As the front line of the specialty-equipment industry, the jobber/retailer sees what is happening in the marketplace before nearly everyone else. SEMA has begun a targeted information-collection program aimed at industry jobber/retailers. The program involves attending industry WD events and visiting jobbers in their businesses and then reporting the findings monthly.

What we're currently hearing is that not all jobber/retailers’ businesses are really struggling. In fact, nearly 30% of the performance parts related jobber/retailers we have spoken to over the past six weeks say their business is up. Another 40% say their business is holding steady.

Some of the jobber/retailers we have talked with are changing their business focus in order to survive. For instance, there was a truck-accessory shop owner who has seen a host of his competitors go out of business and has resorted to targeting only fleet customers. Another one that specializes in custom upholstery shifted to restoration business when its car-dealer customers disappeared.

This information is just a small snapshot of what is going on right now. It is based on conversations with 21 jobber/retailers in our industry. — Jim Spoonhower

For more original market research, visit www.sema.org/research.

One trend BMW execs have noticed during this recession? Buyers are increasingly downsizing from larger models into smaller offerings, like the 1 Series shown here at the SEMA Show.

According to a report in the Detroit News, January sales of luxury brand vehicles in the U.S. took a harder hit than the industry average. While the overall market dropped 37.1%, Mercedes posted a nearly 43% decline; Cadillac a 42.5% drop; and Porsche just under the average with a 36.1% slump.

Analysts attribute the decline to both fewer traditional buyers from struggling banking and real estate industries, as well as what DetNews writer Christine Tierney calls a "newfound austerity," and an attitude shift away from conspicuous consumption.

Jack Nerad, a market analyst at Kelley Blue Book, tells Tierney that people are reluctant to show off during economic downturns and cites examples of traditional luxury car customers opting for a Toyota Prius, while Lexus hybrid sales fall flat (Nerad adds that this is also driven by increased concern for environmental responsibility).

The luxury segment of the specialty-equipment market is likewise not immune to these attitude shifts.

Victor Carrillo, president of The ID Agency, a creative firm representing clients including CEC, Mercedes-Benz, Lexus, Brembo and Recaro, has seen the luxury segment of the aftermarket take a big hit—and we’re only seeing the beginning of it, he says.

“The biggest change will be in the wheel market. A lot of companies that were just marketing [shells] will go away. Some of the tuning companies will go out of business without dramatically scaling back overhead. They just can’t sustain."

Carrillo sees the landscape shifting back to what it looked like when he entered the industry: a handful of solid, major players that innovate and focus on R&D.

“Ultimately you'll have companies that are committed, that are going to stay around, that have to be more innovative and [competitive] on pricing," he explains. "And the consumer ultimately wins."

As part of the New Austerity, Tierney cites BMW executives who've noticed a trend among their customers into smaller models and smaller engines—a 5 Series downsizing to a 3 Series, for example.

Carrillo notices the same trend. He’s even a part of it.

“I’m a die-hard Audi guy,” he says. “I had an A4 completely tuned. And as business started to do better for me, I stepped into an A6 three years ago. The lease is up now, and I still love Audis. But I’m going back to an A4.”

Lower monthly payments and insurance premiums leave a little leftover for wheels and exhaust, to satisfy performance enthusiast cravings. And with several great smaller options available these days—the BMW 1 Series, Audi A3, MINI Clubman—Carrillo says it's a great time to downsize your car. 

And despite seemingly dismal news daily, Carrillo also notes that in this downturn lies opportunity. Carrillo's brother runs noted Porsche tuner TechArt North America who has struggled to make headway with new-car dealers.

“A year and a half ago, it was hard for him to get the attention of dealers,” he says. “Hard to get meetings, hard to get dealers to listen to aftermarket companies and what they were pitching.”

Now, he says, his brother goes to a dealer meeting and receives their full attention.

“He’s talking to the sales department, the parts department, the sales managers. They’re trying to maximize profits on the cars they do sell, which they probably should’ve been doing all along, but was almost kind of a headache when the money was rolling in. They're struggling to sell cars so there’s definitely opportunity there." — Dan Frio

Mossy Nissan Oceanside sells this PowerHouse Amuse quad-tip exhaust on their website, which
the dealership devotes almost exclusively to the sale of aftermarket products.

With Paul Taylor, chief economist of the National Automobile Dealers Association, stating that around 960 dealers closed last year, it's clear that dealers need to explore alternative avenues to increase sales.

Many dealers are, in fact, ahead of the game as they have made the plunge into aftermarket sales before the automotive and economic crisis hit. It is this foresight that many dealers have relied on to help steady faltering sales during this difficult time.

"In these challenging times, dealers are looking for new ways to draw traffic to their dealerships and generate additional revenue," said Ellen McKoy, SEMA senior director of dealer relations. "Accessorizing does both."

Robert Vujcich, parts service director at Colorado-based Pueblo Toyota, states that the dealership started selling aftermarket accessories sometime around 2004 after realizing the potential to increase revenue. Vujcich himself had been reading publications, such as Ward’s Dealer Business and CFO, which emphasized to dealers how much more profitable they could be by incorporating aftermarket accessories into the dealership.

“The aftermarket industry has a huge chunk of the sales out there,” Vujcich said. “We just want a little of it."

Vujcich estimates that aftermarket sales account for around 15% of the dealership’s total sales. He says that Pro Comp lift kits, running boards and hitch steps have been bestsellers.

“We did between $10,00–$15,000 per month in aftermarket sales for 2008,” he said. “It’s a huge part of our business. We have been going to the SEMA Show for the past two years to see where we could expand and what we could bring to the dealership. We will be going again this year.”

California-based Mossy Nissan Oceanside attributes 20% of its sales to aftermarket sales, according to parts specialist Tina Payne. 

