Ford Transit Connect by H&R Springs, Piloti Racing Shoes

Some of the best opportunities are the ones businesses might never consider. Enthusiasts have been the core market for the specialty-equipment industry, but opportunities within other sectors could provide a buffer during a recessed economy.

Business services and recreational equipment are among the least known or understood markets in the specialty-equipment industry. Fleet vehicle operators, military and farming-equipment suppliers, logistics companies and small businesses have needs that specialty-equipment manufacturers can fulfill.

The products and services that these companies demand fall within the scope of products that are already being manufactured; some as is with others simply needing marginal retooling. Service vehicles, equipment haulers and product delivery vehicles require utility and functionality in their design and packaging. SEMA members have the knowledge and experience to carry their products into new markets, with the convergence of business-related and recreational products covering both routes.

Additionally, these items represent a slice of the pie that has experienced consistent expansion year over year. From 2000 to 2007, each of the product categories listed below had positive growth.


 
At the 2009 Chicago Motor Show, Ford announced its decision to introduce the commercial Transit Connect van to North America in 2009. The model was initially designed as a utility vehicle for the European market to be used in fleet and business sales, but has since been adopted by individuals as a personal utility vehicle around the world.

Ford Transit Connect with Utility Accessory, Storage and Protective Features

Len Deluca, director of Commercial Truck Sales and Marketing at Ford, spoke to members of the press about the model’s versatility, "The vehicle will come in as a wagon; and it's a five-passenger vehicle that can be customized to whatever a customer's needs are. If it’s a retail buyer and they just want a different look on a wagon, they can buy that wagon with five passengers and have room in the back for carrying whatever— soccer equipment, hockey equipment.” 

The model may offer utility for businesses as conversion vans and options for customization for general consumers.

Ford plans to ship the gasoline-powered model of the van to North America, but also has ambitions to unveil the all-electric iteration in 2010, built in conjunction with Smith Electric Vehicles—a European company with tens of thousands of battery-electric conversions under its belt.

Ford claims to have sold more than 600,000 units worldwide from Europe to Asia. The table below offers a snapshot of how sales are distributed throughout Europe.

Toyota Sienna NASCAR Fan Rampvan with wheelchair access and “kneeling” suspension.

Toyota Tundra Ducati Desmosedici Transporter

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

Nissan will move forward with plans to supply Chrysler with a Versa-based model for sale in South America this year.

Nissan’s agreement to have a fullsize pickup produced for it by Chrysler has been brought to a halt, as are plans for the automaker to provide Chrysler with a small car, said Nissan spokesman Mitsura Yonekawa last Friday, according to an AP report.

A previously-inked deal to have Nissan supply Chrysler with a Versa-based model for sale in South America beginning this year is still on, according to Yonekawa.

Paul Medina, parts manager for Norco, California-based Frahm Chrysler Jeep Dodge, believes this agreement will be a good thing for Chrysler dealerships who sell aftermarket parts and accessories. "For every new vehicle that comes out, people will want to accessorize it to make it more appealing, whether it's with a custom grille, wheels or tires," he said.

The other parts of the deal are being reviewed due to the company’s cost-cutting efforts, said Yonekawa.

Chrysler Product Development Chief Frank Klegon stated that while Chrysler is still collaborating with Nissan, though, no contract has been signed.

Bill Wolf, SEMA senior director of OEM relations, believes the hold is only temporary, and that in addition to the Chrysler-Nissan alliance, there will be a growing trend of these partnerships. As reported in last week's SEMA e-News, Fiat has agreed to supply Chrysler with compact vehicles in exchange for allowing Fiat to enjoy its dealer distribution network.

“These alliances are simply a factor of economics because of the high cost of developing and manufacturing new models,” said Wolf. “Also, as a result of the current market, a lot of these manufacturers’ facilities are being underused right now, so it makes good economic sense to have these plants working at full capacity.”

In related news, Chrysler Vice Chairman Jim Press urged dealers at the National Automobile Dealers Association convention on January 25 to order more vehicles, according to another AP report. 

Dealers who attended the conference revealed that Chrysler executives said in a conference call that an additional 15,000 more cars and trucks needed to be ordered so it could qualify for additional government loans. "We've got to get the cash flow coming in so we can get to March 31 as a viable company," Press reportedly said.

The executives stated that 70% of the company’s 3,300 dealers have so far come forward. This includes the dealership where Medina works. "The bottom line is that if dealers don't participate in this call to action, the likelihood of not being in business is a lot greater than them not ordering the vehicles," Medina said.

Chrysler requested an additional $5 billion in government aid earlier this week, in addition to the $4 billion it received in December, as reported by the AP.

