SEMA News—July 2020

INDUSTRY NEWS

Fast Facts

Brian Reese

The Retrofit Source (TRS) announced that Brian Reese joined the company as CEO. He succeeds Matt Kossoff, who will become TRS’s chief product officer and remain on the board of directors. Reese is a veteran automotive industry executive and former CEO of Race Winning Brands. He has more than 20 years of experience in fueling premium brands with products and serving customers with best-in-class support in the automotive aftermarket.

Edemitsu Lubricants America announced the appointment of Michael Park as senior director for aftermarket sales and operations for North America. Park has more than 30 years of experience and proven leadership in the automotive aftermarket, including sales, logistics/distribution, wholesale and retail parts.

The Aftermarket Performance Group (APG), a holding company of automotive performance aftermarket companies in the wholesale, retail, e-commerce and manufacturing segments, named Mike Sinoway as CEO. Prior to APG, Sinoway served as CEO at MaritzCX.

Nexen Tire America Inc. announced a new distribution center located at 2190 Creekside Pkwy., in Lockbourne, Ohio. The new Ohio distribution center marks the third addition to its list of U.S. distribution facilities, joining the existing two located in California and Georgia. Ohio was strategically chosen for its centralized location in the United States, allowing Nexen to increase efficiency. With three distribution centers triangulating most of the United States, customers can now expect shorter delivery times and lower costs, according to the company.

XS Power Batteries announced its acquisition of all of the assets of New York-based ultracapacitor manufacturer Ioxus Inc. Ioxus will continue to manufacture the same products through Systematic Power Manufacturing LLC, a wholly owned subsidiary of Systematic Power Solutions LLC, dba XS Power Batteries. Existing customer orders will continue to ship on schedule with no foreseeable delays in the manufacturing and delivery process.

Rob Kinnan

Accessible Technologies Inc., the parent company of ProCharger and Inovair, welcomed Rob Kinnan as the company’s new marketing director. Kinnan has nearly 31 years of experience in the automotive publishing world, most recently serving as the editor of Mustang Monthly. He also worked with Motor Trend Group, including a seven-year stint as the editor of Hot Rod. Kinnan was also a founding member of the National Mustang Racers Association, serving as editorial director for both Race Pages and Fastest Street Car.

Peterson Manufacturing announced that Al Anderson was named the company’s new vice president of sales and marketing. Most recently, Anderson was director of fleet business development for CIMC Intermodal Equipment. A longtime industry veteran, he served for six years as chair of the associates group of the American Trucking Association’s 2,300-member Technology & Maintenance Council.

H&S Autoshot announced a partnership with Steve Darnell of Welder Up (famous for “Vegas Rat Rods” on the Discovery Channel) for its welding and plasma-cutting products. This partnership confirms Darnell as H&S Autoshot’s official brand ambassador. Darnell is the creative mastermind behind the motorized works of art that emerge from the WelderUp shop.

Melling Engine Parts CEO Mark Melling announced the acquisition of Performance Springs UK Ltd. based in Blackpool, England. Performance Springs specializes in the design and manufacturing of springs for the automotive and industrial sectors. The new company will be renamed Melling Performance Springs Ltd., and all management and sales staff are staying with the company.

Transtar Industries Inc. named David Haynes its vice president of U.S. domestic distribution. Haynes is based in Cleveland and reports to Tim Bowes, president and CEO. Haynes brings a significant track record in leading corporate strategic growth initiatives, according to the company, and joins Transtar from Honeywell International, where he served as vice president of marketing for its Novar and Incom divisions.

Mast Motorsports announced the acquisition of Magnitude Performance. Jason Youd, founder of Magnitude Performance, will be named CEO of Mast Motor-sports. He will manage all aspects of Mast Motorsports and support Mast Powertrain as managing director. According to the company, Mast Motorsports and Magnitude Performance will continue advanced development for motorsports products and technologies as part of Mast Technologies group.

ReadyLift Suspensions acquired Zbroz Racing—an aftermarket performance parts manufacturer focused on UTV and snowmobile suspension components. ReadyLift is a division of Wheel Pros. Zbroz was founded in 1998 by the four Zollinger brothers after their successful snowmobile hill climbing career. Today the company provides suspension products for snowmobiles and
UTVs.

SEMA News—July 2020

BUSINESS

Powersports Market Trends

Remaining Tough and Agile Amid a Challenging Environment

By Mike Imlay

Over the last decade, UTV market gains have eclipsed motorcycles in the power-sports world. Highly versatile, upgradable, economical and most of all family-friendly, their appeal showed little sign of waning even amid market uncertainties introduced by the recent coronavirus pandemic.

In late January, all indicators pointed to another robust 2020 for the market. Then came the coronavirus. In response, major UTV manufacturers took decisive measures to safeguard employees and customers and weather the national shutdown initiated in April, and aftermarket manufacturers and retailers developed new ways of selling. More recently, as the summer powersports season moves into full swing, there is optimism that a significant rebound will be possible.

On the OEM side, manufacturers reacted quickly earlier this spring. Market leader Polaris announced temporary closures of its two home-state plants in Roseau and Monticello, Minnesota, and at about the same time, PowerSports Business reported that Yamaha, which had previously paused U.S. production in March, would soon add staff reductions and furloughs at several American plants. Honda likewise suspended powersports production at its South Carolina manufacturing facility as of March and implemented furloughs for the majority of its U.S. salaried employees and support associates in April.

A relative newcomer to the UTV market, Roxor also closed down its Michigan production facility in response to a shelter-at-home order from that state’s governor. However, Dan Proffer, the company’s off-road vehicles marketing manager, told Motorcycle & Powersports News, “We are actively looking for opportunities to switch our production over to manufacturing products that can help with the COVID-19 fight. We will continually monitor this situation, but as of now, it’s business as usual, and we look forward to restarting production as soon as it is possible [and safe for all concerned].”

Proffer’s comments seemed to reflect a general if guarded optimism among powersports industry leaders that COVID-19 would prove a short-term obstacle along the market’s overall upward trajectory. Although there was uncertainty how the pandemic might affect consumer buying going into spring, a traditionally busy season for powersports, there were also positive signs that demand for vehicles and accessories could hold steady.

SuperATV makes a broad range of UTV products, but its GDP Portal is among its most popular for mud riders. The lift and gearing it provides allows them to run significantly larger tires without power losses.

Amid the shutdowns, furloughs and economic disruptions, a number of powersports manufacturers and dealers loosened credit and financing terms to bolster new-vehicle buyers and existing customers. In fact, Wells Fargo Securities analyst Tim Conder told PowerSports Business that research suggested “we could see a meaningful bounce-back in [powersports] retail once visibility improves and stay-at-home orders are lifted,” as long as consumers were able to manage cash flow throughout the economic downturn.

Conder added that the industry’s retail momentum in March, coupled with other positive economic factors that preceded the pandemic, bodes well for an aggressive comeback into the 2021 calendar year. Meanwhile, mid-April analysis by Hedges & Company, a digital marketing agency serving the automotive and powersports aftermarkets, revealed a significant uptick in online sales of truck, off-road, performance and racing parts during the first weeks of the crisis.

But powersports retail has always followed a dealer-based model, and many U.S. dealerships were closed as each state issued its own set of directives for hunkering down in April. Those that were able to remain open as essential businesses often demonstrated a range of best practices to address health and safety guidelines, including sales by appointment, limiting showrooms to 10 people, enforcing social distancing, Zoom vehicle walk-arounds for potential buyers, online ordering, and direct vehicle shipments to customers. The question was whether such measures would prove enough to maintain profits as the nation reopened its economy under lesser but still stringent guidelines.

“I’ve been working with a lot of stores, which I call the innovators, that are selling powersports equipment without a person ever coming into the dealership,” said Rob Greenwald, president of The PowerSport Solution, a dealer consultant firm. “You’re showing them a motorcycle or whatever by FaceTime or Zoom and negotiating, then doing a complete deal and delivering the unit to the customer’s house and signing the paperwork in their driveway by setting up a small portable table [and wearing masks].”

Greenwald added that a quick anecdotal survey of several open dealerships he regularly works with showed significant drops in floor traffic but an even more significant rise in serious, qualified buyers.

“They’re selling at a much higher level to the people they’re getting,” he explained. “It’s a lot fewer shoppers and dreamers than buyers.”

Motorcycle & Powersports News editor-at-large Brendan Baker also predicted a burst of pent-up demand once closed dealerships reopen.

“This is the time of year when dealers are traditionally the busiest,” he said. “This is when everybody’s spring starts out and all the numbers are ramping up. All the people are getting their bikes out of storage and getting ready to ride.”

