

JW: Only 20% of the fuel energy is used to power today’s vehicles. There are many technology and process areas that offer reasons for increased optimism for SEMA members in the areas of new materials for weight reduction; body kits with reduced drag; lubrication systems; bearings and hubs that reduce friction; wheels and tires with less rolling resistance; optical systems and cameras that replace sensors; and batteries and energy storage devices with increased performance. SEMA-member companies focused on these technologies as well as developments that increase total performance, reduce and recover lost energy from, say, braking and convert it to electricity for storage or to power other vehicle systems will do well with consumers demanding increased mileage without sacrificing performance and the cool factor.

SN: SEMA has produced webinars, seminars and other presentations to help educate association members about the technological changes on the horizon. What programs does SEMA currently provide, and what new initiatives are in the works?

JW: Much of SEMA’s success through the years can be attributed to our members’, the industry’s and the association’s capability and willingness to adapt and change. Our Making Green Cool Zone this past year as well as our new-product program represent examples and opportunities for members to showcase their products and demonstrate that horsepower and green power can coexist. To better understand advanced vehicle technology and proactively respond to a number of external factors affecting our members’ future growth, SEMA is also conducting a comprehensive industry research study with the Center for Automotive Research (CAR) in Ann Arbor, Michigan. This study provides forward-looking information and strategic guideposts for vehicle technology and business planning support to SEMA members. The preliminary findings of the study were reviewed at the inaugural SEMA CEO Roundtable at the Council Summit last July and most recently in a nationwide webinar on January 15. The CAR study findings and forecasts provide critical and timely insights and input to scenario-planning processes to define potential challenges, opportunities and solutions, which can then be used by SEMA-member companies to develop their own technology roadmaps and business plans.

Johnson Controls will supply the new SmartGauge with EcoGuide product for vehicles produced by Ford Motor Co. The cluster helps hybrid owners attain better fuel efficiency by coaching them on how to optimize performance.

Due to the success of our inaugural MGCZ this past year, we are expanding it for SEMA 2009 and are offering three SuperSessions focused on green performance, connected vehicles and automotive electronics integration and vehicle dynamics as part of our Vehicle Technology Briefing Program. These three-hour sessions will feature leading experts from across the automotive engineering community and will focus on creating solutions and building relationships that benefit SEMA members. We will also be hosting the Mobile Electronics Industry Awards this year. The awards reception will host 400 attendees and will be integrated with our connected vehicle and automotive electronics integration SuperSession on that day as well as our AECC annual meeting.

The AECC consists of members from CEA, Mobile Enhancement Retailers Association (MERA) and SEMA and acts as a catalyst to accelerate collaboration, integration and interoperability between consumers and automotive electronics. Having the AECC annual meeting and Mobile Electronics Industry Awards presented at the SEMA Show will provide additional value for members and reinforce SEMA as the premiere go-to place for aftermarket mobile-electronics integration and business innovation.

We are also working on several exciting initiatives that combine Hardware-in-the Loop (HIL) testing with math model simulation through our CarSim software license for vehicle dynamics performance that incorporates actual SEMA-member product data directly into a vehicle’s body and chassis control modules. It’s the closest thing to physical testing, but at a fraction of the cost. This initiative supports our vehicle-technology strategic goals, the ESC Work Group, Suspension Task Force and ProPledge efforts. Current plans are to have an HIL demonstration at the SEMA Show as part of our vehicle dynamics SuperSession on November 5, along with an electronic stability control simulator provided by Mechanical Simulations. We are also part of a new program with Michigan International Speedway and the Michigan Department of Transportation that will allow SEMA members to road test their connected vehicle products and electronics solutions.

The financial crisis has some companies questioning the value and relevance of trade shows and auto shows. The SEMA Board of Directors and the association staff understand this very well and are working hard to ensure that SEMA and the SEMA Show continue to provide exceptional value and relevance to members.

Vehicles are more than products. They represent who we are. They are works of art, fun, power and access. The Detroit Auto Show focuses on the automotive business. The Los Angeles Auto Show focuses on automotive green technologies. The SEMA Show showcases, celebrates and focuses on the automotive enthusiast lifestyle and the future of customization.

SN: We’ve heard the term “scenario planning” in conjunction with new technologies and business planning. What is scenario planning and how can SEMA help with it?

SEMA Vice President of Vehicle Technology John Waraniak details where the automotive industry appears to be headed as well as four megatrends impacting the future of the specialty-equipment market and what SEMA is doing to help its members ready themselves for the coming opportunities.

JW: Scenario planning is the bridge between strategic thinking and business plans. It is a critical step toward developing an adaptive set of actions that can allow your organization to survive and even grow in nearly any future market environment. Scenario planning can give your company a competitive advantage as the auto industry struggles with overcapacity, increasing market complexity and ongoing uncertainty.

The purpose of scenario planning is to describe what potential futures may occur. The result is a comprehensive set of scenarios or possible futures that provide a framework for understanding the challenges and opportunities that are coming down the road as well as an increased awareness and a knowledge base for determining how to deal with each of the scenarios. Think of scenario planning as both a business planning dashboard for monitoring what’s currently happening as well as an organizational compass to determine which direction to drive your company. Let me give you an example.

One of the biggest challenges facing automakers today is that the global automotive OEM industry is way too fat. It has the capacity to build 94 million vehicles a year, which is 34 million more vehicles than consumers want to buy and equivalent to nearly 100 assembly plants too many. With the U.S. market bouncing around 10–11 million vehicles this year and 12–14 million for the next few years, that creates a lot of uncertainty and risk that scenario planning can help manage.

Managing risk and uncertainty does not mean making your organization more risk averse by simply reducing your forecasts by a random 20% over your competition. Scenario planning enhances coordination, communication and collaboration across an organization. It helps you better understand industry and market dynamics as well as your competitive strategies and positioning. Most importantly, it helps you create or seize opportunities that your competitors either don’t see or don’t have the capabilities to capitalize on.

It’s interesting to note that 65% of executives believe that their companies are high performers when actually only 5% to 20% are top performers. A recent survey also indicated that 88% of organizational missteps are controllable and only 12% are uncontrollable. Scenario planning is a powerful tool to help SEMA companies control what they can and react quickly to what they cannot. Scenario planning cannot predict the future, but it certainly can help shape it.