Medina is hopeful that the government will be responsive to Chrysler's appeal. "The government aid is what's going to keep the auto industry alive, particularly Chrysler, the dealerships and the multilevel businesses that it will affect," he said. This includes the specialty-equipment industry. "If there is no corporation available, there is no point in supplying the accessories."

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Despite reports from the Chinese media that vehicle sales in China surpassed those in the United States for the first time in January 2009, a SEMA analysis reveals that Americans still buy more cars, but that Chinese sales are nearly equal to U.S. sales for the first month of 2009.

According to a J.D. Power and Associates report, U.S. automobile sales took a deep hit and sales fell 37% in January 2009. China was only slightly more than 60% of the vehicle sales in comparison to the United States from data presented in January 2008. One year later, China is reaching 93% of total U.S. vehicle sales (see table below for statistics in detail). Data used in Chinese press reports compared U.S. passenger vehicle sales with all Chinese vehicle sales, including commercial vehicles.

TOTAL PASSENGER VEHICLES SALES (in units)

Total Passenger Sales, January 2008 
U.S.: 1,042,405
China: 661,938
Total imported vehicle sales in China (passenger and commercial): 29,548

Total Passenger Sales, January 2009
U.S.: 655,302
China: 610,600
Total imported vehicle sales in China (passenger and commercial): 23,405

CAAM (China Automobile Association Manufacturer) confirmed that based on the 610,600 of all passenger vehicles in China sold in January 2009, 439,000 were passenger sedans; 129,300 were crossovers; 30,200 were SUVs; and 11,900 were MPVs. These numbers include all makes of vehicles sold in China which are produced domestically.

An additional 23,405 vehicles were imported into China in January 2009, though this number includes both passenger and commercial vehicles. These numbers portray the growing economic life and high demand in vehicles among consumers in the Middle Kingdom.

SEMA members can reference the China Report at www.sema.org/international.

For more information or questions regarding vehicle sales in China, please contact Yvonne Wang at yvonnew@sema.org.

Sources: CAAM (China Automobile Association Manufacturer); General Administration Customs of P.R. of China; J.D. Power and Associates U.S. Sales Report for January 2009

A series of new online workshops to help SEMA-member businesses survive the severe economic crisis is scheduled to begin later this month.

The “2009 SEMA Recession Survival Series” recognizes that, for many, corporate lay-offs, budget cuts and careful management have become unfortunate business realities. Topics address today’s urgent issues, including managing cash flow, retaining the best employees, managing inventory and leading a business through 2009 and into 2010.

“In this difficult economy, it’s clear that SEMA members need ideas and concepts they can apply immediately,” said SEMA President and CEO Chris Kersting. “This series of web-based seminars gets to the heart of the matter and will address the topics and issues that are of urgent concern today.”

The seminars—mostly 30-minute presentations followed by a Q&A period—span six weeks. The first workshop kicks off February 26 and is designed to help owners and senior-level executives with problems that are likely to result in closing the company. Participation is free of charge to SEMA members.

The association also offers members free market reports, access to previous webinar presentations, cost-saving programs and business tools specific to the automotive specialty-equipment industry. For complete details, visit www.sema.org/survivalseries or call 909/396-0289.

SEMA-member companies and classic-car enthusiasts spoke loudly and helped eliminate a "Cash for Clunkers" provision from both the Senate and House versions of the economic stimulus bill.

SEMA praised the U.S. Senate and House of Representatives for passing "clunker-free" versions of the economic stimulus bill. The final bill to be signed into law by President Obama has no vehicle scrappage program. 

SEMA launched the largest grassroots effort in its 46-year history to oppose attempts by some Washington lawmakers to include a national car crushing program in the legislation. Thousands of SEMA members and SEMA Action Network (SAN) enthusiasts responded to a call for action urging legislators to reject the program. 

Cash for Clunkers programs accelerate the normal retirement of vehicles through the purchase of older cars which are then typically crushed into blocks of scrap metal. For 20 years, Congress has rejected this 'sounds good' idea because it fails to spur car sales, reduce vehicle emissions or raise fleet fuel economy.

Two proposals were considered during the debate. The first was an $8 billion program targeting SUVs and pickup trucks of any model year that make less than 18 mpg such as Chevy Silverados, Dodge Rams, Ford F-Series and Jeep Wranglers. The second would have provided $16 billion worth of cash vouchers toward the purchase of a new vehicle for lower-income individuals who allowed their turned-in cars to be destroyed. 

"SEMA continues to believe that a cash for clunkers program would, for no proven gain, hurt thousands of independent repair shops, auto restorers, customizers and their customers across the country that depend on the used car market," said SEMA Vice President of Government Affairs Steve McDonald. 