RCV Performance Products focuses on hard-core racing and performance products, with UTV product testing done in real-world racing environments. Prop shafts such as these for the Polaris XP Turbo and Turbo S are made to order and account for up to 10% of the company’s UTV parts sales.

Side-by-Sides

Along with their motorcycles, power-sports enthusiasts will also be prepping and riding UTVs—lots of them. Once used mainly for utilitarian tasks, the vehicles have morphed into an enthusiast recreational phenomenon. In the West, they prowl the deserts. In the South, they power through mud. They take hunters, campers and off-road enthusiasts to outdoor locations reliably and in comfort. In fact, their sales numbers have continued to climb in recent years while motorcycle sales have more or less plateaued.

“They’ve taken a little bit of a bite out of ATVs, but not as much as you’d think, because ATVs have a much lower price point, so it’s a different kind of customer,” Baker observed. “We estimate the side-by-side market at around 500,000 new units produced per year. Probably a little more.”

UTVs have become a hit with consumers because they’re economical, family-friendly, versatile and easy to upgrade. Base models can run from $8,000–$15,000, with high-performance versions available for under $40,000—although upgrades can push the price tag much higher.

Among manufacturers, Polaris currently reigns as market king with its RZR and Ranger models. Other popular brands include Can-Am with its Maverick line, which encompasses an X3 Rs Turbo version; Yamaha with its Wolverine X2 R-spec; Textron with its Prowler; Arctic Cat and its Wildcat; along with Honda and its Pioneer series, to name a few. However, the category is extremely diverse, and SEMA market research has identified three distinct vehicle types:

• Sport models, which are more commonly found in the Western United States and are typically the most accessorized UTVs. Owners of those vehicles tend toward social pursuits, often riding with passengers and in groups.
• Multipurpose vehicles, which comprise the largest segment of UTV sales, with the highest volume residing in the South. Owners seek ultimate versatility with their vehicles and their modifications.
• Utility models, whose sales are strongest in the South and Midwest. Owners perceive and use their UTVs as workhorses, focusing on practicality and durability. They are the least likely to upgrade their vehicles and are the most solitary, frequently driving their UTVs alone.

The rise of UTV motorsports, including several UTV classes in SCORE International Baja racing, has been a key market driver for enthusiast consumers. “Race on Sunday, sell on Monday” is very much alive in this powersports category. Photo courtesy: Joe Stokes/Get Some Photography

SEMA research has further found that about 82% of UTV owners take an interest in upgrading and accessorizing their vehicles. Moreover, accessory decisions are made early, with most purchases occurring within the first three months, often at dealerships or directly through the original equipment manufacturer.

Their modifications tend toward enhancing overall functionality and versatility, since many owners use their UTVs year-round for varied driving activities across diverse terrains. Personal sources such as dealers, friends and family have the greatest impact on buying decisions.

Not surprisingly, most UTV households own trucks (particularly pickups), leading to about 18% of owners purchasing accessories for their tow vehicles as a direct result of purchasing an UTV. Industry experts also note a high crossover into ATV and motorcycle ownership as well. It’s not unusual for a household to have a mix of powersports vehicles.

When accessorizing, UTV owners have traditionally focused on safety over speed, durability over performance, and practicality over excitement—but that may be changing, thanks to the growth of UTV motorsports.

RCV Performance Products, based in Loves Park, Illinois, manufactures an array of American-made UTV driveline parts aimed at the performance racing market.

“We pride ourselves on quality, and with that quality comes a price, so we focus primarily on the high-end side of racing,” said Ricky Berry, the company’s marketing director. “We’re in the winning cars of the Baja 1000, King of the Hammers, Dakar, even a lot of the rock bouncing on the East Coast and hill climbing. We work with a lot of racers on development, trying to find out what’s best, then we’ll work that into our product line for the general public.”

Berry said there is little doubt that the increasing popularity of UTV motorsports is influencing weekend-warrior consumers.

“Everybody wants to be like the best,” he said. “The guy who’s building in his garage is looking at magazines. He’s looking at websites with the best—the top driver, the top machine and whatever the latest technology is. That trickle-down effect is very real.”

While the company originally focused on Polaris applications, it widened its applications to include Can-Am and Yamaha as UTV motorsports grew. However, the company still finds desert racing to be the ultimate R&D platform.

“The desert world is the most abusive environment for an axle—the heat, the grease, the wear—so many technological advances have come from that desert-race world for us,” he said.

Still, UTVs are right at home in all sorts of environments when properly upgraded, including the muddy hills, pits and trails of the South.

“That’s a huge market for us, the mud guys,” said Tyler Greves, media manager for SuperATV, which is based in Madison, Indiana.

The company recently opened a warehouse-distribution facility in Shreveport, Louisiana, and makes aftermarket UTV parts ranging from axles to long-travel kits, including applications especially popular with mud riders. In fact, the ability to rapidly ship parts to mud-configured UTVs factored into the company’s decision to open a second location, which also features a showroom.

“Mud guys love going big,” Greves said. “That’s kind of where we got our name started. We were making lift kits and A-arms to allow you to get more ground clearance and put a bigger tire on the machine. When you talk to mud guys, they buy a new machine and the first question they ask is, ‘What size tire can I run without rubbing?’ It’s pretty crazy. We’re up to people running 60-in. tires on these UTVs that come from the factory with a 29 or a 30.”

Responding to that market, SuperATV produced what Greves called a “game-changing” GDP Portal, a portal gear lift utilizing a hub-mounted box to provide gear reduction as well as a lift kit.

“We have 4-, 6- and 8-in. boxes giving you the amount of lift,” he explained. “Then we have different gear-reduction options so that you’re able to put that big tire on. That helps turn the gears and give you back that power.”

Energy Suspension entered the UTV market with polyurethane bushings and other durable components for Polaris and Can-Am consumers desiring longer-lasting parts for the extreme environments in which their vehicles travel. The company is now eyeing other brands and applications in the category.

Family Style

Because UTVs are frequently family conveyances, with adults and children sharing rides and even taking turns driving, there is no end to the aftermarket goodies available.

“We offer pretty much anything and everything from a lug nut up to a turbo kit, the portals, and everything in between—windshields, roofs, doors, A-arms, axles, you name it,” Greves said. “That’s what has been really cool with the ATV scene. There’s so many different companies out there making different things in different styles. This is an industry growing like wildfire because you can go out and buy one and just have a blast. And if you want to, they’re more than capable to do more things than you could ever dream of.”

As of late April, COVID-19 hadn’t slowed consumer demand for SuperATV’s products, though Greves did note that smaller shops might have seen more of an impact, depending on state and local shutdown orders. However, SuperATV was doing enough business that it could adapt its windshield manufacturing capabilities to making personal shields and intubation hoods to aid hospitals and first responders during the crisis. Going forward, that exercise may open a potential crossover market to shield manufacturing for casinos, gas stations and other businesses seeking to protect workers and customers.

Walter Schnapp, heavy-duty/power-sports manager at Energy Suspension in San Clemente, California, also reported that the suspension-component company was successfully navigating the changing business climate.

“We’re still a completely U.S.-made product, so we haven’t been affected by supply-chain issues or anything like that, so we’re weathering this really well,” he said.

Long known for its polyurethane suspension replacement parts, the company has also found more recent success in the UTV space, notably for Polaris and Can-Am models. Schnapp said UTV consumers are universally looking for all types of vehicle components that are more durable and longer-lasting than factory originals.

“We were getting a lot of reports of longevity issues with UTV bushings,” he said. “I’ve heard instances where people are saying they get like 150 hours out of the OEM bushings. Replacing them with polyurethane, you’re seeing just a massive increase in longevity—three or four times longer. We try to use our material to make people’s lives easier. We’re trying to solve problems wherever we can.”

Schnapp said that the segment continues to grow, adding that even the U.S. military is now experimenting with UTVs for rapid combat operations.

“We eventually would like to be able to make components for those vehicles,” he said. “A lot of the tactical vehicles that are going to be deployed in the future are going to be very much based on the UTV, and that makes sense—light load and a lot of other things that are beneficial in a battlefield environment. We hope to be able to use our polyurethane to good effect in those kinds of areas. And then we’re talking to a lot of different outfits out there that are employing UTVs on the industrial side—mining, farming, you name it.”

Motorcycle Culture

While the UTV scene continues to expand, the motorcycle segment has continued rolling along at a more subdued pace as it grapples with changing consumer demographics.