SEMA News — April 2009

 Paralyzed or Energized—The Choice Is Yours

The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket

Most economists are predicting a longer-than-usual recovery after a very sharp entry into the current recession. In conjunction, the auto industry is predicted to be in for drastic changes, not only in what it will look like and how it does business, but also in the technologies that will emerge in new vehicles. In a recent interview, SEMA Vice President of Vehicle Technology John Waraniak detailed not only where the automotive world appears to be headed, but what the association is doing to help its members ready themselves for the coming opportunities.

SEMA News: What are some of the challenges and trends SEMA members should start preparing for now in order to take advantage of the opportunities that will surface in the coming months and years?

John Waraniak: Let me start with the business challenges first: Don’t waste this crisis. Due to the financial meltdown on Wall Street and the speed of change, we are in a crisis environment. And the instinct during a crisis is to wait out the uncertainty and become paralyzed. That strategy is wrong. Now is the time to be energized, prepare, challenge conventional wisdom with nontraditional thinking and create the preferred future. Leading through uncertainty is tough. There’s no script for running a company in this historic downturn. The range of possible futures confronting specialty-equipment businesses is great; however, companies with flexibility and situational awareness are more likely to survive this financial crisis than those that choose to ignore the consequences of inaction.

Today is a different world. The U.S. auto industry is undergoing serious structural changes, and the decisions SEMA members make today—as well as their understanding and knowledge about advanced vehicle technology challenges, solutions and opportunities—will impact their immediate and long-term futures. The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket.

A123 Systems aftermarket Hymotion plug-in battery pack can be installed in Toyota Prius hybrids. The company claims that converting to its battery back can yield more than 100 mpg.

This crisis is agnostic. No one is immune. It has affected every stakeholder in the automotive value chain and nearly every sector in the economy. A combined 988 dealerships went out of business or consolidated last year. Although most recessions are V-shaped, we seem to have entered this one rather quickly. I believe this recovery will take several years and resembles more of a Nike swoosh. Past financial crises have had very different effects on the economy, but they do provide insights and observations on how companies can survive this current crisis and prepare for the eventual recovery.

Automakers and the aftermarket are certainly going to experience some tough times over the next 12–18 months, however, it’s not all doom and gloom. The automotive industry has long been and will continue to be one of the most important sectors in the U.S. economy. The automotive and motor-vehicle aftermarket parts industries also represent one of the biggest economic multipliers of any sector of the economy. There’s a little bit of the auto industry in nearly every congressional district. In many states, employment in automotive and automotive-parts manufacturing ranks among the top three manufacturing industries. I’m confident that there will be many new and exciting opportunities for SEMA members to continue making vehicles go farther and faster as the auto industry restructures and new technologies are deployed. Innovation does not come from the discovery of technology, but from being the first to use technology to meet customer needs.

Regarding technology trends and changes, I see four megatrends impacting the automotive aftermarket—driving green, driving connected, driving safe and driving cool—and vehicle technology is integral to all four. These four megatrends represent significant challenges, but even greater opportunities for SEMA companies developing products and services in the areas of aerodynamics, weight reduction, fuel efficiency, electronics, start-stop technology and personalization applications.

More than half of all new U.S. vehicles now offer iPod connectivity.

SN: What do you see these technologies and trends doing to vehicle systems and product-development processes and their impact on SEMA-member companies?

JW: Powertrain efficiency, vehicle electrification, software and electronics integration for infotainment and active safety have significant impacts on SEMA-member companies today and well into the future. More and more hardware systems are becoming commodities or are being replaced with electronic and software systems with higher reliability and lower cost. The electronics content of today’s vehicles has increased by 50% in the past five years. More than half of all new U.S. vehicles now offer iPod connectivity, and more than 80% offer Bluetooth connectivity. Consumers want seamless on-board vehicle connectivity with their homes, offices and the rest of the world. They want simple and intuitive ways to operate cell phones and entertainment systems, connect to weather and traffic reports, as well as access the information and content of electronic devices that are built in, brought in or beamed in to their vehicles. All three of these areas need to work together seamlessly to connect drivers to their world and the information they need. The challenges, opportunities and solutions for SEMA members lie in how effectively these features, devices and accessories can be integrated into the vehicle by OEMs, suppliers and specialty-equipment manufacturers, retailers and installers.

Flexible systems, open platform architectures and OEM-aftermarket collaboration are the way forward. Open architectures, interoperability and accessory-friendly systems drive integration, and integration drives innovation and growth. As vehicle electronics get more connected, consumers are demanding more control, as evidenced by the iPod revolution, mobile video, Bluetooth connectivity and systems that offer fully integrated, voice-activated communication and entertainment systems. OEMs realize that commoditization will not allow for consumer’s personalization needs. Neither will old business models and product-development processes.

Vegistroke is a self-contained, heated, automated flexible fuel system for the Ford Powerstroke developed by Dino Fuel Alternatives in Portland, Oregon. The one-piece aluminum billet block Vegistroke has been designed and tested and has now been released as the V3.

Toyota’s Scion is a proven example of the power of profitable personalization, and Sync is a great example of Ford’s connectivity, collaboration and personalization strategy. Ford is working hard to be the automotive leader in infotainment and connectivity by working with the automotive aftermarket and consumer electronics industries. Alan Mulally, Ford’s CEO, recently stated that “…we are a car company, but we are learning to think like an electronics company when it comes to bringing fresh, new and innovative technologies and products to market.” Sync is a very successful competitive differentiator, but more importantly, it represents an electronic platform that is more capable than ever for integrating aftermarket products and applications into the vehicle faster, better and more profitably.
Product-development processes based on lean customization principles and open architectures are creating new opportunities as vehicle manufacturers are driven to commonize and reduce the complexity of vehicles while simultaneously developing the flexibility to build more models off fewer platforms.

Successful OEMs will rely more on flexible global platforms and the aftermarket to reach new markets and quickly address fragmenting market segments with increased personalization and lower costs. Lean customization can make the difference between built-in profits and reverse-engineered costs. Open architecture approaches recognize that the most valuable applications may not yet be apparent. Decoupled development, standard interfaces and open collaboration are reasons why SEMA formed an alliance with the Consumer Electronics Association (CEA) and created the Automotive Electronics Connectivity Committee (AECC).