"We look forward to working with the House and Senate and all stakeholders on sound economic solutions to the current recession that will help drive product sales for the entire auto industry, including the vast automotive aftermarket and its specialty equipment segment." 

The stimulus bill includes a SEMA-supported amendment which allows taxpayers to claim a federal tax deduction on state sales/excise taxes when buying a new car in 2009. The tax break will cost about $2 billion. Lawmakers abandoned an $11 billion program that would have also allowed consumers to deduct car loan interest payments. 

The two Cash for Clunkers proposals may reemerge later this year. SEMA will remain vigilant in opposition. Meanwhile, SEMA thanks all member companies and SAN enthusiasts who donated their time and effort to contact legislators. Your voice helps protect our industry and hobby.

For more information, visit www.sema.org/san.

Autobacs Strauss Inc., a retailer of aftermarket auto parts, filed for Chapter 11 bankruptcy protection, as reported by Reuters.

The company listed assets of $75 million and liabilities of approximately $72 million, according to the filing.   

Japanese-based Autobacs Seven Co. acquired the company in 2007. Under a series of loan agreements, Autobacs Seven had agreed to supply Autobacs Strauss with funds, but in December announced that it would no longer provide additional capital. The Japanese company stated that Autobacs Strauss had defaulted on payments and owes it about $42.4 million.

Autobacs Strauss said it will use the bankruptcy process to fix its operations and close underperforming stores. The company employees about 1,450 people.

The New Jersey-based company operates more than 88 stores throughout New York, New Jersey, Philadelphia and Bethlehem, Pennsylvania. The company was established in 1982 when R&S Auto acquired Strauss, a New York City auto-parts chain.

Two-time SEMA Memorial Scholarship winner Brent Opiela shares a hug with his dog Dakota.

As a senior student at Michigan’s Northwood University, Brent Opiela is only too well aware of how difficult it can be to pay off those pesky tuition costs while focusing on his studies and still managing to catch a decent night’s sleep. Needless to say, he was ecstatic when he received the news that he had been awarded a SEMA Memorial Scholarship in the amount of $2,000, his second within the past two years.

“You open the envelope and you get a smile and you just want to tell whoever is around you that you have more money for school,” Opiela said. “It was an exciting moment.”

Opiela received his first SEMA scholarship, also for $2,000, during his junior year. He estimates his annual tuition at $17,500. “The scholarship helped ease my financial burden and the stress of juggling both school and work,” he said. 

As befits a recipient of a SEMA scholarship, Opiela worked his junior year with such aftermarket companies as Mustang Racing Technologies, where he designed a Ford Edge for the company’s display vehicle at the 2008 SEMA Show.

This year, Opiela is able to focus solely on completing his Bachelor of Business Administration degree with a dual major in automotive aftermarket management/business management, thanks largely to his second SEMA scholarship along with various other grants. He has been using his extra time to research aftermarket companies for employment and is also looking into the possibility of attending graduate school to study finance and supply-chain logistics.

“I’m interested in learning everything that I can to help enhance my business knowledge, which I can then apply to my career in the aftermarket industry,” he said. 

Originally, Opiela’s plan upon graduation was to find a job at an aftermarket accessories or performance company, but with the current economic downturn, he is keeping his options open.  “Whatever I choose to do, it will definitely have something to do with the aftermarket industry,” he said. “That is where I fit and where I want to be.”

Opiela paints a mural on the warehouse walls of Mustang Racing Technologies, a SEMA-member
company. The mural displays the vehicles that the company showcased at SEMA Shows.

The SEMA Memorial Scholarship Fund was established in 1984 and has since awarded more than $1,000,000 in grants. For the 2008-2009 academic year, SEMA awarded 93 students more than $130,000 in scholarships.

To qualify for a scholarship, a student must have a minimum 2.5 grade-point average and be enrolled in an accredited university, college or proprietary program. Sophomores enrolled in two-year universities or colleges and students in vocational or technical schools receive $1,000. Graduates and undergraduates with at least a junior standing at a four-year school receive $2,000–$4,000.

Students who are interested in applying for a scholarship for the 2009–2010 academic year can access the online application at www.SEMA.org/scholarship. The application deadline is April 1, 2009.

For more information on the SEMA Memorial Scholarship program, visit www.SEMA.org/scholarship. Questions for Opiela can be directed to Nathan Ridnouer at 909/396-0289, ext. 137.

“SEMA really does a lot to promote students looking for a career in the aftermarket industry,” Opiela said. “I know personally, SEMA has helped in getting me where I want to be come mid-May when I graduate.”

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