“The Baby Boomers have represented a disproportionate size of the market for many, many years—decades, actually,” Baker explained. “As Baby Boomers grew up, they went bigger. They started with a smaller Harley or a Triumph or something like that and moved into bigger and bigger motorcycles to where Harley was only producing heavyweight bikes for the most part. I think the last recession around 2009 was when a lot of those people bought their last bikes. They’re just not into riding as much now. With [car drivers] phoning and texting, things got overly dangerous. It’s always been dangerous, but street riding has been on the decline for the most part.”

Baker said that off-roading has become the bigger segment for motorcycles.

“Right now, it’s between dirt bikes and dual-sport bikes, which kind of count as off-road/on-road,” he said. “Guys want to ride the big KTM adventure bikes, so the motorcycle market has taken a bit of a hit and a redirect. Harley, Indian and some other companies have said that they’re attempting to make more entry- and mid-level bikes that appeal to Millennials.”

And while electric bikes have grabbed headlines recently, Baker doesn’t expect them to make much headway in the market anytime soon.

“A lot of people looking at motorcycles still like the engine sound,” he said. “Maybe they drive a Tesla, but they still want a gas-powered motorcycle, especially if they’re going off-roading. There’s range anxiety, and those engines are so small. A lot of people think it’s a long way off before we see electric, although the technology is getting better and better.”

As with UTVs, aftermarket favorites for motorcyclists include wheels and tires, audio upgrades, GPS, hands-free communications, improved lighting, riding and safety gear, and lifestyle apparel. Like UTV treks, street and off-road motorcycle rides are often social and recreational activities, so there are lifestyle crossover opportunities with outdoor and
sporting pursuits.

All that said, what will the powersports market look like in the final half of 2020? As of press time, the situation was highly fluid, with a lot riding on factors such as how swiftly the U.S. economy could open, consumer cash flow and confidence, and manufacturer and dealer agility in rising to health and safety challenges—not to mention having the business resources to weather the downturn. Nonetheless, aftermarket businesses were still doing what they do best going into spring: innovating, problem solving, and continuing to build and sell the products that excite consumers.

Greenwald, for one, had little doubt that the industry would rebound quickly. He predicted that consumers will want to get out and re-experience the world once restrictions are lifted and money returns, and powersports will feature prominently in their adventuring.

“When you’re in the powersports industry, you’re selling fun,” he said. “We sell lifestyle.”

SEMA News—July 2020

BUSINESS

Powersports Market Trends

Remaining Tough and Agile Amid a Challenging Environment

By Mike Imlay

Over the last decade, UTV market gains have eclipsed motorcycles in the power-sports world. Highly versatile, upgradable, economical and most of all family-friendly, their appeal showed little sign of waning even amid market uncertainties introduced by the recent coronavirus pandemic.

In late January, all indicators pointed to another robust 2020 for the market. Then came the coronavirus. In response, major UTV manufacturers took decisive measures to safeguard employees and customers and weather the national shutdown initiated in April, and aftermarket manufacturers and retailers developed new ways of selling. More recently, as the summer powersports season moves into full swing, there is optimism that a significant rebound will be possible.

On the OEM side, manufacturers reacted quickly earlier this spring. Market leader Polaris announced temporary closures of its two home-state plants in Roseau and Monticello, Minnesota, and at about the same time, PowerSports Business reported that Yamaha, which had previously paused U.S. production in March, would soon add staff reductions and furloughs at several American plants. Honda likewise suspended powersports production at its South Carolina manufacturing facility as of March and implemented furloughs for the majority of its U.S. salaried employees and support associates in April.

A relative newcomer to the UTV market, Roxor also closed down its Michigan production facility in response to a shelter-at-home order from that state’s governor. However, Dan Proffer, the company’s off-road vehicles marketing manager, told Motorcycle & Powersports News, “We are actively looking for opportunities to switch our production over to manufacturing products that can help with the COVID-19 fight. We will continually monitor this situation, but as of now, it’s business as usual, and we look forward to restarting production as soon as it is possible [and safe for all concerned].”

Proffer’s comments seemed to reflect a general if guarded optimism among powersports industry leaders that COVID-19 would prove a short-term obstacle along the market’s overall upward trajectory. Although there was uncertainty how the pandemic might affect consumer buying going into spring, a traditionally busy season for powersports, there were also positive signs that demand for vehicles and accessories could hold steady.

SuperATV makes a broad range of UTV products, but its GDP Portal is among its most popular for mud riders. The lift and gearing it provides allows them to run significantly larger tires without power losses.

Amid the shutdowns, furloughs and economic disruptions, a number of powersports manufacturers and dealers loosened credit and financing terms to bolster new-vehicle buyers and existing customers. In fact, Wells Fargo Securities analyst Tim Conder told PowerSports Business that research suggested “we could see a meaningful bounce-back in [powersports] retail once visibility improves and stay-at-home orders are lifted,” as long as consumers were able to manage cash flow throughout the economic downturn.

Conder added that the industry’s retail momentum in March, coupled with other positive economic factors that preceded the pandemic, bodes well for an aggressive comeback into the 2021 calendar year. Meanwhile, mid-April analysis by Hedges & Company, a digital marketing agency serving the automotive and powersports aftermarkets, revealed a significant uptick in online sales of truck, off-road, performance and racing parts during the first weeks of the crisis.

But powersports retail has always followed a dealer-based model, and many U.S. dealerships were closed as each state issued its own set of directives for hunkering down in April. Those that were able to remain open as essential businesses often demonstrated a range of best practices to address health and safety guidelines, including sales by appointment, limiting showrooms to 10 people, enforcing social distancing, Zoom vehicle walk-arounds for potential buyers, online ordering, and direct vehicle shipments to customers. The question was whether such measures would prove enough to maintain profits as the nation reopened its economy under lesser but still stringent guidelines.

“I’ve been working with a lot of stores, which I call the innovators, that are selling powersports equipment without a person ever coming into the dealership,” said Rob Greenwald, president of The PowerSport Solution, a dealer consultant firm. “You’re showing them a motorcycle or whatever by FaceTime or Zoom and negotiating, then doing a complete deal and delivering the unit to the customer’s house and signing the paperwork in their driveway by setting up a small portable table [and wearing masks].”

Greenwald added that a quick anecdotal survey of several open dealerships he regularly works with showed significant drops in floor traffic but an even more significant rise in serious, qualified buyers.

“They’re selling at a much higher level to the people they’re getting,” he explained. “It’s a lot fewer shoppers and dreamers than buyers.”

Motorcycle & Powersports News editor-at-large Brendan Baker also predicted a burst of pent-up demand once closed dealerships reopen.

“This is the time of year when dealers are traditionally the busiest,” he said. “This is when everybody’s spring starts out and all the numbers are ramping up. All the people are getting their bikes out of storage and getting ready to ride.”

RCV Performance Products focuses on hard-core racing and performance products, with UTV product testing done in real-world racing environments. Prop shafts such as these for the Polaris XP Turbo and Turbo S are made to order and account for up to 10% of the company’s UTV parts sales.

Side-by-Sides

Along with their motorcycles, power-sports enthusiasts will also be prepping and riding UTVs—lots of them. Once used mainly for utilitarian tasks, the vehicles have morphed into an enthusiast recreational phenomenon. In the West, they prowl the deserts. In the South, they power through mud. They take hunters, campers and off-road enthusiasts to outdoor locations reliably and in comfort. In fact, their sales numbers have continued to climb in recent years while motorcycle sales have more or less plateaued.

“They’ve taken a little bit of a bite out of ATVs, but not as much as you’d think, because ATVs have a much lower price point, so it’s a different kind of customer,” Baker observed. “We estimate the side-by-side market at around 500,000 new units produced per year. Probably a little more.”

UTVs have become a hit with consumers because they’re economical, family-friendly, versatile and easy to upgrade. Base models can run from $8,000–$15,000, with high-performance versions available for under $40,000—although upgrades can push the price tag much higher.

Among manufacturers, Polaris currently reigns as market king with its RZR and Ranger models. Other popular brands include Can-Am with its Maverick line, which encompasses an X3 Rs Turbo version; Yamaha with its Wolverine X2 R-spec; Textron with its Prowler; Arctic Cat and its Wildcat; along with Honda and its Pioneer series, to name a few. However, the category is extremely diverse, and SEMA market research has identified three distinct vehicle types:

• Sport models, which are more commonly found in the Western United States and are typically the most accessorized UTVs. Owners of those vehicles tend toward social pursuits, often riding with passengers and in groups.
• Multipurpose vehicles, which comprise the largest segment of UTV sales, with the highest volume residing in the South. Owners seek ultimate versatility with their vehicles and their modifications.
• Utility models, whose sales are strongest in the South and Midwest. Owners perceive and use their UTVs as workhorses, focusing on practicality and durability. They are the least likely to upgrade their vehicles and are the most solitary, frequently driving their UTVs alone.