Enlightened OEMs and SEMA-member companies need to work together to ensure that they can add future capability profitably. Open systems, standardization, authentication and collaboration are essential to getting infotainment systems safely integrated and installed in vehicles while simultaneously achieving increased consumer satisfaction and allowing for later system upgrades. The tipping point for the social utility of connected vehicles is the commercialization of these technologies, applications and services. I’m confident that specialty-equipment companies will play a key role in accelerating the commercialization, deployment and acceptance of connected vehicle technologies as well as alternative powertrain technologies.

SN: Do technologies exist now—or are there some under development—to enhance the performance of vehicles, such as the Toyota Prius and other hybrids and electric vehicles?

The Making Green Cool Zone at the 2008 SEMA Show featured displays and information about a multitude of technology developments, including this Corvette powered by cellulosic E85R ethanol made from wood.

JW: Lithium-ion batteries and hybrid vehicles are a very hot technology and an opportunity now and for the future of customization. Hybrid vehicle production will reach 1.7 million per year by 2012–2013 and reach a production rate of more than 50% of all new vehicles by 2015. SEMA companies, such as A123 System’s aftermarket division, Hymotion, recognize lithium-ion batteries as one of the most important technologies for powering electric motors in vehicles and announced at last year’s SEMA Green Performance Technology Briefing Program that it has teamed with Galpin Auto Sports to provide aftermarket battery packs for Prius cruisers, hot-rod hybrids and muscle electrics.

After years of development for automotive applications and use in cell phones and power tools, lithium-ion batteries are being readied for automotive mass production. The main advantage they offer over conventional nickel-metal hydride batteries is that they are compact and offer superior performance. Unfortunately, they are also quite expensive. The lithium-ion battery pack for the Chevy Volt, for example, will cost somewhere between $5,000–$10,000.

Plug-in vehicle technology development is being accelerated by the major auto manufacturers, and all of them have working prototypes of both plug-in hybrid-electric vehicles and plug-in electric vehicles that have small backup gas or diesel generators. Plug-in vehicles offer drivers the fuel-efficiency benefits of hybrid cars with the added feature of being able to plug in to household electricity when the car is not in use. This leads to increased mileage and fuel savings. Plug-in hybrid-electric vehicles also offer extended electric-only propulsion. Drivers can use the electric mode for short trips and switch to a blended mode of combined gas and electric once the battery runs low or if higher engine performance is needed. Automakers are focused on providing electric vehicles that can travel 40 miles on a single charge since 78% of consumers commute 40 miles or less each day.

One important note for SEMA companies to recognize is that connected vehicles, green performance, hybrid and electric vehicle technology are not just about new vehicles. The aftermarket biofuel systems technology developed by Dino Fuel Alternatives and the Linc Volt are good examples. The Linc Volt—a ’59 Lincoln Continental Mark IV, the car of American dreams of old—has been re-powered by musician Neil Young and builder Johnathan Goodwin with a new-series hybrid system to run on biodiesel and electricity, enabling it to achieve up to 100 miles per gallon. Johnathan, who will be participating in our Making Green Cool Zone (MGCZ) and Green Performance Technology Briefing Program again this year, truly embodies the performance-enthusiast lifestyle. His goal is to inspire this generation as well as the next by creating a clean automobile propulsion technology that serves the needs of the 21st century and delivers performance that is a reflection of the SEMA spirit for years to come.

SN: Fuel efficiency and green technologies don’t center only on engine and powertrain development. What part do aerodynamics, new materials and other technologies play in aftermarket green technologies?

JW: Only 20% of the fuel energy is used to power today’s vehicles. There are many technology and process areas that offer reasons for increased optimism for SEMA members in the areas of new materials for weight reduction; body kits with reduced drag; lubrication systems; bearings and hubs that reduce friction; wheels and tires with less rolling resistance; optical systems and cameras that replace sensors; and batteries and energy storage devices with increased performance. SEMA-member companies focused on these technologies as well as developments that increase total performance, reduce and recover lost energy from, say, braking and convert it to electricity for storage or to power other vehicle systems will do well with consumers demanding increased mileage without sacrificing performance and the cool factor.

SN: SEMA has produced webinars, seminars and other presentations to help educate association members about the technological changes on the horizon. What programs does SEMA currently provide, and what new initiatives are in the works?

JW: Much of SEMA’s success through the years can be attributed to our members’, the industry’s and the association’s capability and willingness to adapt and change. Our Making Green Cool Zone this past year as well as our new-product program represent examples and opportunities for members to showcase their products and demonstrate that horsepower and green power can coexist. To better understand advanced vehicle technology and proactively respond to a number of external factors affecting our members’ future growth, SEMA is also conducting a comprehensive industry research study with the Center for Automotive Research (CAR) in Ann Arbor, Michigan. This study provides forward-looking information and strategic guideposts for vehicle technology and business planning support to SEMA members. The preliminary findings of the study were reviewed at the inaugural SEMA CEO Roundtable at the Council Summit last July and most recently in a nationwide webinar on January 15. The CAR study findings and forecasts provide critical and timely insights and input to scenario-planning processes to define potential challenges, opportunities and solutions, which can then be used by SEMA-member companies to develop their own technology roadmaps and business plans.

Johnson Controls will supply the new SmartGauge with EcoGuide product for vehicles produced by Ford Motor Co. The cluster helps hybrid owners attain better fuel efficiency by coaching them on how to optimize performance.

Due to the success of our inaugural MGCZ this past year, we are expanding it for SEMA 2009 and are offering three SuperSessions focused on green performance, connected vehicles and automotive electronics integration and vehicle dynamics as part of our Vehicle Technology Briefing Program. These three-hour sessions will feature leading experts from across the automotive engineering community and will focus on creating solutions and building relationships that benefit SEMA members. We will also be hosting the Mobile Electronics Industry Awards this year. The awards reception will host 400 attendees and will be integrated with our connected vehicle and automotive electronics integration SuperSession on that day as well as our AECC annual meeting.

The AECC consists of members from CEA, Mobile Enhancement Retailers Association (MERA) and SEMA and acts as a catalyst to accelerate collaboration, integration and interoperability between consumers and automotive electronics. Having the AECC annual meeting and Mobile Electronics Industry Awards presented at the SEMA Show will provide additional value for members and reinforce SEMA as the premiere go-to place for aftermarket mobile-electronics integration and business innovation.

