SEMA News—May 2021

BUSINESS

The UTV Race Heats Up

How Consumer Thirst for Excitement and Escape Is Boosting the Market

By Mike Imlay

The powersports UTV market seems to get better and better each year, not just in terms of the vehicles themselves but also in terms of the increasing number of consumers flocking to the side-by-side lifestyle. It’s a phenomenon that not even a pandemic can stop.

Since the Yamaha Rhino first popularized UTV recreation in 2004, numerous OEMs have flooded the market with a diversity of side-by-side models aimed at youth, families, outdoor aficionados and hardcore racers. According to Motorcycle & Powersports News Editor-at-Large Brendan Baker, today’s UTV space has become fiercely competitive, with most OEMs churning out quality, capable products. Current favorites include Polaris and its RZR models, Yamaha with its Wolverine, Honda and its Talon lineup, and Can-Am, best known for its Mavericks. Each manufacturer also offers additional lines tailored for a variety of levels and uses. (For the utility-minded sportsman, even John Deere has entered the fray with its stalwart Gator models.) Among all those brands, however, Polaris is currently the dominant player.

“Overall, the difference is that Polaris has been doing it longer,” Baker explained. “They have the name and more models out there. They’re the Harley of the side-by-side market, but you’ve also got a lot of second-tier-level OEMs coming out with decent products—newer stuff at a lower price point, more value brands. People want a UTV, but they don’t necessarily want to take out a second mortgage to get it.”

2020 in Hindsight

As it did in so many sectors, COVID-19 shook the 2020 UTV market. Several of its largest OEMs temporarily shut production facilities, and dealers contended with lockdowns early last year. But like the vehicles themselves, the side-by-side segment proved remarkably resilient.

“I think everybody was pleasantly surprised and happy that the industry had a record year in 2020, which you wouldn’t have guessed going into March,” Baker said. “Somewhere in April, things started to turn around because people got the stimulus money. There were still people working and logging in from home, but they were also like, ‘Hey, what can I do during a lockdown?’ And that’s when they decided, ‘I’m buying a dirt bike, motorcycle or UTV,’ and things really took off.

“I almost think [the national shutdown] helped. It cleared out a lot of the inventory the dealers had. A lot of used and pre-owned stuff got sold off as well. In the end, demand was up and they were able to move product.

“We don’t have exact UTV numbers, but Polaris was up 29% in their off-road segment for the fourth quarter of 2020. That’s a pretty good jump that’s representative of the industry. UTVs have always been strong. They’re about half of the powersports market—they’re that powerful. If anything, more riders came in last year, and I don’t see that slowing down.”

According to industry experts, surging interest in UTV motorsports has also primed consumer enthusiasm for the vehicles—and that enthusiasm continued unabated despite the pandemic and the resulting cancellation of many 2020 events. When King of the Hammers (KOH) announced that its 15th annual off-road race would take place in February 2021 with enhanced COVID-19 safety precautions, all eyes were on Johnson Valley, California. Could KOH pull it off? Would the spectators show? The answers were yes and emphatically yes. Attendance topped 10,000.

That bodes well for other motorsports events, which have become the latest proving grounds for UTV manufacturers and specialty-equipment suppliers, observed Jim Ryan, marketing director for SCORE International. As the old saying goes, competition betters the breed.

“UTVs have been part of SCORE [desert racing] for many years now,” Ryan said. “In fact, we have six classes, and they all represent a developmental area for the OEMs. UTVs are our factory wars now. It’s not Ford, Chevy, Dodge. It’s not even Honda, Kawasaki, Yamaha, Husqvarna or KTM. It’s Polaris and Can-Am. Arctic Cat was in there for a while, and now there are also Robby Gordon’s new Speed UTV lines. That’s where the factory riders are, and that’s where the factory efforts are.”

Ryan added that UTV participation has grown to now represent about 20% of the SCORE field.