The rise of UTV motorsports, including several UTV classes in SCORE International Baja racing, has been a key market driver for enthusiast consumers. “Race on Sunday, sell on Monday” is very much alive in this powersports category. Photo courtesy: Joe Stokes/Get Some Photography

SEMA research has further found that about 82% of UTV owners take an interest in upgrading and accessorizing their vehicles. Moreover, accessory decisions are made early, with most purchases occurring within the first three months, often at dealerships or directly through the original equipment manufacturer.

Their modifications tend toward enhancing overall functionality and versatility, since many owners use their UTVs year-round for varied driving activities across diverse terrains. Personal sources such as dealers, friends and family have the greatest impact on buying decisions.

Not surprisingly, most UTV households own trucks (particularly pickups), leading to about 18% of owners purchasing accessories for their tow vehicles as a direct result of purchasing an UTV. Industry experts also note a high crossover into ATV and motorcycle ownership as well. It’s not unusual for a household to have a mix of powersports vehicles.

When accessorizing, UTV owners have traditionally focused on safety over speed, durability over performance, and practicality over excitement—but that may be changing, thanks to the growth of UTV motorsports.

RCV Performance Products, based in Loves Park, Illinois, manufactures an array of American-made UTV driveline parts aimed at the performance racing market.

“We pride ourselves on quality, and with that quality comes a price, so we focus primarily on the high-end side of racing,” said Ricky Berry, the company’s marketing director. “We’re in the winning cars of the Baja 1000, King of the Hammers, Dakar, even a lot of the rock bouncing on the East Coast and hill climbing. We work with a lot of racers on development, trying to find out what’s best, then we’ll work that into our product line for the general public.”

Berry said there is little doubt that the increasing popularity of UTV motorsports is influencing weekend-warrior consumers.

“Everybody wants to be like the best,” he said. “The guy who’s building in his garage is looking at magazines. He’s looking at websites with the best—the top driver, the top machine and whatever the latest technology is. That trickle-down effect is very real.”

While the company originally focused on Polaris applications, it widened its applications to include Can-Am and Yamaha as UTV motorsports grew. However, the company still finds desert racing to be the ultimate R&D platform.

“The desert world is the most abusive environment for an axle—the heat, the grease, the wear—so many technological advances have come from that desert-race world for us,” he said.

Still, UTVs are right at home in all sorts of environments when properly upgraded, including the muddy hills, pits and trails of the South.

“That’s a huge market for us, the mud guys,” said Tyler Greves, media manager for SuperATV, which is based in Madison, Indiana.

The company recently opened a warehouse-distribution facility in Shreveport, Louisiana, and makes aftermarket UTV parts ranging from axles to long-travel kits, including applications especially popular with mud riders. In fact, the ability to rapidly ship parts to mud-configured UTVs factored into the company’s decision to open a second location, which also features a showroom.

“Mud guys love going big,” Greves said. “That’s kind of where we got our name started. We were making lift kits and A-arms to allow you to get more ground clearance and put a bigger tire on the machine. When you talk to mud guys, they buy a new machine and the first question they ask is, ‘What size tire can I run without rubbing?’ It’s pretty crazy. We’re up to people running 60-in. tires on these UTVs that come from the factory with a 29 or a 30.”

Responding to that market, SuperATV produced what Greves called a “game-changing” GDP Portal, a portal gear lift utilizing a hub-mounted box to provide gear reduction as well as a lift kit.

“We have 4-, 6- and 8-in. boxes giving you the amount of lift,” he explained. “Then we have different gear-reduction options so that you’re able to put that big tire on. That helps turn the gears and give you back that power.”

Energy Suspension entered the UTV market with polyurethane bushings and other durable components for Polaris and Can-Am consumers desiring longer-lasting parts for the extreme environments in which their vehicles travel. The company is now eyeing other brands and applications in the category.

Family Style

Because UTVs are frequently family conveyances, with adults and children sharing rides and even taking turns driving, there is no end to the aftermarket goodies available.

“We offer pretty much anything and everything from a lug nut up to a turbo kit, the portals, and everything in between—windshields, roofs, doors, A-arms, axles, you name it,” Greves said. “That’s what has been really cool with the ATV scene. There’s so many different companies out there making different things in different styles. This is an industry growing like wildfire because you can go out and buy one and just have a blast. And if you want to, they’re more than capable to do more things than you could ever dream of.”

As of late April, COVID-19 hadn’t slowed consumer demand for SuperATV’s products, though Greves did note that smaller shops might have seen more of an impact, depending on state and local shutdown orders. However, SuperATV was doing enough business that it could adapt its windshield manufacturing capabilities to making personal shields and intubation hoods to aid hospitals and first responders during the crisis. Going forward, that exercise may open a potential crossover market to shield manufacturing for casinos, gas stations and other businesses seeking to protect workers and customers.

Walter Schnapp, heavy-duty/power-sports manager at Energy Suspension in San Clemente, California, also reported that the suspension-component company was successfully navigating the changing business climate.

“We’re still a completely U.S.-made product, so we haven’t been affected by supply-chain issues or anything like that, so we’re weathering this really well,” he said.

Long known for its polyurethane suspension replacement parts, the company has also found more recent success in the UTV space, notably for Polaris and Can-Am models. Schnapp said UTV consumers are universally looking for all types of vehicle components that are more durable and longer-lasting than factory originals.

“We were getting a lot of reports of longevity issues with UTV bushings,” he said. “I’ve heard instances where people are saying they get like 150 hours out of the OEM bushings. Replacing them with polyurethane, you’re seeing just a massive increase in longevity—three or four times longer. We try to use our material to make people’s lives easier. We’re trying to solve problems wherever we can.”

Schnapp said that the segment continues to grow, adding that even the U.S. military is now experimenting with UTVs for rapid combat operations.

“We eventually would like to be able to make components for those vehicles,” he said. “A lot of the tactical vehicles that are going to be deployed in the future are going to be very much based on the UTV, and that makes sense—light load and a lot of other things that are beneficial in a battlefield environment. We hope to be able to use our polyurethane to good effect in those kinds of areas. And then we’re talking to a lot of different outfits out there that are employing UTVs on the industrial side—mining, farming, you name it.”

Motorcycle Culture

While the UTV scene continues to expand, the motorcycle segment has continued rolling along at a more subdued pace as it grapples with changing consumer demographics.

“The Baby Boomers have represented a disproportionate size of the market for many, many years—decades, actually,” Baker explained. “As Baby Boomers grew up, they went bigger. They started with a smaller Harley or a Triumph or something like that and moved into bigger and bigger motorcycles to where Harley was only producing heavyweight bikes for the most part. I think the last recession around 2009 was when a lot of those people bought their last bikes. They’re just not into riding as much now. With [car drivers] phoning and texting, things got overly dangerous. It’s always been dangerous, but street riding has been on the decline for the most part.”

Baker said that off-roading has become the bigger segment for motorcycles.

“Right now, it’s between dirt bikes and dual-sport bikes, which kind of count as off-road/on-road,” he said. “Guys want to ride the big KTM adventure bikes, so the motorcycle market has taken a bit of a hit and a redirect. Harley, Indian and some other companies have said that they’re attempting to make more entry- and mid-level bikes that appeal to Millennials.”

And while electric bikes have grabbed headlines recently, Baker doesn’t expect them to make much headway in the market anytime soon.

“A lot of people looking at motorcycles still like the engine sound,” he said. “Maybe they drive a Tesla, but they still want a gas-powered motorcycle, especially if they’re going off-roading. There’s range anxiety, and those engines are so small. A lot of people think it’s a long way off before we see electric, although the technology is getting better and better.”

As with UTVs, aftermarket favorites for motorcyclists include wheels and tires, audio upgrades, GPS, hands-free communications, improved lighting, riding and safety gear, and lifestyle apparel. Like UTV treks, street and off-road motorcycle rides are often social and recreational activities, so there are lifestyle crossover opportunities with outdoor and
sporting pursuits.

All that said, what will the powersports market look like in the final half of 2020? As of press time, the situation was highly fluid, with a lot riding on factors such as how swiftly the U.S. economy could open, consumer cash flow and confidence, and manufacturer and dealer agility in rising to health and safety challenges—not to mention having the business resources to weather the downturn. Nonetheless, aftermarket businesses were still doing what they do best going into spring: innovating, problem solving, and continuing to build and sell the products that excite consumers.

