Trends for 2016
A Look to the Future With SEMA Council Leaders
SEMA News annually canvasses the leaders of the association’s councils and networks for the December issue to seek their views about how the industry is shaping up for the coming year. The chairs of each group provide responses based on what their organizations and their companies are seeing within their marketplaces. Their responses provide helpful insights for businesses in every segment of the marketplace.
Chair: Dennis Roberts, Distinctive Industries
In the last decade or so, members of the Automotive Restoration Market Organization have downsized the resources used to enter product in their marketing vehicles of choice, be they catalogs or electronic means. This downsizing has become a problem for manufacturers and results in new challenges when it comes to getting new product to market. With few resources and an endless stream of restoration, performance, custom and new products in general, the retailer is stymied. The overhead for a full staff for new-product development, catalog production, website product entry and social media is hard to support and justify in this day of doing more with less.
There is a new focus from the manufacturers and third-party vendors to help make this daunting task easier. Product load sheets developed by these sources have become a very sophisticated and efficient source of marketing data. For the most part, detailed descriptions, specifications, dimensions, images, installation instructions, etc., are linked to these load sheets.
Retailers can personalize and map this product to their system, catalog or website in a fraction of the time traditionally spent researching and manually entering every line. This could bridge the resource gap!
The mainstream business world long ago adopted the above-mentioned practices, but the niche aftermarket seems to be unaware of these benefits. Being nimble in today’s world is essential.
Chair: Regis Finn, Thyssen-Krupp Bilstein of America
Automotive technology is rapidly changing. Pending 54.5-mpg Corporate Average Fuel Economy rules, autonomous driving, stricter emissions standards and vehicle connectivity are driving the changes. In addition, the 2016 elections will weigh heavily on the economy, as will expected interest-rate increases and worldwide instability.
We expect to see continuing consolidation on both the manufacturing and retail/warehouse-distributor sides of the market, but the biggest challenges remain hiring the right people and retaining the good ones you already have. As the available employee pool shrinks, companies are starting to target employees of other companies. Retaining your good employees will put increased pressure on your labor expenses as you compete to keep them.
With the importance of the Internet and extremely competitive market conditions, I feel that providing top-notch customer service and technical support are among the few ways that you can gain an advantage over your competition.
The Emerging Trends & Technology Network (ETTN) is here to help its members better understand and prepare for the coming changes. We will be working closely with SEMA Garage and SEMA Vehicle Technology Vice President John Waraniak’s vehicle technology programs.
The best thing you can do to stay abreast is become a member of the ETTN. Membership is free to any SEMA member. Please visit www.sema.org/ettn to join today!
Chair: John McLeod, Classic Instruments
Building or rebuilding hot rods, trucks and musclecars is clearly a growing trend. Folks are back in their garages and working on their toys. Young builders seem to be concentrating on trucks, as they are a little cheaper to buy, a little easier to work on and have better parts availability. We need to continue to focus on the upcoming generation. We are in great hands, but we must make sure that we stay focused and pay attention to them.
Change continues to happen in electronic marketing. While some segments may stay with traditional marketing and print media, you have to have your head under a rock if you do not see the electronic media blitz that is going on. From having a webpage and a Facebook presence to all online marketing, the change is clearly coming at us at a fast pace.
The most significant opportunities come from the basics: Treat your customers like you want to be treated. But we need to get more companies involved—and I mean really involved—with the Hot Rod Industry Alliance, not just joining and never doing anything with it. The volunteers and the select committee are here for you and your challenges, but we need more people to help, to get involved, to vote on issues and bring their questions to us. SEMA gives us the resources to do almost anything, and it always amazes me how few use them.
Lee McGuire, Superlift Suspension
Consumers are now really turning to the Internet for research and to purchase aftermarket parts. Consumers in our industry were later to adopt this practice because of the complexity of our products, but they are now embracing online convenience even to purchase items such as full lift kits. A website that is responsive to mobile devices is increasingly important, as more than half the consumers now search from their mobile devices.