“We have unlimited classes, we have stock classes, turbo classes, non-aspirated classes, open, unlimited classes, which involve everything in the UTV category,” he said. “The ability of UTVs to finish even the most brutal races is quite impressive, and there’s an entire industry built up around the aftermarket. There are probably 40, 50, 60 hardcore manufacturers attached to that area in terms of performance applications and general or appearance modifications. Every category from automotive suspension to wheels, tires, safety equipment—all that transfers straight over into UTVs nowadays.”

Ryan further noted that SCORE’s social-media numbers continue to indicate a high level of fan engagement for the UTV classes and that the old “race on Sunday, buy on Monday” axiom is very real with UTV consumers.

The Race for Market Share

That thirst for motorsports-inspired performance means there’s plenty of opportunity for aftermarket businesses considering a jump into the marketplace, according to BOOSTane founder and engineer Ian Lehn.

“The water is not only warm, it’s scorching hot right now,” he said. “As a lot of people are now aware, BOOSTane and Driven Racing have come together in a collaborative partnership for engineering and new market development, and the first crack that we’re going to be taking is the powersports market.”

He added that today’s UTV drivers expect extreme levels of performance and efficiency from their vehicles—demands that he believes can’t be achieved without addressing fuel and lubrication.

“We’re going to be offering a fuel additive as a race-fuel alternative for higher-performance applications,” Lehn said. “Our engineering teams have been working together on a few different products still in development, including an application-specific engine oil for both wet-clutch and non-wet-clutch applications for Polaris, Can-Am, Honda and Yamaha vehicles. The last piece will be an oil specific to the front and rear diffs.”

A racer himself, Lehn believes that the low cost of entry is drawing more drivers into UTV motorsports, along with enthusiast consumers energized by what they see at the competitions.

“The opportunity is there for a family of four to purchase one vehicle and keep up with the maintenance versus buying four separate ATVs or four separate motorcycles,” he said. “With one UTV you’ve got a vehicle to go out and have fun in the outdoors all year round. The vehicles are designed for subzero temperatures and speeding through the desert and everything from racing to hunting, overlanding and camping. They have a lot of versatility. It doesn’t matter what your business model is—there’s a part of these vehicles and their market segment that [any company] could probably influence.”

Hypertech General Manager John Lambert said that his company added a thus-far successful UTV product line just over two years ago.

“We wanted to introduce our Max Energy Spectrum Power Programmer for the market, along with a supporting product line of popular high-quality accessories,” he said. “Our tuning product was an obvious introduction of Hypertech to the market.”

In a short time, the company’s many offerings have grown to include not only the CARB-approved power programmer for Polaris but also suspension limiting straps, a pistol-grip shifter, and such utility items as front-door storage bags, a UTV recovery kit, a tire repair kit, and other performance and safety items.

“We’re the first company to obtain an executive order (EO) for aftermarket tuning for the Polaris RZR,” Lambert said. “We also obtained an EO for our Xtreme Blow-Off Valve, which is also an industry first.

“The accessory product line came to fruition because of discussions we had with employees who are also off-roaders with UTVs. We want to serve these enthusiasts with a full product line that shows off our expertise in product design by offering numerous products that are all top-notch.”

According to Lambert, the latter point is essential to standing out in the crowd of businesses rushing into the market.

“It seems that there are a lot of people and companies trying to make products for UTV consumers,” he observed. “That means a lot of online sellers racing to the bottom of the pricing ladder. You can see that many products sacrifice quality to position themselves competitively at the lowest price. We decided to buck that trend and make products that showcase quality and performance.”

Crossing over to the UTV realm has been an equally natural and profitable progression for lighting suppliers like Oracle Lighting.

“A big focus of what we’ve been doing lately has been powersports and adapting existing products to work in those applications and also developing new products specifically for powersports,” said Oracle Director of Development Justin Hartenstein. “A big part of our customer base is off-road-type vehicles, whether for the truck market or the Jeep and SUV market, so a lot of our products in those categories lend themselves to powersports use as well.”

