2017 SEMA Market Report

SEMA News—October 2017

RESEARCH

By Mike Imlay

2017 SEMA Market Report

Now Available, SEMA’s Latest Research Delivers Unprecedented Marketplace Insight

  Market Report
The 2017 SEMA Market Report is now available. Taking a dynamically new approach, the report combines comprehensive data from numerous government, consumer and industry sources to help readers profile accessorizers and identify sales opportunities within the $41 billion specialty-equipment marketplace.
   

What are the current trend lines for the aftermarket? What parts are selling, and who’s buying them? How are consumers locating and purchasing these products? And what might businesses glean from key economic and industry indicators to help them chart both their short- and long-term growth?

For the answers to these and many other questions, SEMA members have come to rely on the association’s yearly market report, a comprehensive research project summarizing economic, sales, consumer, category and vehicle trends affecting the $41 billion automotive specialty-equipment industry.

Now available to SEMA members and the industry at large, the 2017 report takes a dynamically new approach in delivering an extensively detailed presentation of industry numbers that manufacturers, warehouse distributors and retailers alike can immediately grasp and profit from.

Greater Depth Than Ever

“The 2017 SEMA Market Report really represents a new stage in the evolution of our reports,” explained Gavin Knapp, SEMA director of market research. “Readers last year were introduced to a whole new data set that SEMA developed over the last three years. This year, we’ve completely moved to this new data set for our key market sizing and reporting structure. It’s a big change to move away from data that we’ve used for more than 20 years, but this new data ultimately allows us to get a lot deeper than we’ve ever been able to get and bring in a lot more insight around product categories, types of vehicles being modified and the retail structure of where people are buying products.”

sales channel
The report’s front section is packed with useful data charting aftermarket retail sales, purchases by sales channels (shown here), purchases by vehicle segments, and more. Such breakdowns will greatly assist manufacturers, warehouse distributors and retailers alike in bringing the right products to the right consumers through the right channels.
 
   

In terms of methodology, Knapp said the report combines comprehensive information from many different government, consumer and industry sources to help readers understand both the overall direction of the U.S. economy and the health of the specialty-equipment industry. However, the true meat of the report is its presentation of new data distinctive to the industry and its many niche segments.

“We’ve developed a unique methodology because we’re a unique market,” Knapp said. “When we look at these numbers, they are absolutely specific to us, to our specific categories. These are the things that really connect with our membership and, frankly, information you can’t get anywhere else. We’re really the only organization creating something this detailed for the specialty-equipment market.”

Ultimately much of this new data comes from the consumer.

“We do a survey starting with 20,000 people,” Knapp explained. “We ask them what kind of cars they have, what they are buying in our space, if anything. How much did they pay? Where did they buy the product? What car did it go on? Then we follow up with information about how they shop, etc. Our key is still market sizing: How big is the market, and what does the market look like in terms of sales? It’s just that now we can go beyond that general $41 billion number for the entire industry. We can get much more granular in terms of product categories, retail outlets and so forth.”

  estimates
The annual report includes growth forecasts for the coming year in accessory and appearance products (shown here), performance products, and wheels, tire and suspension products. Each segment is further broken down for granular detail. A survey of 20,000 specialty-equipment consumers helped form the report’s foundation.
   

The report begins with trend lines highlighting overall industry growth since 2011, retail sales since 2014, and 2016 consumer purchase estimates by sales channels (chain stores, online sellers, general retailers, etc.) as well as vehicle segments from small cars to trucks to classics. It then presents exhaustive market sizing summaries for 43 specialized aftermarket niche categories, taking a look at their overall dollar sales volumes in 2014, 2015 and 2016, and highlighting the percentage of typical parts sales across 15 different sales channels—as well as breaking down parts sales percentages by vehicle types, from small cars to vans.

“If you then look at all the individual product categories, you’ll actually see that we also do a little 2017 forecasting,” Knapp said. “People can see what trends might be expected in the coming year for everything from chemical additives to mobile electronics, wheels and tires. Assuming nothing catastrophic happens to the economy, it’s where we’re expecting the categories to go. Also new for this year, following the look at individual parts categories, is an entire section providing segment profiles broken out by different vehicle types. This is where somebody who focuses on small cars or pickup trucks, for example, can get a whole new view of market size, sales channels and parts that are selling based on their chosen vehicle type, with a greater depth than we’ve ever been able to show before.”