E-commerce and a strong voice on social media are becoming so important for manufacturers building a community and for retailers developing a loyal customer base. If you don’t have a social-media presence, you are missing out on so much potential conversation about your brand or business. It is becoming increasingly important for our membership to make sure that they engage in social media in whatever capacity they can. With the growth of social media, it is no longer just word of mouth. It has become “world of mouth.”
The light-truck market has seen some recovery, and certainly some of our membership is reaping the rewards of that. Some members have reported stronger sales, but some product categories remain a bit soft. The most significant opportunities lie in finding unserved or underserved product areas and segments and having a product available to meet the needs of that consumer. The TORA select committee tries to identify areas that are relevant for our members and, with SEMA’s help, start the conversation so that we know what opportunities are out there.
Rich Barsamian, Advanced Clutch Technology
Industry consolidation is one of the most significant trends for members of the Motorsports Parts Manufacturers Council (MPMC). Historical data shows that the automotive aftermarket experiences a softness in most presidential election years, so we expect a flat to slightly declining market in 2016.
There are always lots of changes and movement taking place in the marketing realm, but the prevailing trend is an over-saturation of niche marketing options and channels, both in print and in electronic media. It has become overwhelming for those without sophisticated marketing efforts.
The biggest challenges are fighting for the next generation of customers and fighting to remain relevant in a marketplace that is crowded with options for entertainment, hobbies and ways to spend disposable income, but bolt-on street-performance products provide opportunities. The easier they are to install, the better the potential sales.
Product, vehicle and market data are becoming increasingly important. The hardcore motorsports market continues to sag due to cost and legislative pressures as well as changing consumer behavior. The aftermarket media is in a phase of heavy transition, and the MPMC’s Media Trade Conference must also evolve with the market changes.
Chair-Elect: Vic Bennett, Gantt-Thomas & Associates Inc.
Vendor consolidation is a significant concern in business today. Vendor consolidation occurs when one manufacturer acquires another. In some cases, this can benefit your company, but unfortunately, it can have a negative impact in other cases because you end up loosing the opportunity to represent that line, which translates into loss of income.
Opportunities are found in developing new customers. New customers are the lifeblood of all businesses.
In my opinion, communication is very important with both our customers and our manufacturers. Conference calls are increasing in popularity and are becoming a daily occurrence, as are video conferencing and, of course, we have the everyday phone calls, e-mails and, my favorite, face-to-face meetings.
Partnering with our customers and manufacturers with their social-media efforts adds to the relationship. What agency reps contribute is feedback about what we see and hear on the streets. This information helps the customer and/or manufacturer understand the voice of the consumer.
New-vehicle applications are highly anticipated every year. Manufacturers and customers race to be first to market with new applications and products to fit these new vehicles. New-vehicles applications are key to business.
Scott C. Wolin, Chicago Parts & Sound
Vehicle connectivity and infotainment are exciting new trends that bring complexity on many levels. During our recent long-range planning meetings in Detroit, we created a new taskforce called Smart-Connected, which will focus on new-vehicle technologies and autonomous driving. It will also facilitate forward thinking in the council’s approach and support of our Professional Restylers Organization (PRO) manufacturers, restylers and distributors. PRO manufacturers are accomplishing goals by working closely with the SEMA OEM-relations team, SEMA Garage and SEMA’s staff specialized in vehicle technology.
There is an urgent need for creating new ways to find, attract and retain young, fresh talent to help us grow our businesses in the short and long term, especially in the technology area. Marketing in our industry is changing dramatically with the enormous impact of social media. Most forward-thinking companies are developing a presence on Facebook, Instagram and Twitter to market and promote products and to communicate with their customers. Each business has unique needs and should carefully research their business opportunities and then adjust their marketing to take full advantage.
I am proud of the work we do at PRO and of the valuable resources we have created for our members. We are working on other important initiatives such as the PRO Seating Certificate Program, Sales Training Certificate, and engaging with NADA on educational programs. If you are not yet a PRO member, please consider joining us. Your membership will directly support our industry and help us move forward. Just visit www.SEMA.org/pro and click on “Join This Council.”