Hartenstein said that adapting lighting and other aftermarket products to UTVs doesn’t necessarily require a lot of engineering. Today’s larger side-by-sides aren’t much smaller than a Jeep or a compact SUV, so many of Oracle’s universal products easily exchange across platforms. (The company also makes vehicle-specific applications.) Moreover, UTVs share many features in common with their larger vehicle counterparts.

“The lighting systems on them are really similar to automotive lighting systems,” Hartenstein said. “They have daytime running lights, high beams, low beams and fault lights in some applications, so we approach [product development] the same way we would for OE-replacement parts for something like a modern SUV.”

Modification-Hungry Consumers

When it comes to the customer base, Hartenstein said that UTV enthusiasts are especially prone to specialty upgrades, with many consumers opting to purchase less-expensive utility or base models from UTV dealers so they can spend more on customizing them for desert running, trail riding, mud bogging, or simply hunting, fishing or ranch chores.

“Just because they’re utility vehicles doesn’t mean people don’t like to modify them,” he said. “For example, there are plenty of people modifying the Polaris Ranger just because it’s a lower price of entry. They might spend a little less on the purchase price but put money into aftermarket parts—wheels, tires, lights and things like that to make it stand out.”

In fact, as with fullsize trucks and Jeeps, wheels and tires are among the first and most popular upgrades UTV purchasers undertake.

Cameron Parsons, product engineer and field analyst for the competition and specialty tires division of Toyo Tire USA Corp., said that the company introduced its 32x9.50R15 Open Country SxS in 2019. It’s a popular size used on more aggressive side-by-side vehicles and in off-road racing.

“We’ve had a special interest in this segment for years, largely due to our recent race wins and season championships in both desert and short-course racing,” he said. “As the popularity of side-by vehicles grew among both enthusiasts and racers, it only made sense for Toyo to draw inspiration from our Baja-race-winning Open Country M/T-R and build a similar tire geared toward side-by-side applications.”

Parsons characterized the UTV tire market as “very competitive” for tiremakers.

“Side-by-sides are quickly changing and becoming more capable with each new model,” he said. “For that reason, we approached this segment from a motorsports perspective, where tires are put to the most strenuous tests in terms of performance and durability.

“A majority of side-by-side owners are interested in exploration, speed or both. We’ve also found that many of these owners enjoy modifying and upgrading their vehicles to enhance their capabilities further. They don’t take their side-by-sides for easy drives on flat roads. They drive through rough and complicated terrains, slide through fast corners, and they occasionally seek out jumps when they can find them.”

That translates to seemingly limitless opportunities for the aftermarket. In addition to wheels and tires, engine and tuning enhancements and lighting, frequent consumer buys include exhaust and suspension components, sound systems and mobile electronics, winches and recovery gear, and helmets, harnesses and related safety products. Replacement windshields, doors and roof options as well as cargo-management solutions and tools for the trail are also big sellers.

In the end, Baker said, the UTV market is all about motorsports-inspired performance and a freedom-loving lifestyle.

“There’s so much possibility with these vehicles, and people are going to want more of the already fair amount of aftermarket parts available,” he asserted. “And the more, the merrier, in my opinion. The cream will rise to the top, and a lot of SEMA companies already know how to build good product. It’s just a matter of gearing it up for UTVs.”

Explore the Opportunities

SEMA Market Research estimates that more than 80% of UTV owners will purchase accessories for their vehicle and lifestyle. Further, research indicates that the average accessorizer will spend in excess of $1,700 outfitting their side-by-side. To explore this and additional research relating to this market, go to www.sema.org/market-research where you can download the “SEMA Powersports: UTV Accessorization Report” along with other market reports to assist your aftermarket business.

