As prices escalate at the pump, so too does the price of race fuel, causing crew chiefs and weekend enthusiasts to adjust their budgets accordingly. The rise hasn’t been dramatic, but still noticeable.
“The cost is increasing, maybe even more than pump gas,” says Steve Scheidker, global marketing manager for VP Racing Fuels. VP makes a number of race fuel blends, including spec fuels for American LeMans and NHRA.
Scheidker adds that since VP buys refined product and additives to produce its blends, the company is also subject to the ebbs and flows of the chemical industry. “In some cases, those have been in short supply: oxygenates, isopentanes, isooctanes—you name it. When those material costs go up, our costs go up just like they do at the pump.”
The rising cost of steel is another factor that impacts VP’s bottom line, Scheidker adding that the bulk of his company's product is shipped in steel drums and adds “another $.50, $.60, $.75 a gallon. The cost of steel is a significant factor.”
The average national price for a gallon of premium unleaded 91 octane rose 22% in the last year, and 6% in the last month, according to data from the Automobile Association of America.
The price for 100- and 110-octane at Willow Springs Raceway in Rosamond, California, has risen in step with pump prices—nearly 20%—but in half the time, according to WSR’s assistant manager Jim Hutchings. Hutchings says he was charging $5.50 a gallon six months ago and recently raised it a dollar. That’s still cheaper than some other stations nearby or in Los Angeles and Orange County, he says.
And while the rise in high-octane unleaded and leaded fuels is not significantly higher than that of regular pump gas, the spike in methanol prices is another story. Typically used in high-performance classes such as Top Alcohol drag racing, methanol prices have jumped as much as 50%, says David Hedderick, general manager of Hyperfuels, based in Houston.
“I know it’s popular with individuals making their own biodiesel, but most of my customers run it in alcohol go-karts or run methanol-injection on their turbos and turbodiesels,” Hedderick says. “It’s gone up quite a bit on me, and my margin has been gradually dwindling over the last six, eight months. Last June I was selling it for $2.10 (a gallon for a 55-gallon drum). Now it’s $2.90.”
The methanol spike is due in large part to labor disputes and natural gas supply problems experienced at the South American facilities of Methanex, the world’s largest methanol producer, according to Bloomberg. Recent prices appear to have leveled off, even dipping in parts of Asia, but Methanex’s situation still looks dicey.
The government of Argentina, a major supplier to Methanex, recently raised the import duty on natural gas. CNNMoney.com quotes a senior Latin American Methanex official as saying the company’s plants in Chile have only been operating at 30% capacity since June 2007.
Ironically, a country often cited as a catalyst for rising fuel prices due to increased energy demands is selling race fuel to American distributors cheaper than what U.S. refiners can offer.
“I sourced some nitromethane from California off of a Chinese tanker,” Hedderick says. “I did some testing on it and it is every bit as good as the stuff we make here. It just costs significantly less. My price on nitro is lower than everybody I know of.”
Even though the price of race fuel hasn’t increased significantly parallel to pump gas, its rise has been noted and chips away at established race team budgets.
“The trend has definitely been upward, like everything—hotels, diesel,” says Bernie Fedderly, co-crew chief for John Force Racing, explaining that race fuel typically accounts for 5% of his team’s budget.
“I don’t think it’s anything above the norm,” he adds. “And sponsorship dollars don't necessarily keep up with other expenses! We just learn to live with it.”
SEMA research analyst Megan McKernan, who races in NHRA’s Super Comp class, isn’t so much worried about rising race fuel prices as much as the costs of getting to the track. She recalls a particularly painful moment recently filling up her diesel tow vehicle at nearly $4.50 a gallon.
“My race season doesn’t really start until May, so I’m a little bit worried about summer prices. I think that’s where it’s going to hit most people, both the cost of diesel and race fuel prices. I won’t be surprised if it affects a lot of people’s decisions to travel for races.”
Hutchings, who sees enthusiasts at his track daily, doesn’t sense a great outcry—yet—among the weekend warrior leadfoots.
“If you’re a racer, [fuel] is just part of it, like tires.”
Despite talk of the pickup market taking a big hit this year, specialty-equipment companies actually showed more of these trucks, and products to install on them, at the 2007 SEMA Show. Sales of pickups are down 12% for the first two months of 2008 compared to the year prior, but exhibitors at the SEMA Show displayed more pickups in 2007 than in 2006.
Ford's F-Series, the Chevrolet Silverado and the Toyota Tundra were the most popular, the latter two increasing their presence at the Show most likely due to redesigns. In fact, 19 of the top 20 pickups sold during January and February of this year had a presence at the Show, and for good reason: pickups still rank high as the vehicle targeted for personalization by custom parts and accessories consumers.