Greenwald, for one, had little doubt that the industry would rebound quickly. He predicted that consumers will want to get out and re-experience the world once restrictions are lifted and money returns, and powersports will feature prominently in their adventuring.

“When you’re in the powersports industry, you’re selling fun,” he said. “We sell lifestyle.”

SEMA News—June 2020

FROM THE HILL

By Eric Snyder

Getting to Know Your Lawmakers

SEMA-Member Relationships With Elected Officials Are Key to Protecting the Industry

Warn Industries Director of Manufactur­ing Operations Jack Hooper (left) and U.S. Rep. Kurt Schrader (D-OR, center) conversing during the factory tour.

The presidential election is just a few months away and the balance of power in Congress and state capitols is up for grabs. Now is the time for the specialty automotive aftermarket to mobilize and make our voices heard. Although SEMA’s next Washington Rally will be in May 2021, it is still possible to meet your elected officials in their local districts this year. SEMA government affairs staff can help you forge a relationship with the men and women who make decisions that impact the industry by inviting an elected official to tour your business or arranging a community meeting with your lawmaker.

One of the key benefits SEMA provides to its members is legislative and regulatory advocacy. In fact, one of the main reasons that SEMA was founded was to protect the industry and enthusiasts from unreasonable laws and regulations. Accordingly, SEMA maintains a government affairs office in Washington, D.C., to review and influence the actions of state and federal lawmakers and regulators in a way that is favorable to the industry.

SEMA staff works closely with members of Congress and state legislators who are interested to learn about the automotive specialty-equipment aftermarket and the issues of importance to SEMA members. SEMA maintains a state caucus of more than 700 legislators who are automotive enthusiasts, and the association’s federal caucus includes more than 70 members of Congress who support the industry and hobby. Visit www.semasan.com to see if your lawmakers are caucus members. SEMA has developed these connections over many years as a result of member-company relationships, outreach to elected officials and their staffs, and by the fact that some lawmakers are gearheads themselves. In fact, many state and federal lawmakers modify their own vehicles and have been to the SEMA Show.

Tray Smith (right), U.S. Rep. Steve Womack (R-AR) and Herman Smith (left) chat in front of H&H Classic Parts’ mobile warehouse.

In order to be prepared to address any public-policy matters that may arise in the future, from zero-emissions vehicle mandates to data access and cybersecurity, it is important that we continue to identify new lawmakers to defend the industry and strengthen existing relationships. Lawmakers and their staffs are always interested to learn about the SEMA members they represent. SEMA members also play a critical part in helping lawmakers who do not have a personal connection to the auto industry understand the role that aftermarket businesses and their workers play in the communities they represent.

During the weeks that Congress and state legislatures are not in session, lawmakers meet with their constituents and visit local businesses. SEMA encourages its members to invite their elected officials to tour their businesses. If you would like to host your elected officials at your facility, SEMA’s government affairs office will arrange the event. Please feel free to contact SEMA’s Director of State Government Affairs and SEMA PAC Christian Robinson at christianr@sema.org.

SEMA members can also visit their lawmakers’ local offices or participate in a live or telephone town hall. When contacting your lawmakers, you will frequently interact with a member of their staff. These staffers can be a great resource, as they are gatekeepers for elected officials.

U.S. Sen. Gary Peters (D-MI) chats with Dart Machinery founder Richard Maskin (left) and Jack McInnis (center).

Your customers are also invaluable advocates for the industry. Recognizing the passion that automotive enthusiasts have for protecting their hobby, SEMA formed the SEMA Action Network (SAN), a nationwide partnership of car clubs, individuals and industry members who are dedicated to protecting their passion at the state and federal levels.

The SAN makes it easy for automotive enthusiasts to email their state and federal lawmakers. In the two decades since the SAN was formed, it has successfully made its voice heard—and swayed the vote—on a wide range of issues, including vehicle scrappage (“clunker”) laws, equipment standards, registration classifications, emissions-test exemptions, and hobbyist rights.

If you and your employees are not already SAN members, it takes less than a minute to join for free at www.semasan.com. You can also help spread the word by promoting the SAN across your business’s social-media channels.

Even if this is the first time you’ve contacted your lawmakers, SEMA’s government affairs staff is available to answer questions and help you establish a relationship with your elected officials. Please feel free to reach out to SEMA’s Director of Congressional Affairs Eric Snyder via email at erics@sema.org.

SEMA News—June 2020

FROM THE HILL

By Eric Snyder

Getting to Know Your Lawmakers

SEMA-Member Relationships With Elected Officials Are Key to Protecting the Industry

Warn Industries Director of Manufactur­ing Operations Jack Hooper (left) and U.S. Rep. Kurt Schrader (D-OR, center) conversing during the factory tour.

The presidential election is just a few months away and the balance of power in Congress and state capitols is up for grabs. Now is the time for the specialty automotive aftermarket to mobilize and make our voices heard. Although SEMA’s next Washington Rally will be in May 2021, it is still possible to meet your elected officials in their local districts this year. SEMA government affairs staff can help you forge a relationship with the men and women who make decisions that impact the industry by inviting an elected official to tour your business or arranging a community meeting with your lawmaker.

One of the key benefits SEMA provides to its members is legislative and regulatory advocacy. In fact, one of the main reasons that SEMA was founded was to protect the industry and enthusiasts from unreasonable laws and regulations. Accordingly, SEMA maintains a government affairs office in Washington, D.C., to review and influence the actions of state and federal lawmakers and regulators in a way that is favorable to the industry.

SEMA staff works closely with members of Congress and state legislators who are interested to learn about the automotive specialty-equipment aftermarket and the issues of importance to SEMA members. SEMA maintains a state caucus of more than 700 legislators who are automotive enthusiasts, and the association’s federal caucus includes more than 70 members of Congress who support the industry and hobby. Visit www.semasan.com to see if your lawmakers are caucus members. SEMA has developed these connections over many years as a result of member-company relationships, outreach to elected officials and their staffs, and by the fact that some lawmakers are gearheads themselves. In fact, many state and federal lawmakers modify their own vehicles and have been to the SEMA Show.

Tray Smith (right), U.S. Rep. Steve Womack (R-AR) and Herman Smith (left) chat in front of H&H Classic Parts’ mobile warehouse.

In order to be prepared to address any public-policy matters that may arise in the future, from zero-emissions vehicle mandates to data access and cybersecurity, it is important that we continue to identify new lawmakers to defend the industry and strengthen existing relationships. Lawmakers and their staffs are always interested to learn about the SEMA members they represent. SEMA members also play a critical part in helping lawmakers who do not have a personal connection to the auto industry understand the role that aftermarket businesses and their workers play in the communities they represent.

During the weeks that Congress and state legislatures are not in session, lawmakers meet with their constituents and visit local businesses. SEMA encourages its members to invite their elected officials to tour their businesses. If you would like to host your elected officials at your facility, SEMA’s government affairs office will arrange the event. Please feel free to contact SEMA’s Director of State Government Affairs and SEMA PAC Christian Robinson at christianr@sema.org.

SEMA members can also visit their lawmakers’ local offices or participate in a live or telephone town hall. When contacting your lawmakers, you will frequently interact with a member of their staff. These staffers can be a great resource, as they are gatekeepers for elected officials.

U.S. Sen. Gary Peters (D-MI) chats with Dart Machinery founder Richard Maskin (left) and Jack McInnis (center).

Your customers are also invaluable advocates for the industry. Recognizing the passion that automotive enthusiasts have for protecting their hobby, SEMA formed the SEMA Action Network (SAN), a nationwide partnership of car clubs, individuals and industry members who are dedicated to protecting their passion at the state and federal levels.

The SAN makes it easy for automotive enthusiasts to email their state and federal lawmakers. In the two decades since the SAN was formed, it has successfully made its voice heard—and swayed the vote—on a wide range of issues, including vehicle scrappage (“clunker”) laws, equipment standards, registration classifications, emissions-test exemptions, and hobbyist rights.

If you and your employees are not already SAN members, it takes less than a minute to join for free at www.semasan.com. You can also help spread the word by promoting the SAN across your business’s social-media channels.

Even if this is the first time you’ve contacted your lawmakers, SEMA’s government affairs staff is available to answer questions and help you establish a relationship with your elected officials. Please feel free to reach out to SEMA’s Director of Congressional Affairs Eric Snyder via email at erics@sema.org.