We are also working on several exciting initiatives that combine Hardware-in-the Loop (HIL) testing with math model simulation through our CarSim software license for vehicle dynamics performance that incorporates actual SEMA-member product data directly into a vehicle’s body and chassis control modules. It’s the closest thing to physical testing, but at a fraction of the cost. This initiative supports our vehicle-technology strategic goals, the ESC Work Group, Suspension Task Force and ProPledge efforts. Current plans are to have an HIL demonstration at the SEMA Show as part of our vehicle dynamics SuperSession on November 5, along with an electronic stability control simulator provided by Mechanical Simulations. We are also part of a new program with Michigan International Speedway and the Michigan Department of Transportation that will allow SEMA members to road test their connected vehicle products and electronics solutions.

The financial crisis has some companies questioning the value and relevance of trade shows and auto shows. The SEMA Board of Directors and the association staff understand this very well and are working hard to ensure that SEMA and the SEMA Show continue to provide exceptional value and relevance to members.

Vehicles are more than products. They represent who we are. They are works of art, fun, power and access. The Detroit Auto Show focuses on the automotive business. The Los Angeles Auto Show focuses on automotive green technologies. The SEMA Show showcases, celebrates and focuses on the automotive enthusiast lifestyle and the future of customization.

SN: We’ve heard the term “scenario planning” in conjunction with new technologies and business planning. What is scenario planning and how can SEMA help with it?

SEMA Vice President of Vehicle Technology John Waraniak details where the automotive industry appears to be headed as well as four megatrends impacting the future of the specialty-equipment market and what SEMA is doing to help its members ready themselves for the coming opportunities.

JW: Scenario planning is the bridge between strategic thinking and business plans. It is a critical step toward developing an adaptive set of actions that can allow your organization to survive and even grow in nearly any future market environment. Scenario planning can give your company a competitive advantage as the auto industry struggles with overcapacity, increasing market complexity and ongoing uncertainty.

The purpose of scenario planning is to describe what potential futures may occur. The result is a comprehensive set of scenarios or possible futures that provide a framework for understanding the challenges and opportunities that are coming down the road as well as an increased awareness and a knowledge base for determining how to deal with each of the scenarios. Think of scenario planning as both a business planning dashboard for monitoring what’s currently happening as well as an organizational compass to determine which direction to drive your company. Let me give you an example.

One of the biggest challenges facing automakers today is that the global automotive OEM industry is way too fat. It has the capacity to build 94 million vehicles a year, which is 34 million more vehicles than consumers want to buy and equivalent to nearly 100 assembly plants too many. With the U.S. market bouncing around 10–11 million vehicles this year and 12–14 million for the next few years, that creates a lot of uncertainty and risk that scenario planning can help manage.

Managing risk and uncertainty does not mean making your organization more risk averse by simply reducing your forecasts by a random 20% over your competition. Scenario planning enhances coordination, communication and collaboration across an organization. It helps you better understand industry and market dynamics as well as your competitive strategies and positioning. Most importantly, it helps you create or seize opportunities that your competitors either don’t see or don’t have the capabilities to capitalize on.

It’s interesting to note that 65% of executives believe that their companies are high performers when actually only 5% to 20% are top performers. A recent survey also indicated that 88% of organizational missteps are controllable and only 12% are uncontrollable. Scenario planning is a powerful tool to help SEMA companies control what they can and react quickly to what they cannot. Scenario planning cannot predict the future, but it certainly can help shape it.

SEMA News — April 2009

 Paralyzed or Energized—The Choice Is Yours

The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket

Most economists are predicting a longer-than-usual recovery after a very sharp entry into the current recession. In conjunction, the auto industry is predicted to be in for drastic changes, not only in what it will look like and how it does business, but also in the technologies that will emerge in new vehicles. In a recent interview, SEMA Vice President of Vehicle Technology John Waraniak detailed not only where the automotive world appears to be headed, but what the association is doing to help its members ready themselves for the coming opportunities.

SEMA News: What are some of the challenges and trends SEMA members should start preparing for now in order to take advantage of the opportunities that will surface in the coming months and years?

John Waraniak: Let me start with the business challenges first: Don’t waste this crisis. Due to the financial meltdown on Wall Street and the speed of change, we are in a crisis environment. And the instinct during a crisis is to wait out the uncertainty and become paralyzed. That strategy is wrong. Now is the time to be energized, prepare, challenge conventional wisdom with nontraditional thinking and create the preferred future. Leading through uncertainty is tough. There’s no script for running a company in this historic downturn. The range of possible futures confronting specialty-equipment businesses is great; however, companies with flexibility and situational awareness are more likely to survive this financial crisis than those that choose to ignore the consequences of inaction.

Today is a different world. The U.S. auto industry is undergoing serious structural changes, and the decisions SEMA members make today—as well as their understanding and knowledge about advanced vehicle technology challenges, solutions and opportunities—will impact their immediate and long-term futures. The global automotive industry will experience more change in the next 10 years than it has in the past 50, and these business and technology changes will certainly impact the specialty-equipment aftermarket.

A123 Systems aftermarket Hymotion plug-in battery pack can be installed in Toyota Prius hybrids. The company claims that converting to its battery back can yield more than 100 mpg.

This crisis is agnostic. No one is immune. It has affected every stakeholder in the automotive value chain and nearly every sector in the economy. A combined 988 dealerships went out of business or consolidated last year. Although most recessions are V-shaped, we seem to have entered this one rather quickly. I believe this recovery will take several years and resembles more of a Nike swoosh. Past financial crises have had very different effects on the economy, but they do provide insights and observations on how companies can survive this current crisis and prepare for the eventual recovery.

Automakers and the aftermarket are certainly going to experience some tough times over the next 12–18 months, however, it’s not all doom and gloom. The automotive industry has long been and will continue to be one of the most important sectors in the U.S. economy. The automotive and motor-vehicle aftermarket parts industries also represent one of the biggest economic multipliers of any sector of the economy. There’s a little bit of the auto industry in nearly every congressional district. In many states, employment in automotive and automotive-parts manufacturing ranks among the top three manufacturing industries. I’m confident that there will be many new and exciting opportunities for SEMA members to continue making vehicles go farther and faster as the auto industry restructures and new technologies are deployed. Innovation does not come from the discovery of technology, but from being the first to use technology to meet customer needs.