SEMA’s latest Performance Parts and Accessories Demand Index (PADI) shows that 19% of consumers intending to purchase specialty equipment plan to accessorize a pickup, the second most popular choice after midsize cars. Specialty-equipment companies know that consumers still need pickups, whether for work or lifestyle, so even a declining truck market still allows growth of specialty-equipment products.
For more from the SEMA Research & Information Center, visit www.sema.org/research.
In February, the SEMA Performance Parts and Demand Index (PADI) rose to 81 from January’s meager 54-point reading. This is still a drop from February 2007, when the Index was up to 97. Consumers are increasingly feeling the impact of economic forces this year, such as higher gas prices and bleak employment outlook. While the latter is less predictable, constant media attention on gas prices are making consumers aware that higher prices are likely here to stay.
Consumers seem to be responding to this by indicating plans to purchase custom parts and accessories for their large SUVs and pickups that they bought a few years ago when gas prices were less of an issue. While the number of pickup owners that told us that they plan to purchase custom parts and accessories over the next 90 days rose a modest 1%, the number of large-SUV owners jumped six percentage points.
And while car dealerships are still the top retail channel of choice among mainstream consumers planning to buy specialty equipment, independent parts stores (often referred to as jobbers) and performance specialty installation shops made considerable gains. As consumers are learning more about the specialty-equipment market, they seem to be growing their awareness of the place-of-purchase options available to them.
For more from the SEMA Research & Information Center, visit www.sema.org/research.
In response to growing member interest in China's specialty-equipment market, SEMA recently researched the most popular aftermarket products in China, finding intake, exhaust, and wheels/tires the top three most popular modifications in the tuning and performance segment.
A 2007 SEMA survey of tuning shop managers in northern, eastern and southern China identified the top 10-selling products as: intake kits and air filters, exhaust, wheels and tires, suspension components (shocks, springs, coil-overs, sway and tie bars), brakes (pads, rotors, lines, calipers), ignition (spark plugs, leads), electronics (gauges, timers, controllers, ECU), body kits, turbo, and transmission parts.
Within the "car beauty" segment, as it's called in China, the U.S. Commercial Service noted that seat-back video displays, car care products, vehicle paint and leather upholstery are among the most popular purchases. Industry insiders also identified window film/tint as a top sales product available at chain stories and car beauty shops.
An estimated 600 car tuning shops account for retail sales between $77 million–$94 million (USD), while another 400 shops selling 4WD products account for sales of $49 million (USD). These outlets sell a range of products, including engine parts, handling, braking and exterior styling items. These performance/tuning shops carry out exhaust, intake, chip tuning and turbo upgrades.
There are also approximately 26,000 car beauty stores in China serving a portion of the market conservatively worth $12.5 billion to $15 billion (USD) retail. Among the products these shops sell and sometimes install include window tint, car-care, stickers, electronics and in-car accessories. Aftermarket wheels are also available at the larger car beauty shops.
Currently there are no major Chinese specialty-equipment importers in the mold of larger wholesale distributors found in the United States, but there is a growing network of independent tuning shops throughout China.
With the exception of body kits, which have declined in sales due to recent government crackdowns in Shanghai, the current popular accessories and performance products should continue to experience strong sales relative to the growth of the Chinese specialty-equipment market.
This information is an excerpt from a new SEMA report on the Chinese specialty market. Members can download this report and other information on international markets at www.sema.org/international.
Filler for eNews
SEMA members can enjoy substantial discounts with FedEx Express, FedEx Ground, FedEx Freight, New Penn and Roadway using the SEMA Freight Savings Plan administered by Siriani & Associates. Special SEMA rates are also available on international shipping. Enrollment is free, quick and easy. If you’re ready to start saving, click here.
SEMA-member company Anzo USA of Chino, California, saved more than $30,000 last year using the Freight Savings Plan. The Filling Station of Lebanon, Oregon, saved 26 times its annual dues and Rev Wheels of Riverside, California, saved more than 14 times. No matter the size of your company, you can save on day-to-day inbound, outbound and third-party shipping costs.
Keith V. Leigh-Monstevens of Talegator Distributors LLC in Detroit uses the freight program to ship to trade shows. “The SEMA Freight Savings Plan saves me time and money, literally thousands of dollars a year," says Leigh-Monstevens.
Lou Frank of Four Point Publishing, San Diego, says, “It’s one of the real benefits of joining SEMA and a very important reason for maintaining membership in the association.”
For more information, call Siriani & Associates, at 800/554-0005 or e-mail info@siriani.com. Call today and start saving!