SEMA News—June 2020

FROM THE HILL

By Eric Snyder

Getting to Know Your Lawmakers

SEMA-Member Relationships With Elected Officials Are Key to Protecting the Industry

Warn Industries Director of Manufactur­ing Operations Jack Hooper (left) and U.S. Rep. Kurt Schrader (D-OR, center) conversing during the factory tour.

The presidential election is just a few months away and the balance of power in Congress and state capitols is up for grabs. Now is the time for the specialty automotive aftermarket to mobilize and make our voices heard. Although SEMA’s next Washington Rally will be in May 2021, it is still possible to meet your elected officials in their local districts this year. SEMA government affairs staff can help you forge a relationship with the men and women who make decisions that impact the industry by inviting an elected official to tour your business or arranging a community meeting with your lawmaker.

One of the key benefits SEMA provides to its members is legislative and regulatory advocacy. In fact, one of the main reasons that SEMA was founded was to protect the industry and enthusiasts from unreasonable laws and regulations. Accordingly, SEMA maintains a government affairs office in Washington, D.C., to review and influence the actions of state and federal lawmakers and regulators in a way that is favorable to the industry.

SEMA staff works closely with members of Congress and state legislators who are interested to learn about the automotive specialty-equipment aftermarket and the issues of importance to SEMA members. SEMA maintains a state caucus of more than 700 legislators who are automotive enthusiasts, and the association’s federal caucus includes more than 70 members of Congress who support the industry and hobby. Visit www.semasan.com to see if your lawmakers are caucus members. SEMA has developed these connections over many years as a result of member-company relationships, outreach to elected officials and their staffs, and by the fact that some lawmakers are gearheads themselves. In fact, many state and federal lawmakers modify their own vehicles and have been to the SEMA Show.

Tray Smith (right), U.S. Rep. Steve Womack (R-AR) and Herman Smith (left) chat in front of H&H Classic Parts’ mobile warehouse.

In order to be prepared to address any public-policy matters that may arise in the future, from zero-emissions vehicle mandates to data access and cybersecurity, it is important that we continue to identify new lawmakers to defend the industry and strengthen existing relationships. Lawmakers and their staffs are always interested to learn about the SEMA members they represent. SEMA members also play a critical part in helping lawmakers who do not have a personal connection to the auto industry understand the role that aftermarket businesses and their workers play in the communities they represent.

During the weeks that Congress and state legislatures are not in session, lawmakers meet with their constituents and visit local businesses. SEMA encourages its members to invite their elected officials to tour their businesses. If you would like to host your elected officials at your facility, SEMA’s government affairs office will arrange the event. Please feel free to contact SEMA’s Director of State Government Affairs and SEMA PAC Christian Robinson at christianr@sema.org.

SEMA members can also visit their lawmakers’ local offices or participate in a live or telephone town hall. When contacting your lawmakers, you will frequently interact with a member of their staff. These staffers can be a great resource, as they are gatekeepers for elected officials.

U.S. Sen. Gary Peters (D-MI) chats with Dart Machinery founder Richard Maskin (left) and Jack McInnis (center).

Your customers are also invaluable advocates for the industry. Recognizing the passion that automotive enthusiasts have for protecting their hobby, SEMA formed the SEMA Action Network (SAN), a nationwide partnership of car clubs, individuals and industry members who are dedicated to protecting their passion at the state and federal levels.

The SAN makes it easy for automotive enthusiasts to email their state and federal lawmakers. In the two decades since the SAN was formed, it has successfully made its voice heard—and swayed the vote—on a wide range of issues, including vehicle scrappage (“clunker”) laws, equipment standards, registration classifications, emissions-test exemptions, and hobbyist rights.

If you and your employees are not already SAN members, it takes less than a minute to join for free at www.semasan.com. You can also help spread the word by promoting the SAN across your business’s social-media channels.

Even if this is the first time you’ve contacted your lawmakers, SEMA’s government affairs staff is available to answer questions and help you establish a relationship with your elected officials. Please feel free to reach out to SEMA’s Director of Congressional Affairs Eric Snyder via email at erics@sema.org.

SEMA News—July 2020

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

FEDERAL UPDATE

Wisconsin—Collector and Hobbyist Vehicles: SEMA-opposed legislation in Wisconsin to restrict eligibility and raise fees for collector and hobbyist vehicle registrations failed to pass the Assembly prior to a required legislative deadline. Currently, those vehicles must be more than 20 years old, and owners are required to pay twice the normal registration fee. If passed, the bill would have further limited each designation to vehicles 30 years old and older, expanded seasonal use restrictions, and increased the registration fees to three times the normal rate. In Wisconsin, a collector vehicle is defined as being at least 20 years old, preserved because of historical significance, and having had no body alterations. Vehicles eligible for hobbyist plates include street modifieds, replica vehicles, reconstructed vehicles and homemade vehicles.

COVID-19 Webpage: SEMA continues to update the www.sema.org/coronavirus webpage daily to provide members with valuable resources for addressing COVID-19. The information gathered is comprehensive and ranges from industry best practices for protecting employee health to tracking the states as they allow nonessential businesses to reopen. Members are encouraged to bookmark the page and visit often.

Small-Business Loans: This spring, the U.S. Congress increased the amount of money available to be lent to small businesses through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs. Both programs are funded through the U.S. Small Business Administration (SBA), with PPP loans being processed by a bank and EIDL loans being issued directly by the SBA. The PPP was scheduled to end on June 30, 2020, unless funds were depleted sooner or Congress extended the program. The EIDL program ends on December 31, 2020 (or when funds are depleted). Of primary concern is whether the federal government will sufficiently fund the programs to cover the needs of millions of small businesses across the United States. A PPP loan equals up to 250% of a company’s monthly payroll (capped at $10 million), which can be used to cover payroll, mortgage, rent and other specified expenses. It is a two-year loan at a 1% interest rate with no payment due for six months, and the SBA will forgive that portion of the loan used to cover payroll, rent and utilities for the first eight weeks of the loan. The EIDL is a loan of up to $2 million at a 3.75% interest rate to be used to pay workers, rent and other bills. The first $10,000 of the loan is a grant that does not need to be repaid.

Tariffs: The Americans for Free Trade Coalition, of which SEMA is a member, asked that companies be provided comprehensive tariff relief during COVID-19. The coalition called on President Trump to temporarily suspend tariff collections, including those imposed on metals and Chinese products. The request for suspended tariffs had widespread bipartisan support on Capitol Hill but was rejected by the administration. However, President Trump issued an executive order that allowed companies to defer duty payments for 45 days in March and April but only on a very limited category of products. The coalition asked the Trump Administration to apply the order to all imports, including tariffs on steel, aluminum and Chinese products, and defer collections through June so that companies can use the money to pay other expenses during COVID-19. There has been no decision on the request by the administration to date.

RPM Act: SEMA is working with members of Congress on both sides of the aisle to pass the Recognizing the Protection of Motorsports (RPM) Act in 2020. The legislation clarifies that the Clean Air Act allows motor vehicles to be converted into dedicated race cars and that it is legal to produce, sell and install race parts for those vehicles. The RPM Act has been subject to previous Congressional hearings and is well-positioned for consideration in the U.S. House of Representatives and the Senate. The House bill (H.R. 5434) currently has 58 co-sponsors, and the Senate bill (S. 2602) has 29 co-sponsors. To contact your lawmakers and request their support, visit www.sema.org/rpm.

STATE UPDATE

Virginia—Motorsports: SEMA-supported legislation in Virginia to create a motor vehicle racing heritage trail in order to promote tourism and economic development became law after the deadline for Governor Ralph Northam’s signature or veto passed. The law convenes a group of stakeholders, including owners of historic NASCAR and other racing tracks, to design and implement the trail.

West Virginia—Military Vehicles: West Virginia Governor Jim Justice signed into law a SEMA-supported bill to allow antique military vehicles to display an alternate registration insignia as opposed to a traditional license plate. Antique vehicle plates are available for vehicles that are more than 25 years old and owned solely as collector’s items.

SEMA News—July 2020

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

FEDERAL UPDATE

Wisconsin—Collector and Hobbyist Vehicles: SEMA-opposed legislation in Wisconsin to restrict eligibility and raise fees for collector and hobbyist vehicle registrations failed to pass the Assembly prior to a required legislative deadline. Currently, those vehicles must be more than 20 years old, and owners are required to pay twice the normal registration fee. If passed, the bill would have further limited each designation to vehicles 30 years old and older, expanded seasonal use restrictions, and increased the registration fees to three times the normal rate. In Wisconsin, a collector vehicle is defined as being at least 20 years old, preserved because of historical significance, and having had no body alterations. Vehicles eligible for hobbyist plates include street modifieds, replica vehicles, reconstructed vehicles and homemade vehicles.