Regarding technology trends and changes, I see four megatrends impacting the automotive aftermarket—driving green, driving connected, driving safe and driving cool—and vehicle technology is integral to all four. These four megatrends represent significant challenges, but even greater opportunities for SEMA companies developing products and services in the areas of aerodynamics, weight reduction, fuel efficiency, electronics, start-stop technology and personalization applications.

More than half of all new U.S. vehicles now offer iPod connectivity.

SN: What do you see these technologies and trends doing to vehicle systems and product-development processes and their impact on SEMA-member companies?

JW: Powertrain efficiency, vehicle electrification, software and electronics integration for infotainment and active safety have significant impacts on SEMA-member companies today and well into the future. More and more hardware systems are becoming commodities or are being replaced with electronic and software systems with higher reliability and lower cost. The electronics content of today’s vehicles has increased by 50% in the past five years. More than half of all new U.S. vehicles now offer iPod connectivity, and more than 80% offer Bluetooth connectivity. Consumers want seamless on-board vehicle connectivity with their homes, offices and the rest of the world. They want simple and intuitive ways to operate cell phones and entertainment systems, connect to weather and traffic reports, as well as access the information and content of electronic devices that are built in, brought in or beamed in to their vehicles. All three of these areas need to work together seamlessly to connect drivers to their world and the information they need. The challenges, opportunities and solutions for SEMA members lie in how effectively these features, devices and accessories can be integrated into the vehicle by OEMs, suppliers and specialty-equipment manufacturers, retailers and installers.

Flexible systems, open platform architectures and OEM-aftermarket collaboration are the way forward. Open architectures, interoperability and accessory-friendly systems drive integration, and integration drives innovation and growth. As vehicle electronics get more connected, consumers are demanding more control, as evidenced by the iPod revolution, mobile video, Bluetooth connectivity and systems that offer fully integrated, voice-activated communication and entertainment systems. OEMs realize that commoditization will not allow for consumer’s personalization needs. Neither will old business models and product-development processes.

Vegistroke is a self-contained, heated, automated flexible fuel system for the Ford Powerstroke developed by Dino Fuel Alternatives in Portland, Oregon. The one-piece aluminum billet block Vegistroke has been designed and tested and has now been released as the V3.

Toyota’s Scion is a proven example of the power of profitable personalization, and Sync is a great example of Ford’s connectivity, collaboration and personalization strategy. Ford is working hard to be the automotive leader in infotainment and connectivity by working with the automotive aftermarket and consumer electronics industries. Alan Mulally, Ford’s CEO, recently stated that “…we are a car company, but we are learning to think like an electronics company when it comes to bringing fresh, new and innovative technologies and products to market.” Sync is a very successful competitive differentiator, but more importantly, it represents an electronic platform that is more capable than ever for integrating aftermarket products and applications into the vehicle faster, better and more profitably.
Product-development processes based on lean customization principles and open architectures are creating new opportunities as vehicle manufacturers are driven to commonize and reduce the complexity of vehicles while simultaneously developing the flexibility to build more models off fewer platforms.

Successful OEMs will rely more on flexible global platforms and the aftermarket to reach new markets and quickly address fragmenting market segments with increased personalization and lower costs. Lean customization can make the difference between built-in profits and reverse-engineered costs. Open architecture approaches recognize that the most valuable applications may not yet be apparent. Decoupled development, standard interfaces and open collaboration are reasons why SEMA formed an alliance with the Consumer Electronics Association (CEA) and created the Automotive Electronics Connectivity Committee (AECC).

Enlightened OEMs and SEMA-member companies need to work together to ensure that they can add future capability profitably. Open systems, standardization, authentication and collaboration are essential to getting infotainment systems safely integrated and installed in vehicles while simultaneously achieving increased consumer satisfaction and allowing for later system upgrades. The tipping point for the social utility of connected vehicles is the commercialization of these technologies, applications and services. I’m confident that specialty-equipment companies will play a key role in accelerating the commercialization, deployment and acceptance of connected vehicle technologies as well as alternative powertrain technologies.

SN: Do technologies exist now—or are there some under development—to enhance the performance of vehicles, such as the Toyota Prius and other hybrids and electric vehicles?

The Making Green Cool Zone at the 2008 SEMA Show featured displays and information about a multitude of technology developments, including this Corvette powered by cellulosic E85R ethanol made from wood.

JW: Lithium-ion batteries and hybrid vehicles are a very hot technology and an opportunity now and for the future of customization. Hybrid vehicle production will reach 1.7 million per year by 2012–2013 and reach a production rate of more than 50% of all new vehicles by 2015. SEMA companies, such as A123 System’s aftermarket division, Hymotion, recognize lithium-ion batteries as one of the most important technologies for powering electric motors in vehicles and announced at last year’s SEMA Green Performance Technology Briefing Program that it has teamed with Galpin Auto Sports to provide aftermarket battery packs for Prius cruisers, hot-rod hybrids and muscle electrics.

After years of development for automotive applications and use in cell phones and power tools, lithium-ion batteries are being readied for automotive mass production. The main advantage they offer over conventional nickel-metal hydride batteries is that they are compact and offer superior performance. Unfortunately, they are also quite expensive. The lithium-ion battery pack for the Chevy Volt, for example, will cost somewhere between $5,000–$10,000.

Plug-in vehicle technology development is being accelerated by the major auto manufacturers, and all of them have working prototypes of both plug-in hybrid-electric vehicles and plug-in electric vehicles that have small backup gas or diesel generators. Plug-in vehicles offer drivers the fuel-efficiency benefits of hybrid cars with the added feature of being able to plug in to household electricity when the car is not in use. This leads to increased mileage and fuel savings. Plug-in hybrid-electric vehicles also offer extended electric-only propulsion. Drivers can use the electric mode for short trips and switch to a blended mode of combined gas and electric once the battery runs low or if higher engine performance is needed. Automakers are focused on providing electric vehicles that can travel 40 miles on a single charge since 78% of consumers commute 40 miles or less each day.

