2017 SEMA Market Report

SEMA News—December 2017

BUSINESS

By Mike Imlay

2017 SEMA Market Report

The Latest Consumer Research Into Who’s Buying What

  Market Report
Who are your consumers, what are they buying and where, and how can you target them? Those questions are at the heart of a sound business strategy for the coming year, and SEMA’s latest market research can help you get a handle on them.
   

With the SEMA Show wrapped up and a new year on its way, SEMA-member companies are busy absorbing the latest aftermarket trends and adjusting their marketing and sales strategies for 2018. The task can seem overwhelming, especially after experiencing the dizzying array of new products and innovations that flooded the recent Show. For a successful 2018 marketing plan, you need to identify who your consumers are, what they’re currently buying, where they’re shopping, and how to target them.

As SEMA News first reported in October (page 120), the recently debuted 2017 SEMA Market Report includes extensive research into differing types of consumers, their levels of engagement with their vehicles and the aftermarket, how they research and shop for products, and what they ultimately buy. The following is a brief look at some of the report’s key consumer findings, which can help serve as a launching point for a sound business plan.

Profiling Aftermarket Consumers

“Our accessorizer profiles are based on data from a large-scale consumer research study designed to understand the broad market for automotive specialty parts and accessories,” explained Gavin Knapp, SEMA director of market research. “Our SEMA Consumer Market Data project surveyed 20,000 drivers across the United States and examined the purchase decisions of 5,000 people who modified or accessorized their vehicles. We asked them what kind of cars they have and what they’re buying in our space, if anything. How much did they pay? Where did they buy it? What car did it go on? Then we followed up with information about how they shop, etc.”

Specialty Equipment Retail Sales

The SEMA research separates those aftermarket consumers into two main groups, “Enthusiasts” and “Non-Enthusiasts,” and then further sifts them down into six subgroups based on a range of more finely tuned characteristics. Enthusiasts, for example, are sorted into Builder, Driver and In-Crowd subcategories, while Handymen, Commuters and Do-It-For-Me (DIFM) consumers represent Non-Enthusiast buyer types.

As Enthusiast buyers, Builders generally shop for parts because they enjoy working on their vehicles, while In-Crowders seek accessories primarily to make their vehicles stand out. Each of the other subgroups exhibits equally unique interests, motivations and purchasing habits. Needless to say, understanding overall consumer trends—including those associated with each particular group—can greatly aid businesses in their strategic planning for 2018 and beyond.

Currently, SEMA research finds that Non-Enthusiasts represent the majority of the aftermarket’s consumer base (58%). Within that grouping, Commuters buying parts to maximize comfort or attain mild vehicle personalization make up the single largest buyer profile at 26%, followed by Do-It-For-Me Buyers who like to leave parts installations to professionals at 22%. Handyman consumers buying parts and accessories to upgrade their vehicles during repairs or maintenance comprise only 10% of the market.

Among Enthusiast consumers (42% of the market), Builders who enjoy working on their vehicles make up 17% of specialty-equipment buyers, followed closely by the In Crowd, who principally buy parts to make their vehicles stand out. The latter represent 16% of the market. Finally, Drivers who turn to the aftermarket for parts that maximize their driving fun comprise just 9% of aftermarket customers.

Based on the above figures, it will come as no surprise that most accessorizers (73%) report that their vehicles serve as daily drivers. Pleasure driving (32%), occasional use (27%) and work use (26%) trail behind. Only 13% of aftermarket customers surveyed reported using their vehicles in such other pursuits or hobbies as racing, track days, car shows, off-roading, etc.

SEMA’s market data further shows that consumers who accessorize their vehicles heavily opt for shop installations for wheels and tires (73%); drivetrain items (72%); engine components (71%); and suspension, brakes and steering enhancements (68%). They also prefer shop installations for intake, fuel and exhaust upgrades (67%) and even safety gear (65%). However, they begin to trust their own abilities when it comes to mobile electronics, with 45% of them installing items themselves and 55% of them turning to retail installers. That confidence in self-installation predictably grows with various interior and exterior items (49%), lighting (55%) and chemicals (57%).

2016 Consumer Purchase Estimates by Vehicle Segment

As for the vehicles they drive, accessorizers are roughly split between pickups (24%) and midrange cars (22%). Crossover and SUV ownership combined accounts for 27% of accessorizers, with sports-car ownership reported at only 5%. However, SEMA data also points toward a strong cross-marketing potential.

“Accessorizers in the car and truck spaces are also twice as likely as other drivers to own other vehicles, such as powersports and recreational vehicles or boats,” Knapp said. “Those other vehicle pursuits offer strong cross-selling, cross-promotion and marketing messaging opportunities for SEMA members. If you accessorize your truck, for example, there’s probably a good chance that you are at least amenable to accessorizing the other vehicles you own.”

Meanwhile, Knapp advised that the industry not write off younger consumers, despite anecdotal reports that their enthusiasm for vehicles is waning. According to SEMA market research, younger accessorizers are still more likely to make performance-oriented under-hood modifications, even though such modifications are done by a minority of consumers in general. Plus, younger accessorizers are also more likely to modify or upgrade vehicle interiors, lighting and mobile electronics.