“Since we started selling aftermarket accessories sometime between 2002–2003, it has really added a lot more to our sales,” she said. “There was a demand for it in our local area and not too many businesses carry aftermarket accessories. Most of the products the customers were asking for were only available on the Internet, and people like to see the actual product before they purchase it.”

Mossy Nissan Oceanside goes one step further than just giving the customers what they ask for. The dealership preloads several of its vehicles with aftermarket wheels and tires. “The preloaded vehicles do well because they tend to catch people’s attention more and it’s easier for them to buy because they can pay for everything at once,” Payne said.

In 2008, the dealership established a website, www.mossyperformance.com, which is in addition to their homepage and is devoted to their full-line of aftermarket products. Depending on the product, the dealership can perform the installation either in-house or through outside, professional installers.

Pueblo Toyota has its own aftermarket marketing campaign. The dealership aggressively pushes its aftermarket sales through a program where anyone at the dealership who makes an aftermarket sale receives 10% of the total sales. Even after the point of delivery, the dealership employs an e-mail campaign to go after anyone who didn’t make an aftermarket purchase.

It’s an avenue that the dealership knows can help them through tough times.

“Every time we lift a car and put on an aftermarket tire and wheel, it’s a substantial profit for us,” Vujcich said. “For now, due to the economic downturn, we have put on hold plans to build a new Toyota store, but when we do build it, it will double the size of the space we currently are in and have a huge section for aftermarket products."

The dealership currently has a 20x20 space for aftermarket accessories.

It’s all part of Pueblo Toyota’s game plan to stay current with the trend of the automotive and aftermarket industry. Mossy Nissan Oceanside is also well aware of what the future has in store for dealerships.

“I think it is very important for dealers to really start looking towards the aftermarket,” Payne said. “I don’t think as many dealers are doing so as much as they should, but that will definitely change in the future because a lot of people like one-stop shopping, and they are asking for products that are not directly related to maintenance. It's something we all have to do to keep up.”

"With the car business being as slow as it is, this is an opportune time to get dealers' attention and help them understand the benefits and value of accessorization," added McKoy. "Members who take the time now to nurture these relationships will reap the reward, along with the dealers, as the market begins to turn around." — Annie Kang

Young consumers tend to be a hot target among specialty-equipment companies looking to sell products to new and lasting buyers. A testament to this is the trend that consumers aged 18–24 tend to be the one age group that consistently says they plan to purchase specialty-equipment in the coming three months, according to SEMA Performance Parts and Accessories Demand Index (PADI) results.

In the most recent survey, these consumers indicated a higher incidence in wheel, tire and suspension purchase plans last month compared to the same time last year.

Overall purchase plans by young consumers did drop when comparing December to January and year-over-year demand, but a higher number of 18–24 year-olds do plan to outfit their cars and trucks with new wheels, tires or suspension products.

Overall in January, the SEMA PADI improved seven points, or 22%, going from 29 in December to 36 this month. Last month, nearly 10% of adult American drivers (or approximately 10-plus million households of “mainstream consumers”) indicated that they had plans to purchase aftermarket products sometime within the next three months.

Notable improvements in the PADI among several demographics are highlighted in the table below.

While the increase in the latest PADI score may provide some relief to specialty-equipment companies used to hearing nothing but bad news lately, not all segments are receiving the same attention among mainstream consumers. Survey respondents said that they plan to purchase accessories and performance products more so than the previous month, but the same is not true for those planning wheel, tire and suspension purchases.

Close to 4% of consumers said that they were likely to purchase wheels, tires and suspension components, down from nearly 5% in December and 8.4% in January of 2008.

More than 5% of “mainstream consumers” said that they were likely to purchase racing and performance products in January, up from 3.7% in December. Nearly 6% said that they were likely to purchase accessory and appearance products last month, up from 4.2% in December and even slightly up from the 5.4% who indicated so in January 2008.

Over the last three months, on average, 19% of consumers planning to buy accessories owned a pickup, second only to midsize cars (25%) as being the most common target vehicles for enhancement or modification. Next in line were compact-car owners (14%) and fullsize car owners (12 percent).

Also, car dealerships (26%), on average, were the most popular purchase destinations among those planning to enhance their vehicles over the last three months, followed by the Internet and chain auto parts stores (16%, respectively) and independent parts stores (14%).

When aftermarket buyers were asked what form their vehicle would take after customization, this month the most common answer was general personalization (49%), followed by restoration (15%), hot rod (10%) and street performance (7%). — Ty Michael

For more original market research, visit www.sema.org/research.

To assist members with identifying key media contacts in China (including those at Option 4WD, shown at left), SEMA has complied a list of top media editorial contacts in the country. The media database is available online at www.sema.org/international. To go straight to the list of Editorial Contacts in China, click here.

For more information on the Chinese market, access the report on the specialty-equipment market in China at www.sema.org/international or contact Yvonne Wang at yvonnew@sema.org.

How to Get Free Editorial Coverage Overseas

Members are invited to download the PowerPoint presentations made during the 2008 SEMA Show by journalists Zlatko Mulabegovic of Dubai's Top Performance magazine, and Eduardo Bernasconi of Brazil's FullPower. 

Their presentations include useful tips on how to enhance your chances of successfully snagging free editorial coverage from international publications, like 

For tips on getting free editorial coverage overseas, click here.

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A new online resource is available to importers of autos and auto parts. The National Highway Traffic Safety Administration (NHTSA) has posted information designed to help importers comply with applicable Federal Motor Vehicle Safety Standards (FMVSS).

The website includes information on the government standards, reporting requirements, regulatory program and enforcement process. 

For more information on SEMA’s international programs, contact Linda Spencer at lindas@sema.org or visit www.sema.org/international.

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