By Ashley Reyes

Creating an environment that avoids micromanagement leads to employee self-sufficiency and, consequently, to productivity. During the webinar “Reducing Micromanagement and Increasing Employee Self-Sufficiency” taking place, Thursday, May 13, at 12:00 p.m. (PDT), managers and supervisors will learn tips for reducing micromanagement and how they can build confidence, efficiency and productivity within their departments that will lead to the long-term growth of their staff and company.  

During the SEMA webinar, managers and supervisors will learn:   

• How to identify common micromanagement habits and understand the impact on the organization.
• Best practices for setting a team up for success and ensuring that project goals are being met as a team.
• Ways to increase comfort levels between both the manager and employees
• Tips for proactively reducing micromanagement.

Attendees will participate in a breakout session following the webinar presentation to share their previous micromanagement experiences and discuss what they have learned.

Register here.

By SEMA Washington, D.C., Staff

SEMA-supported legislation was reintroduced in the 2021-2022 session of Congress that would provide tax credits to cover 50% of the expenses associated with exhibiting or attending a trade show. The bipartisan Hospitality and Commerce Job Recovery Act of 2021 (H.R.1346/S.477) would help businesses that participate in trade shows and the millions of men and women employed in the tourism industry.

SEMA’s Government Affairs Office is working in coordination with other key industry and trade groups to educate members of Congress and staff on the need to pass the Hospitality and Commerce Job Recovery Act of 2021. It is important that members of Congress continue to hear from SEMA members about the need to provide tax credits to businesses that participate in trade shows. To send a letter to your lawmakers in Washington, D.C., please click here.

Key provisions of the Hospitality and Commerce Job Recovery Act of 2021:

• Establish a tax credit for 50% of the cost of attending or exhibiting at a convention, business meeting or trade show in the United States between January 1, 2022, and December 31, 2024.
• Create a tax credit equal to 100% of the qualified restart costs paid or incurred to reopen facilities designed for conventions, business meetings or trade shows if the facility was forced to temporarily close or reduce operations due to the COVID-19 pandemic. Costs may include any renovation, remediation, personal protective equipment, cleaning, testing or labor to prevent the spread of COVID-19.
• Restores the Entertainment Business Expense Deduction for 2021 and 2022.
• Establishes a tax credit for restaurants or food service businesses that would cover any cost associated with reopening or increasing service at an establishment forced to temporarily close or reduce operations due to the COVID-19 pandemic. The credit would be effective between the date of enactment and December 31, 2022.
• Creates a tax credit for 50% of qualified travel expenses for individuals up to a maximum of $1,500 per household plus $500 for each qualifying child (maximum benefit of $3,000 for a family of five). The credit begins phasing out for individuals making more than $75,000 per year ($150,000 for married couples).
• Provides a temporary credit for unmerchantable inventory costs for small businesses that were lost due to necessary precautions to halt public gatherings.

For details, contact Eric Snyder at erics@sema.org.

By Ashley Reyes

During the upcoming Facebook live chat hosted by the SEMA Businesswomen’s Network (SBN), SEMA members are invited to tap into the expertise of a professional career coach and HR expert.  

With more than 15 years of experience interviewing candidates and serving as an HR resources to employees, owner of HR Culture Geek, Elizabeth Jacobs has insider tips and advice to help with every phase of a career, from résumé writing to interview prep and career planning.   

Tune in on the SBN Facebook page, Wednesday, May 5, at 12:00 p.m. (PDT), as Jacobs shares advice on how to land a dream job and navigate the workplace landscape with ease. As a live chat, participants will be able to get their questions answered during the event.

By Ashley Reyes

SEMA Chairman of the Board Tim Martin, President and CEO Chris Kersting and other SEMA/PRI executive staff will share updates about the industry’s top initiatives during the Virtual Town Hall, Tuesday, May 4, at 11:00 a.m. (PDT).  

Recognizing the changes that have taken place in the industry during the past year, the association has many new, enhanced and modified programs focused on current needs. During the 45-minute Virtual Town Hall, members will get updates about resources for emissions compliance, programs uniting the motorsports community and reconnecting the industry at in-person trade events this year.  