Following those breakdowns, the report then turns to accessorizer profiles—snapshots of different types of consumers, their product research and purchasing habits, and their levels of engagement with their particular vehicles and the aftermarket. After examining this data in depth, the report next tackles such economic indicators affecting the industry as overall U.S. economic growth, retail gas prices, real GDP, unemployment figures, retail growth both within and outside the aftermarket, and a host of others. The report finishes with comprehensive vehicle sales figures and an overview of historical specialty-equipment industry trends. Introductions to each section, along with easy-to-follow graphs, charts and captions, aid the reader in making sense not just of the raw information but why it matters to them and the industry.

mobile
The 2017 SEMA Market Report includes an extensive market sizing section, with charts detailing virtually every conceivable industry category such as the Mobile TV and Video Camera product segment seen here. Sales volumes for 2014 through 2017 help users predict category growth. In addition, the charts help readers to quickly size up significant sales channels and vehicle relationships for each category.
 
   

Key Market Profiles

Perhaps the best news from all this data crunching is the bullish picture the 2017 market report paints for the near term. After taking significant hits from 2008 through 2010, the aftermarket has rebounded, posting steady 5% overall growth annually for the past several years.

“In all honesty I would say that right now things are looking pretty good across the board,” Knapp said. “There are a couple of areas that have been stagnant or down, such as mobile electronics—specifically stereos. So there are certain categories where the OEMs are doing such a good job now, and have been for some time, that there’s less need for people to seek replacements. But generally, all of our categories have been doing well. Obviously, that mirrors vehicle sales, which have done well but flattened a little this year. The economy in general has been good. Consumer confidence has been fairly good. Consequently, since we work in a discretionary-spending industry, people spend money when things are good, and that’s the stage we’re in right now.”

There are a few caveats to this upbeat assessment, however. First, Knapp pointed out that, in addition to a slight drop-off in OEM vehicle sales, the current political climate could possibly unnerve consumers, prompting them to hold back spending. Plus there is some concern in economic circles that the financial and loan markets can again hiccup, as they did a few years ago.

“All those things kind of loom out there and can pull us back, but as long as people are happy, our industry can expect to remain healthy,” observed Knapp.

In fact, the research indicates that the entire specialty-equipment industry grew from $39 billion to a healthy $41 billion this past year alone. The report also again demonstrates that, while tied to OEM vehicle sales, the aftermarket still somewhat marches to its own drumbeat. For OEMs, crossover utility vehicles (CUVs) have become the highest-selling vehicle segment, but pickup trucks continue to be the most popular segment for aftermarket installations. It’s also noteworthy that the vast majority of items are still purchased at physical localities, even as roughly a third of aftermarket products are now acquired by consumers online.

“We haven’t hit that point where it’s a majority of sales online or anything close to that,” Knapp emphasized. “The reality is that there’s a lot of disparity in online versus brick-and-mortar. When you look across different part types, different categories, there are certain things such as motor oil that people want now, so they’re going into the store. But there are other things that are small and easy to install that are naturals for online. They’re easy to ship and easy for a consumer to install. There are still other parts that are too big or too complicated to ship or install. Those are obviously going to have a smaller uptake online because it doesn’t make a lot of sense to purchase them that way.”

  consumers
Consumer segmentation is a major aspect of the 2017 report, which delves into the many ways accessorizers research, purchase and install parts for their vehicles. The report also examines what differing types of consumers are prone to buy, why they buy, potential crossover purchase areas, and a plethora of other demographic information.
   

As for the accessorizers themselves, the research indicates that (contrary to popular belief media stories) young people continue to enhance their vehicles with aftermarket offerings at a steady pace. In fact, the majority of accessorizers remain under 40, with younger drivers especially more likely than their older counterparts to buy performance parts.

As a whole, accessorizers are also twice as likely as other drivers to own additional vehicles, such as powersports vehicles, RVs and boats, yielding strong cross-selling opportunities for SEMA members. As far as product research, consumers who accessorize their vehicles typically rely on search engines and advice from friends and relatives in making their purchase decisions. Interestingly, roughly one-third of consumers may consult manufacturer websites, but a similar percentage will also visit actual stores to gather information.