Chair: Erin Gilhuly, Toyota Motor Sales
Manufacturers and retailers must embrace the idea they do not have their brand reputations entirely in their own hands. Who hasn’t read a consumer review before buying something online, particularly the one-star reviews? Consumers are more savvy and educated about the products they want and need.
I believe that one of the biggest opportunities for the industry will be finding ways to tap into the ever-expanding market for alternative-fuel vehicles. The OEMs are under pressure to raise mileage ratings, and alternative-fuel vehicles will be a key part of that strategy. I can foresee a shortage of qualified technicians and mechanics to fix and maintain alternative-fuel vehicles, which could provide a great advantage for young people coming into the industry with those skills.
Specifically for the SBN, we are seeing more and more women entering niches in the industry that have been traditionally dominated by men. Women racers, engineers, mechanics and builders are becoming more commonplace. They are not only entering these fields, but their expertise and knowledge also have them on par—or in some cases above—their male counterparts. They are being recognized and acknowledged as leaders. The goal of the SBN will continue to be to bring recognition to these amazing women and encourage more young women to enter our industry.
Chair: Joe Findeis, www.PlusSizingGuide.com
With plenty of exposure from “The Fast and Furious” movies and online enthusiast forums, the “flush fitment” segment of the wheel/tire industry has expanded throughout the country and continues to grow each year. Wider rims combined with lower offsets are used to create the desired stance.
Car dealers are again dressing up their inventories of vehicles, which is always a good sign. Aftermarket wheel sales appear to be on the rise. In spite of the somewhat sluggish economy, people will buy the things they want, not just what they need.
People love Jeeps and love to improve their off-road capability and appearance with wheels and tires. Trucks—whether two-wheel drive, four-wheel drive, lifted, leveled, modified or stock—continue to be extremely popular for accessorization, especially with an aftermarket wheel-and-tire package. Silver, gray and black in a variety of flat, gloss and hyper finishes are still the most popular, but colors such as reds, golds, yellows, greens, blues and others are being sought by wheel buyers who are looking to stand out from the crowd.
Traditional print media will most likely continue to decline as consumer behavior changes. Online marketing techniques should provide mobile-friendly content in websites, blogs, videos, buying guides and product information in order to inform and educate consumers. Popular forms of social media such as Twitter, Facebook, YouTube, Google+ and others are being used to build loyal customer followings and gain referrals.
Competent installation partners are required for online tire and wheel sellers that need a physical location for drop shipping and installation. While the installer will not get the initial sale, they gain new customers for future profitable services such as brakes and alignments that the online seller is not capable of providing.
Chair: John Rosanbalm, Conklin Company Inc.
Maintaining differentiation in the market is as key as it’s ever been, and it’s as tough as it’s ever been in a market gravitating toward competing on price points. We have found that investing internally is helping us to regularize the business we get. Improving internal operations and procedures is setting us up better for growth and to improve customer service at the existing levels of business.
Although we have new products in the pipeline, they will primarily be to maintain existing market share for customers with newer vehicles who need a newer oil specification. Regardless, we have recently picked up an additional 80,000-sq.-ft. building, allowing us to build up more inventory depth for the spring of 2016. We have seen steady growth over the last few years, and we see that continuing. We also see the continuation of companies being purchased by others, either by competitors or by companies looking to diversify.
We are concerned about government and industry regulations that are in the pipeline and the consumer-education issues that these regulations cause. Motor-oil misapplication is also a concern as cars get smaller engines, smaller oil capacities, more strain on the oil via needing to cool turbos, lower viscosities to also improve fuel efficiency, and new specifications and weights of oils for consumers to pick from. Further regulations will lead to other reformulations in 2016, and that isn’t a trend that has slowed in recent years.
I positively view new product niches and the new company startups I see entering the automotive aftermarket. This influx is key to the future growth of the industry.