SEMA/PRI staff will talk about the status of current programs and events available to members and answer questions live during the Virtual Town Hall.  

By participating in the event, members can make their voice heard and provide their feedback on how SEMA can better serve the industry and membership.   

Register here. 

By SEMA Washington, D.C., Staff

SEMA will provide free access to a one-hour webinar, May 6, at 1:00 p.m. (EDT) to review employment issues facing small businesses as they navigate a summer that will hopefully mark the final chapter in the COVID-19 pandemic.

The webinar will discuss COVID-19 vaccines, returning employees to the physical workspace and some lesser-known but important relief programs available to small businesses, including the Employee Retention Tax Credit.

The webinar is presented by Jessica Summers, an employment law attorney and the strategic policy director for the Small Business Legislative Council (SBLC). SEMA is a member of the SBLC—a coalition of trade and professional associations that help influence legislative and Federal policy on issues of importance to the small business community.

Register for free. 

After registering, you will receive a confirmation email containing information about joining the webinar.

For more information, contact Stuart Gosswein at stuartg@sema.org.

By Kyle Cheng

The overall economic outlook is positive. Consumers are spending money now that restrictions are easing and overall confidence has jumped as consumers are optimistic about the economy.

Retail sales surged 9.8% in March. Driven by the stimulus, Q1 retail sales saw the strongest quarterly growth since the ’60s. Auto sales also spiked last month, hitting levels not seen in more than three years.

Manufacturing has been especially strong, adding 53,000 jobs. Auto manufacturing is seeing some slowing because of key component shortages. However, overall production in the auto-parts segment is still growing. While some obstacles remain, such as supply-chain constraints and short-term pricing pressure, the overall outlook remains bright.

For more information, download the new April “SEMA Industry Indicators” report today at www.sema.org/research.

Other new reports from SEMA Market Research:

• 2021 SEMA Vehicle Landscape Report: Aftermarket products can be used on just about any vehicle. However, knowing where the greatest opportunities are can be challenging. This report looks at how the vehicle landscape is shifting, where the greatest opportunities are for our industry and what trends are on the horizon that may impact your business.
• Classic Vehicle Report—Classic Cars, Modern Markets: In this report, SEMA Market Research explores the specialty aftermarket for classic vehicles. Inside, you will find information on how owners relate to their classic vehicle, how they go about achieving their vision and how businesses can connect with them.

While Ford just recently debuted the third-generation F-150 Raptor R back in February, they only provided a look at the tamer version with the 3.5L EcoBoost. The Raptor R is rumored to have a unique grille, beefier trailing arms, exclusive rims and, as everyone knows by now, the heart and soul of the GT500—the Predator 5.2L supercharged V8.

According to sources, the R will pump out around 725 hp to 750 hp, leaning more toward 750 hp, especially since the GT500 puts out 760 hp. One source said “Honestly, we had to counter RAM once we knew they installed the HellCat in the TRX.” The team is allegedly looking to beat the RAM TRX in every facet of the Raptor R.

The ’21 F-150 Raptor will be assembled at Ford’s Dearborn Truck Plant in Dearborn, Michigan, and will be available at dealers this summer. The Raptor R is expected to debut later this year with an on-sale date in 2022.

Photo credit: Brian Williams, SpiedBilde

While Ford just recently debuted the third-generation F-150 Raptor R back in February, they only provided a look at the tamer version with the 3.5L EcoBoost. The Raptor R is rumored to have a unique grille, beefier trailing arms, exclusive rims and, as everyone knows by now, the heart and soul of the GT500—the Predator 5.2L supercharged V8.

According to sources, the R will pump out around 725 hp to 750 hp, leaning more toward 750 hp, especially since the GT500 puts out 760 hp. One source said “Honestly, we had to counter RAM once we knew they installed the HellCat in the TRX.” The team is allegedly looking to beat the RAM TRX in every facet of the Raptor R.