COVID-19 Webpage: SEMA continues to update the www.sema.org/coronavirus webpage daily to provide members with valuable resources for addressing COVID-19. The information gathered is comprehensive and ranges from industry best practices for protecting employee health to tracking the states as they allow nonessential businesses to reopen. Members are encouraged to bookmark the page and visit often.

Small-Business Loans: This spring, the U.S. Congress increased the amount of money available to be lent to small businesses through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs. Both programs are funded through the U.S. Small Business Administration (SBA), with PPP loans being processed by a bank and EIDL loans being issued directly by the SBA. The PPP was scheduled to end on June 30, 2020, unless funds were depleted sooner or Congress extended the program. The EIDL program ends on December 31, 2020 (or when funds are depleted). Of primary concern is whether the federal government will sufficiently fund the programs to cover the needs of millions of small businesses across the United States. A PPP loan equals up to 250% of a company’s monthly payroll (capped at $10 million), which can be used to cover payroll, mortgage, rent and other specified expenses. It is a two-year loan at a 1% interest rate with no payment due for six months, and the SBA will forgive that portion of the loan used to cover payroll, rent and utilities for the first eight weeks of the loan. The EIDL is a loan of up to $2 million at a 3.75% interest rate to be used to pay workers, rent and other bills. The first $10,000 of the loan is a grant that does not need to be repaid.

Tariffs: The Americans for Free Trade Coalition, of which SEMA is a member, asked that companies be provided comprehensive tariff relief during COVID-19. The coalition called on President Trump to temporarily suspend tariff collections, including those imposed on metals and Chinese products. The request for suspended tariffs had widespread bipartisan support on Capitol Hill but was rejected by the administration. However, President Trump issued an executive order that allowed companies to defer duty payments for 45 days in March and April but only on a very limited category of products. The coalition asked the Trump Administration to apply the order to all imports, including tariffs on steel, aluminum and Chinese products, and defer collections through June so that companies can use the money to pay other expenses during COVID-19. There has been no decision on the request by the administration to date.

RPM Act: SEMA is working with members of Congress on both sides of the aisle to pass the Recognizing the Protection of Motorsports (RPM) Act in 2020. The legislation clarifies that the Clean Air Act allows motor vehicles to be converted into dedicated race cars and that it is legal to produce, sell and install race parts for those vehicles. The RPM Act has been subject to previous Congressional hearings and is well-positioned for consideration in the U.S. House of Representatives and the Senate. The House bill (H.R. 5434) currently has 58 co-sponsors, and the Senate bill (S. 2602) has 29 co-sponsors. To contact your lawmakers and request their support, visit www.sema.org/rpm.

STATE UPDATE

Virginia—Motorsports: SEMA-supported legislation in Virginia to create a motor vehicle racing heritage trail in order to promote tourism and economic development became law after the deadline for Governor Ralph Northam’s signature or veto passed. The law convenes a group of stakeholders, including owners of historic NASCAR and other racing tracks, to design and implement the trail.

West Virginia—Military Vehicles: West Virginia Governor Jim Justice signed into law a SEMA-supported bill to allow antique military vehicles to display an alternate registration insignia as opposed to a traditional license plate. Antique vehicle plates are available for vehicles that are more than 25 years old and owned solely as collector’s items.

SEMA News—July 2020

LEGISLATIVE AND TECHNICAL AFFAIRS

By Stuart Gosswein

FEDERAL UPDATE

Wisconsin—Collector and Hobbyist Vehicles: SEMA-opposed legislation in Wisconsin to restrict eligibility and raise fees for collector and hobbyist vehicle registrations failed to pass the Assembly prior to a required legislative deadline. Currently, those vehicles must be more than 20 years old, and owners are required to pay twice the normal registration fee. If passed, the bill would have further limited each designation to vehicles 30 years old and older, expanded seasonal use restrictions, and increased the registration fees to three times the normal rate. In Wisconsin, a collector vehicle is defined as being at least 20 years old, preserved because of historical significance, and having had no body alterations. Vehicles eligible for hobbyist plates include street modifieds, replica vehicles, reconstructed vehicles and homemade vehicles.

COVID-19 Webpage: SEMA continues to update the www.sema.org/coronavirus webpage daily to provide members with valuable resources for addressing COVID-19. The information gathered is comprehensive and ranges from industry best practices for protecting employee health to tracking the states as they allow nonessential businesses to reopen. Members are encouraged to bookmark the page and visit often.

Small-Business Loans: This spring, the U.S. Congress increased the amount of money available to be lent to small businesses through the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs. Both programs are funded through the U.S. Small Business Administration (SBA), with PPP loans being processed by a bank and EIDL loans being issued directly by the SBA. The PPP was scheduled to end on June 30, 2020, unless funds were depleted sooner or Congress extended the program. The EIDL program ends on December 31, 2020 (or when funds are depleted). Of primary concern is whether the federal government will sufficiently fund the programs to cover the needs of millions of small businesses across the United States. A PPP loan equals up to 250% of a company’s monthly payroll (capped at $10 million), which can be used to cover payroll, mortgage, rent and other specified expenses. It is a two-year loan at a 1% interest rate with no payment due for six months, and the SBA will forgive that portion of the loan used to cover payroll, rent and utilities for the first eight weeks of the loan. The EIDL is a loan of up to $2 million at a 3.75% interest rate to be used to pay workers, rent and other bills. The first $10,000 of the loan is a grant that does not need to be repaid.

Tariffs: The Americans for Free Trade Coalition, of which SEMA is a member, asked that companies be provided comprehensive tariff relief during COVID-19. The coalition called on President Trump to temporarily suspend tariff collections, including those imposed on metals and Chinese products. The request for suspended tariffs had widespread bipartisan support on Capitol Hill but was rejected by the administration. However, President Trump issued an executive order that allowed companies to defer duty payments for 45 days in March and April but only on a very limited category of products. The coalition asked the Trump Administration to apply the order to all imports, including tariffs on steel, aluminum and Chinese products, and defer collections through June so that companies can use the money to pay other expenses during COVID-19. There has been no decision on the request by the administration to date.

RPM Act: SEMA is working with members of Congress on both sides of the aisle to pass the Recognizing the Protection of Motorsports (RPM) Act in 2020. The legislation clarifies that the Clean Air Act allows motor vehicles to be converted into dedicated race cars and that it is legal to produce, sell and install race parts for those vehicles. The RPM Act has been subject to previous Congressional hearings and is well-positioned for consideration in the U.S. House of Representatives and the Senate. The House bill (H.R. 5434) currently has 58 co-sponsors, and the Senate bill (S. 2602) has 29 co-sponsors. To contact your lawmakers and request their support, visit www.sema.org/rpm.

STATE UPDATE

Virginia—Motorsports: SEMA-supported legislation in Virginia to create a motor vehicle racing heritage trail in order to promote tourism and economic development became law after the deadline for Governor Ralph Northam’s signature or veto passed. The law convenes a group of stakeholders, including owners of historic NASCAR and other racing tracks, to design and implement the trail.

West Virginia—Military Vehicles: West Virginia Governor Jim Justice signed into law a SEMA-supported bill to allow antique military vehicles to display an alternate registration insignia as opposed to a traditional license plate. Antique vehicle plates are available for vehicles that are more than 25 years old and owned solely as collector’s items.

SEMA News—July 2020

BUSINESS

(Re)Open For Business

Three Brand-Management Strategies to Survive COVID-19 and Come Out Stronger

By Douglas McColloch

Consumers expect the business community to assume a leadership role in the fight against COVID-19, so proactive support for community initiatives outside the traditional business scope can be a big help to promote and expand your brand in the short term.

The COVID-19 pandemic caused many companies to scale back production or reduce operating hours, and it’s clear that consumers are looking for greater safety and security in their lives as the industry moves toward recovery. Based on information gathered from a variety of sources, the consensus is that the companies that are best positioned to deliver those attributes while still reliably delivering the products and services their customers depend on will have a unique opportunity to build upon and even expand their brand awareness in the coming years.

That will require many companies to make adjustments—some minor, others substantial—to their current business models and develop marketing communications initiatives that offer assurance and affirmation as well as motivation and engagement.

One data point, a market-research survey of 2,200 adult Americans conducted in late March and published by global technology company Morning Consult suggested that large majorities of consumers are forgiving of businesses in the face of the virus, with 87% expressing appreciation for companies that have remained open for business. But they also expect the business community to take a leadership role in combatting the pandemic, with 68% expressing the belief that company CEOs bear some responsibility for helping Americans during
the crisis.