Continuing an approach adopted over the past few years, the report also delves into consumer trends by sifting their demographics into buyer segments based on engagement and motivation factors. Enthusiast buyers are subdivided into Builders, Drivers and In-Crowd groupings, with each group exhibiting its own unique set of buying habits. Builders, for example, buy parts because they enjoy working on their vehicles, while In-Crowders seek parts to make their vehicles stand out. Handymen, Commuters and Do-It-For-Me (DIFM) consumers characterize non-enthusiast buyer types with equally individualized buying habits.

Understanding each group, what they spend on, where they buy and what motivates them can be powerful considerations in crafting and directing products and marketing messages their way, so the 2017 SEMA Market Report pays detailed attention to such questions.

Not surprisingly, the report finds that enthusiast buyers purchase more parts, are more engaged with the industry and are prone to more daring aftermarket modifications. Nevertheless, non-enthusiast buyers actually represent the majority of the industry’s consumer base, accounting for 58% of aftermarket sales. What’s more, Commuters represent 28% of purchases within that category, followed by DIFMs at 22%. Those figures stand in stark contrast to enthusiast Builders and In-Crowders, who represent 17% and 16% of aftermarket sales, respectively.

midrange
The research project includes comprehensive data for vehicle market segments, including midrange, small, upscale, sports and alternative-power vehicles, along with CUVs, SUVs, pickups and vans. Again, easy-to-grasp charts highlight important facts about the aftermarket-product potential for each vehicle type.
 
   

Putting the Data to Work

As a product of SEMA market research, the 2017 SEMA Market Report was designed with all SEMA members in mind—with the expectation that every business in the aftermarket supply chain will find it useful.

“The report answers requests we’ve been getting over the years from SEMA members for more depth,” Knapp said. “Now we’re able to drill further down and bring these resources to bear for our members’ businesses. Obviously, people often automatically think of manufacturers when they think of SEMA. Of course, this report is great for manufacturers because they can see the categories they play in and what they look like. But on the retail side, we’ve still got all the other product categories that are selling. We’re now also able to give a lot more information on the retail side about where people are buying in terms of different types of retail outlets.”

While manufacturers may be interested in the depth of one or two categories, retailers will be looking at a whole bunch of those categories and asking what the research team is seeing in terms of what’s going up and what’s potentially going down.

“Also you’ll see product categories matched with the types of vehicles they’re being put on,” Knapp said. “A lot of our retail guys are specialized in some way. Maybe they sell for only trucks, so we’re trying to give them more depth so they can match parts with trucks and get a better understanding there. Or maybe they’re only looking at small cars and so can get that kind of depth. They can also look at the different types of parts, where people tend to buy them, and where they fit in as a retailer. Perhaps they’ll see an opportunity to stand out and do something different. For them, the report offers a lot of ideas about the products they should be carrying, the types of customers they should be targeting, and how those customers shop
and buy.”

  growth
As in past reports, the 2017 edition presents national economic trends and other indicators that help chart industry health. It also contains a wealth of data about specific vehicle-model sales for the past five years.
   

Beyond sizing up traditional markets and sales channels, however, the 2017 SEMA Market Report also includes new-technology segments, offering a road map to where the aftermarket may be headed as vehicles become increasingly computerized, connected and automated. The research tracks transmission and sensor products, engine control and computer products, mobile electronics of various types, and wireless and smartphone integration products, among other categories. Of course, even those companies and retailers dealing with old-school vehicles will find this information useful in delivering retrofit and enhanced safety and entertainment options to older and vintage vehicle owners.

“Ultimately, we hope this report helps our members to create and market the ‘next big idea,’” Knapp concluded. “SEMA takes very seriously the idea that a core competency of a trade association is its ability to do market research to help members better understand their market. We’re continually evolving this ability every year. We’re proud of our work over the past three years in bringing a new methodology, new data sets, and increased market insight to our members. The 2017 SEMA Market Report represents a new milestone in those efforts.”

Getting Your 2017 SEMA Market Report

The 2017 SEMA Market Report is available free to SEMA members. Non-members may obtain a copy for $499. To download the report, go to www.sema.org/2017-market-report.

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