One important note for SEMA companies to recognize is that connected vehicles, green performance, hybrid and electric vehicle technology are not just about new vehicles. The aftermarket biofuel systems technology developed by Dino Fuel Alternatives and the Linc Volt are good examples. The Linc Volt—a ’59 Lincoln Continental Mark IV, the car of American dreams of old—has been re-powered by musician Neil Young and builder Johnathan Goodwin with a new-series hybrid system to run on biodiesel and electricity, enabling it to achieve up to 100 miles per gallon. Johnathan, who will be participating in our Making Green Cool Zone (MGCZ) and Green Performance Technology Briefing Program again this year, truly embodies the performance-enthusiast lifestyle. His goal is to inspire this generation as well as the next by creating a clean automobile propulsion technology that serves the needs of the 21st century and delivers performance that is a reflection of the SEMA spirit for years to come.

SN: Fuel efficiency and green technologies don’t center only on engine and powertrain development. What part do aerodynamics, new materials and other technologies play in aftermarket green technologies?

JW: Only 20% of the fuel energy is used to power today’s vehicles. There are many technology and process areas that offer reasons for increased optimism for SEMA members in the areas of new materials for weight reduction; body kits with reduced drag; lubrication systems; bearings and hubs that reduce friction; wheels and tires with less rolling resistance; optical systems and cameras that replace sensors; and batteries and energy storage devices with increased performance. SEMA-member companies focused on these technologies as well as developments that increase total performance, reduce and recover lost energy from, say, braking and convert it to electricity for storage or to power other vehicle systems will do well with consumers demanding increased mileage without sacrificing performance and the cool factor.

SN: SEMA has produced webinars, seminars and other presentations to help educate association members about the technological changes on the horizon. What programs does SEMA currently provide, and what new initiatives are in the works?

JW: Much of SEMA’s success through the years can be attributed to our members’, the industry’s and the association’s capability and willingness to adapt and change. Our Making Green Cool Zone this past year as well as our new-product program represent examples and opportunities for members to showcase their products and demonstrate that horsepower and green power can coexist. To better understand advanced vehicle technology and proactively respond to a number of external factors affecting our members’ future growth, SEMA is also conducting a comprehensive industry research study with the Center for Automotive Research (CAR) in Ann Arbor, Michigan. This study provides forward-looking information and strategic guideposts for vehicle technology and business planning support to SEMA members. The preliminary findings of the study were reviewed at the inaugural SEMA CEO Roundtable at the Council Summit last July and most recently in a nationwide webinar on January 15. The CAR study findings and forecasts provide critical and timely insights and input to scenario-planning processes to define potential challenges, opportunities and solutions, which can then be used by SEMA-member companies to develop their own technology roadmaps and business plans.

Johnson Controls will supply the new SmartGauge with EcoGuide product for vehicles produced by Ford Motor Co. The cluster helps hybrid owners attain better fuel efficiency by coaching them on how to optimize performance.

Due to the success of our inaugural MGCZ this past year, we are expanding it for SEMA 2009 and are offering three SuperSessions focused on green performance, connected vehicles and automotive electronics integration and vehicle dynamics as part of our Vehicle Technology Briefing Program. These three-hour sessions will feature leading experts from across the automotive engineering community and will focus on creating solutions and building relationships that benefit SEMA members. We will also be hosting the Mobile Electronics Industry Awards this year. The awards reception will host 400 attendees and will be integrated with our connected vehicle and automotive electronics integration SuperSession on that day as well as our AECC annual meeting.

The AECC consists of members from CEA, Mobile Enhancement Retailers Association (MERA) and SEMA and acts as a catalyst to accelerate collaboration, integration and interoperability between consumers and automotive electronics. Having the AECC annual meeting and Mobile Electronics Industry Awards presented at the SEMA Show will provide additional value for members and reinforce SEMA as the premiere go-to place for aftermarket mobile-electronics integration and business innovation.

We are also working on several exciting initiatives that combine Hardware-in-the Loop (HIL) testing with math model simulation through our CarSim software license for vehicle dynamics performance that incorporates actual SEMA-member product data directly into a vehicle’s body and chassis control modules. It’s the closest thing to physical testing, but at a fraction of the cost. This initiative supports our vehicle-technology strategic goals, the ESC Work Group, Suspension Task Force and ProPledge efforts. Current plans are to have an HIL demonstration at the SEMA Show as part of our vehicle dynamics SuperSession on November 5, along with an electronic stability control simulator provided by Mechanical Simulations. We are also part of a new program with Michigan International Speedway and the Michigan Department of Transportation that will allow SEMA members to road test their connected vehicle products and electronics solutions.

The financial crisis has some companies questioning the value and relevance of trade shows and auto shows. The SEMA Board of Directors and the association staff understand this very well and are working hard to ensure that SEMA and the SEMA Show continue to provide exceptional value and relevance to members.

Vehicles are more than products. They represent who we are. They are works of art, fun, power and access. The Detroit Auto Show focuses on the automotive business. The Los Angeles Auto Show focuses on automotive green technologies. The SEMA Show showcases, celebrates and focuses on the automotive enthusiast lifestyle and the future of customization.

SN: We’ve heard the term “scenario planning” in conjunction with new technologies and business planning. What is scenario planning and how can SEMA help with it?

SEMA Vice President of Vehicle Technology John Waraniak details where the automotive industry appears to be headed as well as four megatrends impacting the future of the specialty-equipment market and what SEMA is doing to help its members ready themselves for the coming opportunities.

JW: Scenario planning is the bridge between strategic thinking and business plans. It is a critical step toward developing an adaptive set of actions that can allow your organization to survive and even grow in nearly any future market environment. Scenario planning can give your company a competitive advantage as the auto industry struggles with overcapacity, increasing market complexity and ongoing uncertainty.

The purpose of scenario planning is to describe what potential futures may occur. The result is a comprehensive set of scenarios or possible futures that provide a framework for understanding the challenges and opportunities that are coming down the road as well as an increased awareness and a knowledge base for determining how to deal with each of the scenarios. Think of scenario planning as both a business planning dashboard for monitoring what’s currently happening as well as an organizational compass to determine which direction to drive your company. Let me give you an example.

One of the biggest challenges facing automakers today is that the global automotive OEM industry is way too fat. It has the capacity to build 94 million vehicles a year, which is 34 million more vehicles than consumers want to buy and equivalent to nearly 100 assembly plants too many. With the U.S. market bouncing around 10–11 million vehicles this year and 12–14 million for the next few years, that creates a lot of uncertainty and risk that scenario planning can help manage.