With so many potential customers quarantined, there has never been a better time for companies to expand their online presence with aggressive use of social media. Facebook, Instagram and YouTube are all efficient and economical ways to stay in touch with your customers when they can’t interact with you.

Tip: Take Note of Consumer Preferences and Tailor Your Business Accordingly

According to the Morning Consult survey, consumers show a strong preference to buy from companies that provide a “clean and safe” store environment (88%). This is one action point that many companies have already begun to ramp up in their workplaces by accelerating daily and hourly cleaning schedules, making hand sanitizer and related cleaning products more widely available to customers and employees, and by offering curbside service where in-store shopping has been curtailed or is not advisable.

As an example, Pep Boys recently rolled out a new repair and installation protocol where customers can book appointments online, drop off their vehicles, pay for services via smartphone and pick up their vehicles, all without the need for any close human contact. 4 Wheel Parts, among others, has recently introduced curbside service at its retail locations. Additionally, environmental service companies such as U.S. Ecology (www.usecology.com) are among those becoming more visible to provide cleaning and decontamination instructions to aftermarket companies looking to optimize workplace sanitation.

The survey also showed a strong consumer preference for companies that treat their employees with “flexibility and empathy” (84%). This is another area where many aftermarket companies have been proactive, expanding work-from-home policies and creating greater safeguards in the workplace. Summit Racing, to name one, announced recently that it will begin requiring masks to be worn at its facilities, in addition to implementing greater physical spacing between work stations, and many aftermarket companies such as Derive Systems and Painless Performance have instituted telecommuting protocols.

Tom Shay, an author and small-business consultant, encouraged companies to reconsider how they engage with their customers.

“It’s a different game now,” he said. “The old item-and-price advertising with the list of ‘here’s our weekly specials’ isn’t going to work because that’s not what people are interested in. People are buying things that help them feel normal. They’re feeling out of control, and some of the panic buying we’re seeing is a reflection of that. There’s a great opportunity to connect with people, to help them feel good about your business and to keep your name in front of them so that you’ll be remembered when the world comes back to normal.”

By contrast, he said, “the people who went to shut-down mode to a large degree have got to start all over with building their name from ground zero.”

As more sales are generated online, it’s a good idea for companies to be flexible in offering multiple payment options for consumers. PayPal, Apple Pay and Amazon Pay should be considered as essential going forward in addition to traditional credit and debit cards.

Tip: Consider the Future Consequences of Decisions Made Today

This can be a difficult subject, particularly in a business climate in which layoffs, furloughs or reduced business hours may be unavoidable. While consumers are overwhelmingly sympathetic as companies adjust their operations, actions such as layoffs, besides being disruptive, can lead to poor business outcomes. Nearly half of all Americans surveyed by Morning Consult said that they were less likely to patronize a business that had imposed layoffs, so how companies respond to this negative public perception can make a considerable difference not only to the minds of consumers but also to the bottom line.

According to the Morning Consult survey, among the actions that companies can take to strengthen consumer loyalty are pledges to rehire workers after business improves (64% responded favorably), announcing salary reductions for the executive management team (63%), and issuing public statements explaining the reasons behind the layoffs while expressing continued support for laid-off employees (62%). Shay advised against layoffs if at all possible.

“As an employer, if you’ve got the money, you have to look at how much time you invested in that employee to teach them what they know about the automotive industry,” he said. “If you simply toss them out the door and say, ‘I’m sorry, but I have to lay you off at this point,’ how do you think you build that experience back into your business?”

Shay instead advised companies to consider taking advantage of new federal relief initiatives such as the Paycheck Protection Program (PPP), a Small Business Administration (SBA) program that guarantees loans for small businesses up to 250% of a company’s monthly payroll (up to $10 million), which can be used to cover payroll, mortgage, rent and other specified expenses. PPP loans offer favorable terms (1% interest), and the SBA will forgive portions of the loan used to cover payroll, mortgage interest, rent and utilities for the first eight weeks if small businesses retain their employees and payroll levels.

Shay also pointed out that programs such as PPP provide companies with an opportunity to leverage their workforce to perform valuable community service.

“You don’t have to have your employees actually working; you just have to keep them on the payroll,” he noted. “So if you don’t have anything for your employees to do, you could assign them to volunteer at a local charity such as a food bank that’s feeding low-income children: ‘I don’t have anything for you to do here, so this is where I’m assigning you today.’”

To that end, many companies have responded by launching community-service programs, and consumers have noticed, according to the Morning Consult survey. As an example, 38% of Americans said that they would be more likely to patronize Wal-Mart after the company announced it would conduct drive-through coronavirus testing at some of its locations. A similar percentage said they would be more likely to purchase products from Apple after the company announced it was donating nine million face masks to support hospital relief efforts; 36% said they were more likely to purchase from Anheuser-Busch after the brewer announced it was shifting production lines to make hand sanitizer; and 45% said they’d be more likely to buy from Kraft-Heinz after the company announced that it was donating $12 million in cash and products to virus-impacted communities.

In a similar vein, numerous SEMA-member companies have retooled their operations or partnered with other companies to provide goods and services outside their core competencies to address the coronavirus pandemic—and discovered potential new revenue streams in so doing.

Case in point is Graffiti Shield, a company based in Anaheim, California, that manufactures graffiti-proof protective film products. The company saw a steep decline in business in the weeks following the initial COVID-19 outbreak, but then it was approached by a local hospital that was having trouble sourcing clear face shields for its medical staff. Within a matter of hours, the company had devised the means to design and cut shields that could be secured to the wearer’s head with Velcro straps.

“The main reason we took the project on—besides helping the hospital—was that we didn’t want to furlough any of our people,” said company CEO Jeff Green.

The company initially produced 1,000 shields a day, but production was soon tripled as new orders came in, and additional workers have been hired to meet
the demand.

Shay summed it up: “In the short term, the questions you need to be asking are: What can you do for your employees? What can you do to stay in touch with your customers? And what can you do to help your community?”

Tip: Invest in Quality Service and Acknowledge Customer Support

It’s one thing to make those changes in the workplace, but it’s equally important to communicate those facts in ways that will resonate with the public. According to Morning Consult, consumers respond most favorably to messaging that shows (a) what companies are doing to help stop the spread of the coronavirus and (b) what companies are doing to improve their customers’ safety and overall
well-being.

“It’s all about customer service,” Shay said. “A good message for employers is to emphasize customer service at this point more than ever.”

But customer service requires more than a nod and a wave at the door. It requires an educated workforce and a company willing to provide ongoing education.

“When I’m speaking at the SEMA Show,” Shay explained. “I’ll ask this question with a show of hands: ‘How many of you believe that you give great customer service?’ And the majority of hands go up. Okay, so I ask a second question: ‘How many of you have an ongoing program where you teach people how to engage with customers, how to sell merchandise, and where you teach about the products and the differences between various products?’ Very few hands go up. My question then is, ‘How do you expect me to believe your first answer when I’ve heard your second answer?’”

Shay also advised companies to consider expanding payment methods to provide greater flexibility to customers. In the short term, he said, “You’re going to find people who don’t want to touch cash, so I’d ask every businessperson: ‘How many different ways can I pay you? Visa, MasterCard, is that it?’ For a lot of folks, the answer is yes. But you also need to look at American Express and Discover. Then look at Apple Pay, Amazon Pay, Google Pay, Samsung Pay. You’ve got to open up.”

In the end, Shay said, customer service begins with keeping customers engaged. When so many are quarantined, social-media sites such as Facebook, YouTube and Instagram are ideal messaging tools to reach them as well as express empathy and gratitude for their support.

“You have an opportunity right now to try your wildest and craziest ideas of how to market to people,” he said. “They’ll be easily forgotten or forgiven if you do it wrong. Just keep trying. Find ways to connect with customers.

“Most of us have a database of information in which we have names, addresses and phone numbers. If you have to shut down your business, sit down with a telephone and start calling people just to say, ‘Hello, I’m thinking about you, and I just want to know how you’re doing.’”

The COVID-19 pandemic caused many companies to scale back production or reduce operating hours, and it’s clear that consumers are looking for greater safety and security in their lives as the industry moves toward recovery. Based on information gathered from a variety of sources, the consensus is that the companies that are best positioned to deliver those attributes while still reliably delivering the products and services their customers depend on will have a unique opportunity to build upon and even expand their brand awareness in the coming years.