Tune into the SPEED Channel as automotive veteran Barry Meguiar chats with industry leaders at the 2007 SEMA Show. Two episodes will air this month. The first episode, “Celebrities at SEMA 2007,” premiered earlier this week and re-airs this Sunday, March 16.
The second episode, “SEMA 2007,” debuts on Monday, March 31. Viewers will hear from dozens of industry legends and icons and discover how the market has changed over the years. Visit the Car Crazy website, www.carcrazycentral.com/TV-Show-Watch-Episodes.aspx, for times and details.
Renowned Washington commentators Fred Barnes and Eleanor Clift will be the headliners for a lively debate on timely political issues, including the 2008 presidential election, during the political insiders session at SEMA’s 2008 Washington Rally.
In addition to influential SEMA members, council and industry leaders, among those participating in the SEMA Washington Rally will be members of the Congressional Automotive Performance and Motorsports Caucus, consisting of about 100 members of Congress. The Caucus, formed in 1996 is a coalition of federal lawmakers who are car enthusiasts themselves or have racing and performance manufacturers in their districts. The Caucus was created to help raise the profile of the motor vehicle performance industry in Washington and throughout the country.
Fred Barnes is host, along with Mort Kondracke, of the Beltway Boys on FOX News. Barnes appears regularly on "FOX’s Special Report" with Brit Hume. From 1988–1998, he was a regular panelist on "The McLaughlin Group." He has also appeared on "Nightline," "Meet the Press," "Face the Nation," and "The News Hour with Jim Lehrer." In addition, Barnes hosts the weekly radio show, "Issues in the News" on Voice of America. He is the co-founder and executive editor of The Weekly Standard. From 1985–1995, he served as senior editor and White House correspondent for The New Republic.
Eleanor Clift Fred Barnes
Eleanor Clift is a regular panelist on the syndicated talk show, "The McLaughlin Group," and a political analyst for the Fox News Network. Clift became a contributing editor to Newsweek in September 1994. She writes on the Washington power structure, the influence of women in politics and other issues. She is currently assigned to follow the jockeying over policy and politics in the Democratic-controlled Congress and the emerging contenders for the 2008 presidential nomination in both the Republican and Democratic parties. Formerly Newsweek’s White House correspondent, Clift also served as congressional and political correspondent for six years.
In addition to the political insiders' session, SEMA members who attend the Washington Rally will participate in an opening reception featuring car enthusiast Jon Tester, U.S. Senator from Montana, meet with their members of Congress in a one-on-one setting, tour the U.S. Capitol and celebrate the Victory Junction Gang Camp and the motorsports industry with businessman, philanthropist and respected NASCAR driver Kyle Petty at a Congressional reception.
For more information or to download a registration form for the Washington Rally, go to: www.sema.org/main/semaorghome.aspx?ID=51667.
The deadline to register for the SEMA Installer Certification Exams is next Friday, March 21. The tests are ideal for business owners, installers, restylers and wheel and tire specialists looking to gain a quality advantage in the marketplace.
The SEMA certification program includes five exams which will be offered on Thursday, May 13, at more than 700 test centers in the United States and Canada. Testing begins at 7:00 p.m. local time.
The five exams include: Z1/Electric Sunroofs; Z2/Truck Accessories & Body Exterior Components; Z3/Leather Interiors; Z4/Roof Treatments; Z5/Custom Wheel and Tire. The registration deadline is Friday, March 21, 2008.
To register, follow the links located below for the appropriate registration forms. For more information, visit www.sema.org/certification, or e-mail Beverly Rosen at beverlyr@sema.org.
Installer Certification Quick Links
SEMA Manufacturer Members: SEMA has set up a Measuring Session with smart USA for the 2008 smart fortwo coupe and cabriolet. Measuring Sessions provide manufacturers with private previews of new and soon-to-be-released vehicles. In addition to gathering first-hand measurements and specs, participants are also able to interact with high-level OEM personnel and get answers to technical queries directly from vehicle designers.
For more information on smart USA and the smart fortwo, click here. For additional information on SEMA-OEM relations, visit www.sema.org/oem.
Measuring Session Details
Who: smart USA
What: 2008 smart fortwo coupe and cabriolet
Two-seater, Three cylinder, 1.0L, 61 cu. in., 70 hp
15-inch, three-bolt wheels
Where: AAA Building (next to the SEMA offices), 1577 S. Valley Vista Dr., Diamond Bar, CA 91765
When: Thursday, April 3, 8:30 a.m.–4:00 p.m.
To Register: E-mail responses with name (s), company, address and phone to: measuringsession@sema.org
Registration Deadline: Friday, March 28
Questions?: Contact Bill Wolf or Sandy Conolly at 909/396-0289, ext. 177 or ext. 155, respectively.