Managing risk and uncertainty does not mean making your organization more risk averse by simply reducing your forecasts by a random 20% over your competition. Scenario planning enhances coordination, communication and collaboration across an organization. It helps you better understand industry and market dynamics as well as your competitive strategies and positioning. Most importantly, it helps you create or seize opportunities that your competitors either don’t see or don’t have the capabilities to capitalize on.

It’s interesting to note that 65% of executives believe that their companies are high performers when actually only 5% to 20% are top performers. A recent survey also indicated that 88% of organizational missteps are controllable and only 12% are uncontrollable. Scenario planning is a powerful tool to help SEMA companies control what they can and react quickly to what they cannot. Scenario planning cannot predict the future, but it certainly can help shape it.

SEMA News -- April 2009
HERITAGE

By Drew Hardin
Photo Courtesy the Source Interlink Archives

Craig Breedlove’s Spirit of America was arguably one of the prettiest land-speed racers to tackle Bonneville, but it certainly met an ugly end. While chasing Art Arfons’ 434-mph speed record in 1964, Breedlove found himself unable to bring the rocket-powered Spirit to a stop while traveling in excess of 500 mph. Two parachutes and the car’s brakes failed, leaving Breedlove a helpless passenger as the car went off the race course, flew through two telephone poles and augured into a brine pond. Miraculously unhurt, Breedlove swam to safety.

Breedlove’s 526-mph pass was eclipsed just a week later by Arfons, who set a jet-powered land-speed record of 544 mph. Undaunted, Breedlove returned to the salt in 1965 in a new Spirit of America and traded records with Arfons again, finally exceeding 600 mph and setting a high-speed mark that stood for five years.

Photos of Spirit of America’s tailfin sticking out of the water became famous at the time, but this Shell Oil public relations shot of a pensive Breedlove as the Spirit was hauled out of the pond is more evocative. Who knew that this man—seemingly beaten four-plus decades ago—would still be chasing his speed-record dreams in the 21st century?

SEMA News -- April 2009
HERITAGE

By Drew Hardin
Photo Courtesy the Source Interlink Archives

Craig Breedlove’s Spirit of America was arguably one of the prettiest land-speed racers to tackle Bonneville, but it certainly met an ugly end. While chasing Art Arfons’ 434-mph speed record in 1964, Breedlove found himself unable to bring the rocket-powered Spirit to a stop while traveling in excess of 500 mph. Two parachutes and the car’s brakes failed, leaving Breedlove a helpless passenger as the car went off the race course, flew through two telephone poles and augured into a brine pond. Miraculously unhurt, Breedlove swam to safety.

Breedlove’s 526-mph pass was eclipsed just a week later by Arfons, who set a jet-powered land-speed record of 544 mph. Undaunted, Breedlove returned to the salt in 1965 in a new Spirit of America and traded records with Arfons again, finally exceeding 600 mph and setting a high-speed mark that stood for five years.

Photos of Spirit of America’s tailfin sticking out of the water became famous at the time, but this Shell Oil public relations shot of a pensive Breedlove as the Spirit was hauled out of the pond is more evocative. Who knew that this man—seemingly beaten four-plus decades ago—would still be chasing his speed-record dreams in the 21st century?

SEMA News -- April 2009
RESEARCH

By Ty Michael and Zack Krelle

Pitting Performance Against Appearance: Which Is More Important Now?

Nissan’s 240SX, Honda’s Civic and Mitsubishi’s EVO topped the list of vehicles owned by enthusiasts that have an affinity for the compact-performance market.

Urban-lifestyle enthusiasts have one very prominent trait that carries over from the early days of lowriding to the heyday of oversized wheels on pickups and SUVs to today’s more moderate mixture of each: Style and being different is of utmost importance. Add to that the need to infuse interests in music, sports, entertainment and vehicle performance (since big wheels need big power in order to at least make up for the extra weight). One distinctive crossover sub-niche, the Americanized VIP market, employs styles similar to the urban market (i.e., body kits, expensive wheels, lowered profile) with a twist. Even the pure compact-performance market shares some vehicles and lifestyle behaviors with those in the urban-lifestyle market.

Knowledge of enthusiast lifestyles plays an important role when specialty-equipment companies plan their marketing strategies for one main reason: successfully capturing and attracting the attention of potential customers to the company’s brand.

Vehicles, such as this Dodge Charger underscore the recent stray from the traditional formula for urban enthusiasts and illustrate the dominance of performance and style.

Creating and maintaining a particular brand image is important, especially among the younger urban and compact-performance segments of consumers. However, branding embodies different meanings for the two crowds.

Urban-lifestyle enthusiasts seek labels with an established reputation for style. These companies are known for their attention to lifestyle elements (music, fashion, etc). In contrast, compact-performance enthusiasts set their sights on brands that have an established distinction for performance.

Automotive Lifestyles and Specialty Equipment

Table 1 Ford Mustangs have a mainstream appeal while the Nissan 240SX is more specific to the compact-performance market.

Let’s start with the vehicles. Enthusiasts claiming to be part of the urban-lifestyle segment of consumers own a diverse array of cars and light trucks. Topping the list of vehicles driven by urban enthusiasts were Ford Mustangs, Chevrolet Corvettes, Ford F-Series pickups and Honda Civics (see table 1). Other more notable “urban” vehicles, such as the Chrysler 300 and Cadillac Escalade, have more presence at urban-lifestyle targeted car shows; however, actual enthusiasts sporting an “urban” look often drive vehicles characteristic of a multitude of market niches. Urban enthusiasts also have an eye for luxury (shown by the two Lexus models also making the list of most-owned vehicles) as do those involved in the compact-performance scene, where the Nissan 240SX, Honda Civic and Mitsubishi EVO topped the list.

Table 2 Similar products top the lists for both segments, however, urban enthusiasts favor milder performance upgrades and aesthetics. Window tinting and alarm systems are some of the exceptions.

Differences Among Automotive Enthusiasts

Table 3 Compact-performance enthusiasts, on the other hand, lean heavily on performance. Tires are standouts, and suspension upgrades signal a preference for handling.