The ’21 F-150 Raptor will be assembled at Ford’s Dearborn Truck Plant in Dearborn, Michigan, and will be available at dealers this summer. The Raptor R is expected to debut later this year with an on-sale date in 2022.

Photo credit: Brian Williams, SpiedBilde

Compiled by SEMA Editors

John Thomas Named President and CEO of Toyo Tire U.S.A. Corp.

Toyo Tire U.S.A. Corp. has announced that John Thomas has been selected as its next president and CEO. He brings more than 30 years of automotive experience to the role, including extensive knowledge of the North American OEM and aftermarket landscape. In his most recent role, Thomas served as president and CEO of Webasto Charging Systems Inc. based in Monrovia, California. Thomas will report to Tatsuo Mitsuhata, chairman of the board of Toyo Tire U.S.A. Corp. All departments at Toyo Tires, including sales, finance, pricing and planning, marketing, and product planning and technical services will report directly to Thomas. He succeeds Roy Bromfield, who will retire in July after nearly nine years with Toyo Tires and 37 years in the tire industry. Bromfield will serve as an advisor to Toyo Tires at least through the end of 2021.

RANDYS Worldwide Promotes Neal Hollingsworth to Vice President of Marketing

RANDYS Worldwide has announced the promotion of Neal Hollingsworth to vice president of marketing. As a part of the executive leadership team and reporting to the President and CEO, Hollingsworth will continue to be responsible for activities related to RANDYS Worldwide and the network of brands across all sales and marketing channels. His marketing group leads RANDYS’ companies in web, analytics, digital, event and brand management, graphic design, motion graphics, sales channel support and development, customer marketing support and more. In addition to RANDYS internal work, Hollingsworth’s group functions as a marketing agency to customers, building brand and sales support programs within their market area. He began with RANDYS in September of 2010 and continues to place emphasis on brand development along all channels of the business.

Pep Boys to Award $100,000 in Scholarships to Aspiring Automotive Technicians

Pep Boys invites those studying to become technicians to apply for one of the 15 scholarships available in the annual Find Your Drive scholarship program. Scholarships awarded through the program this year will total $100,000 to celebrate the company’s centennial and continue the “Race to 2026” initiative, designed to recruit talented technicians in the automotive industry and close America’s skills gap.  

This year’s program will include five $10,000 scholarships to be awarded to qualified students studying to become professional automotive technicians in major metro areas: Houston, Los Angeles, Orlando, Philadelphia and Puerto Rico. An additional 10 $5,000 scholarships will be awarded to qualified students studying to become professional automotive technicians in other areas in the U.S.

To be eligible for consideration for a scholarship, students must be pursuing an automotive technician degree or certification through a full- or part-time college or trade school program and meet certain academic requirements, provide a written or video essay and submit two letters of recommendation. The application window will remain open until Friday, May 21, at 12:00 a.m. (EDT), and winners will be notified by Tuesday, June 1. Students can begin the application process and find additional details and eligibility requirements at www.pepboys.com/findyourdrive.

Retrac Group Announces New CEO, Company Structure

Retrac Group has announced a structural change designed to increase growth and enhance the security and prospects of its employees. The company’s ownership has been transferred from the Carter family to an Employee Ownership Trust (EOT) structure, making the 115-strong workforce the company’s beneficiaries. Experienced automotive and motorsports executive Dan Walmsley has been appointed as CEO. He will lead the group’s two divisions—Retrac Productions Ltd. and Retrac Composites Ltd. Long-standing co-owner and Retrac Productions Managing Director Andy Carter has been appointed as chairman of Retrac Group. Walmsley arrives at the company from VentilatorChallengeUK Consortium. Prior, he was the motorsports director at McLaren Automotive from 2016-20, having been team principal at FIA World Sportscar Championship entrant Strakka Racing.

Have some company news you would like to share? Let us know and the news may appear in an upcoming issue of SEMA eNews. Send your items for consideration to editors@sema.org.