“Contrary to what many news outlets have reported, we’re finding that there are still many young people who enjoy accessorizing their vehicles, with younger drivers still more likely than older drivers to buy performance accessories,” Knapp concluded.

What They’re Buying

The 2017 SEMA Market Report delves deeply into market sizing of product categories ranging from accessory and appearance items to performance upgrades and wheels and tires, and consumer purchase estimates for each category range into the billions of dollars. Those deep dives are intended to help both manufacturers and retailers increase sales.

Age Total US Population

“Manufacturers may connect with one or two product categories, thinking here’s where I play and how I compare,” Knapp said. “For retail, they’ll be looking at a whole bunch of the categories and asking what we are seeing in terms of what’s going up and what’s potentially going down. You’ll also see product categories matched with the types of vehicles they’re being put on.

“A lot of our retail guys are specialized in some way—maybe only trucks—so we’re trying to give them more depth so they can match parts with trucks and get a better understanding. Maybe they’re only looking at small cars, so they can get that kind of depth. Maybe they can also look at the different types of parts and where people tend to buy them. For them, there’s a lot of different things to look into for ideas about the products they should be carrying and the types of customers they should
be targeting.”

Where Parts Are Bought

While the report’s data is too extensive to cover in this overview, some 2017 estimates for the total worth of each category are as follows:

  • $22.15 Billion: Accessory and appearance products, including chemicals, exterior and interior items, lighting and mobile electronics.
  • $9.65 Billion: Performance products, including drivetrain, engine, intake, fuel and exhaust, and safety gear.
  • $9.35 Billion: Wheels, tires and suspension products.

The report also presents extensive breakdowns of where and how purchasers prefer to shop and install items across more than 40 of these product categories, drilling down with precision that even includes the vehicle segments consumers are accessorizing with these products by percentage. For example, in the exterior products category, body, trim and other exterior accessories combined account for $1.84 billion in annual consumer spending. The top sellers of these items include new vehicle dealerships (17%), online auto parts chains (13%), independent specialty stores (12%) and custom fabricators (11%). Pickup trucks are the most frequent recipients of these products (25%), followed by mid-range cars (23%), SUVs (12%) and CUVs (11%).

“There are a couple of other categories that have been stagnant or down, like 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 make replacements. But generally across the board all of our categories have been doing well,” noted Knapp.

Where They’re Buying It

Although much has also been written about the struggle of brick-and-mortar sales points against internet goliaths, physical stores are far from dead in the specialty-equipment world. By nature, aftermarket consumers will always head to brick-and-mortar shops for big-ticket and complicated upgrades, installations, restorations and custom work. Moreover, although aftermarket consumers now spend a lot of research time online, the numbers nonetheless indicate a preference for sales channels where they can see and touch all types of products before opening their wallets. Physical auto parts chain stores, independent specialty stores, tire shops, general retail chains and the like still garner more than 50% of all accessorizer purchases.

Buyer Types

“Online shopping has become a large sales channel across many sectors of the U.S. economy and has taken hold with our industry’s consumers as well,” Knapp said. “But our buyers are still reporting that the majority of their purchases come from physical locations. It’s interesting because we sometimes hear from store owners that people are coming in, shopping and then purchasing online. I would actually speculate that there’s more of the opposite occurring. People right now are doing a huge amount of research online because they can see every option. And where it makes sense with certain products, they’ll buy online. But for a lot of things, they want to get really comfortable with the product and understand it so that they are informed when they go into the store.”

That underscores the need for even brick-and-mortar retailers to exert a competent presence online. More than simply researching products via the web, consumers research the ideal stores to visit to see and talk about those products.

“That’s a part of the online equation people sometimes gloss over.” Knapp said. “There’s more information than a consumer can ever use online, but that doesn’t necessarily make things easy or helpful for them. When they walk into the store, you have to fill that gap. You’ve got to be that helpful, knowledgeable place where they can come and feel secure in their purchases. If it’s just as scary to purchase in the store, they might as well do it online. Retailers should strive to ease consumers’ minds in their stores.”

2018 and Beyond

In the end, those who strategize well for 2018 and beyond have good reason for optimism. According to the 2017 SEMA Market Report findings: “After several years of recovery, 2016 was a year of stabilization. Unemployment has fallen to pre-recession levels and is expected to stay there through the coming year. GDP growth has been relatively consistent for the past year or two, and gas prices remained relatively low. While new-car sales appear to have leveled off, auto parts retail stores reported higher revenue. Consumers, meanwhile, are about evenly split on positive versus negative outlooks after being pessimistic in the early recovery years.”

Looking down the road, Knapp can foresee specialty-equipment sales growth beginning to slow in 2018–2020 as the economic recovery levels off and settles into renewed stability. However, as the 2017 SEMA Market Report concludes, the overall economic indicators remain solid and set the stage for what will likely be another positive year in 2018. SEMA businesses have only to recognize the trends and seize the opportunities presenting themselves in a newly recovered marketplace.

For a more detailed look at aftermarket consumers, what’s selling and other key market factors, get the full 2017 SEMA Market Report, available for free to all 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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