The last piece of the enthusiast puzzle is how urban-lifestyle and compact-performance enthusiasts actually differ. Besides vehicles owned, compact-performance enthusiasts are heavily geared toward performance, while urban-lifestyle enthusiasts lean more toward appearance. Around 95% of enthusiasts within the compact-performance niche said that they specifically customize their vehicle to increase performance, while 87% of urban-lifestyle enthusiasts gave the same response (8% is a significant difference). In contrast, 36% of the same enthusiasts said that they prefer to modify the appearance of their vehicles over performance, and while this is a relatively small percentage, it is more than double the 16% of compact-performance enthusiasts who prefer appearance over performance. Another significant difference involves place of purchase among these two groups of enthusiasts. Both groups indicated that they purchased the largest percentage of their specialty equipment at online retail stores, but 39% of compact-performance enthusiasts indicated so compared to 24% of urban-lifestyle enthusiasts (see table 4, left).

Table 4 Catalog mail-order purchases are lower for both groups than for the general enthusiast. Internet venues are the most cited, especially for compact-performance consumers.

Compact-performance and urban-lifestyle enthusiasts also differ with respect to demographics. The urban group tended to be a bit older while earning a substantially larger household income compared to enthusiasts within the compact-performance market. On average, urban-lifestyle enthusiasts surveyed were 33 years old, whereas compact-performance enthusiasts were six years younger. Also, the average income of enthusiasts within the urban-lifestyle market was nearly $17,000 more than their compact-performance counterparts.

The data presented in this article is quite comprehensive, but one thing to keep in mind is that automotive enthusiasts of all forms have similarities and differences but are all potentially profitable customers if correctly targeted. This means that a thorough understanding of compact-performance and urban-lifestyle enthusiasts will significantly improve the chances of getting a company’s products into the hands of its desired consumers.

SEMA News -- April 2009
RESEARCH

By Ty Michael and Zack Krelle

Pitting Performance Against Appearance: Which Is More Important Now?

Nissan’s 240SX, Honda’s Civic and Mitsubishi’s EVO topped the list of vehicles owned by enthusiasts that have an affinity for the compact-performance market.

Urban-lifestyle enthusiasts have one very prominent trait that carries over from the early days of lowriding to the heyday of oversized wheels on pickups and SUVs to today’s more moderate mixture of each: Style and being different is of utmost importance. Add to that the need to infuse interests in music, sports, entertainment and vehicle performance (since big wheels need big power in order to at least make up for the extra weight). One distinctive crossover sub-niche, the Americanized VIP market, employs styles similar to the urban market (i.e., body kits, expensive wheels, lowered profile) with a twist. Even the pure compact-performance market shares some vehicles and lifestyle behaviors with those in the urban-lifestyle market.

Knowledge of enthusiast lifestyles plays an important role when specialty-equipment companies plan their marketing strategies for one main reason: successfully capturing and attracting the attention of potential customers to the company’s brand.

Vehicles, such as this Dodge Charger underscore the recent stray from the traditional formula for urban enthusiasts and illustrate the dominance of performance and style.

Creating and maintaining a particular brand image is important, especially among the younger urban and compact-performance segments of consumers. However, branding embodies different meanings for the two crowds.

Urban-lifestyle enthusiasts seek labels with an established reputation for style. These companies are known for their attention to lifestyle elements (music, fashion, etc). In contrast, compact-performance enthusiasts set their sights on brands that have an established distinction for performance.

Automotive Lifestyles and Specialty Equipment

Table 1 Ford Mustangs have a mainstream appeal while the Nissan 240SX is more specific to the compact-performance market.

Let’s start with the vehicles. Enthusiasts claiming to be part of the urban-lifestyle segment of consumers own a diverse array of cars and light trucks. Topping the list of vehicles driven by urban enthusiasts were Ford Mustangs, Chevrolet Corvettes, Ford F-Series pickups and Honda Civics (see table 1). Other more notable “urban” vehicles, such as the Chrysler 300 and Cadillac Escalade, have more presence at urban-lifestyle targeted car shows; however, actual enthusiasts sporting an “urban” look often drive vehicles characteristic of a multitude of market niches. Urban enthusiasts also have an eye for luxury (shown by the two Lexus models also making the list of most-owned vehicles) as do those involved in the compact-performance scene, where the Nissan 240SX, Honda Civic and Mitsubishi EVO topped the list.

Table 2 Similar products top the lists for both segments, however, urban enthusiasts favor milder performance upgrades and aesthetics. Window tinting and alarm systems are some of the exceptions.

Differences Among Automotive Enthusiasts

Table 3 Compact-performance enthusiasts, on the other hand, lean heavily on performance. Tires are standouts, and suspension upgrades signal a preference for handling.

The last piece of the enthusiast puzzle is how urban-lifestyle and compact-performance enthusiasts actually differ. Besides vehicles owned, compact-performance enthusiasts are heavily geared toward performance, while urban-lifestyle enthusiasts lean more toward appearance. Around 95% of enthusiasts within the compact-performance niche said that they specifically customize their vehicle to increase performance, while 87% of urban-lifestyle enthusiasts gave the same response (8% is a significant difference). In contrast, 36% of the same enthusiasts said that they prefer to modify the appearance of their vehicles over performance, and while this is a relatively small percentage, it is more than double the 16% of compact-performance enthusiasts who prefer appearance over performance. Another significant difference involves place of purchase among these two groups of enthusiasts. Both groups indicated that they purchased the largest percentage of their specialty equipment at online retail stores, but 39% of compact-performance enthusiasts indicated so compared to 24% of urban-lifestyle enthusiasts (see table 4, left).

Table 4 Catalog mail-order purchases are lower for both groups than for the general enthusiast. Internet venues are the most cited, especially for compact-performance consumers.

Compact-performance and urban-lifestyle enthusiasts also differ with respect to demographics. The urban group tended to be a bit older while earning a substantially larger household income compared to enthusiasts within the compact-performance market. On average, urban-lifestyle enthusiasts surveyed were 33 years old, whereas compact-performance enthusiasts were six years younger. Also, the average income of enthusiasts within the urban-lifestyle market was nearly $17,000 more than their compact-performance counterparts.

The data presented in this article is quite comprehensive, but one thing to keep in mind is that automotive enthusiasts of all forms have similarities and differences but are all potentially profitable customers if correctly targeted. This means that a thorough understanding of compact-performance and urban-lifestyle enthusiasts will significantly improve the chances of getting a company’s products into the hands of its desired consumers.