The 2018 SEMA Market Report

SEMA News—October 2018

BUSINESS

The 2018 SEMA Market Report

Now Available, SEMA’s Latest Research Is Good News for the Industry

By Mike Imlay

  Market Report
Recently released, the “2018 SEMA Market Report” indicates a period of expansion for the aftermarket fueled by a strong overall economy, an ongoing decline in unemployment, and growth in consumer spending. The report offers detailed profiles of every major aftermarket category along with insights into consumer buying habits, making it an essential resource for business planning.
   

The automotive specialty-equipment market experienced an eighth straight year of post-recession growth, reaching $43 billion in 2017. That’s just one of the many important takeaways from the newly released “2018 SEMA Market Report.” Filled with insights about the state of the specialty-equipment industry, the 82-page report also includes detailed profiles of aftermarket consumers, comprehensive industry and economic trend data, and key statistics surrounding the vehicles currently in operation on the roads. The annual report was prepared by SEMA’s market research department and is now available for free download at www.sema.org/research.

“Each year, our goal is to help SEMA members better understand the specialty-equipment market so they can grow their businesses,” said SEMA Director of Market Research Gavin Knapp. “Reflecting that goal, our 2018 report has likewise grown to include breakouts for the new advanced driver-assistance systems (ADAS) category, while each of what we call our ‘product scorecards’ reveals a wealth of additional information about a wide range of product categories.”

State of the Market

“Overall, this year’s report presents a lot of good news for the specialty-equipment market, which has been sustaining an upward trend,” Knapp continued. “At roughly $43 billion, our market has hit a new high, thanks in part to roughly 4% growth from 2016 to 2017. As they say, a rising tide floats all boats, so things are generally looking pretty good for the industry across most of our categories. The only hiccup worth mentioning is the mobile-electronics category, largely because of ongoing OEM improvements and integrations in that area. Otherwise, returns have been solid across the industry. From performance to appearance to handling products, it seems that our industry is innovating at an increasing pace.”

Retail Sales
As highlighted in the “2018 SEMA Market Report,” last year saw the aftermarket reaching an estimated $42.92 billion in retail sales, continuing on a multi-year trajectory of 4% annual growth. SEMA further projects retail sales will reach close to $45 billion by the end of this year.
 
Sales Channel
SEMA research indicates that the in-store experience continues to shine among nearly two-thirds of aftermarket consumers. Of course, specific categories may vary depending upon the type of part or accessory, cost, installation requirements and other factors. The “2018 SEMA Market Report” offers the broader picture while also drilling down into specific category data.
 


The report also includes analysis of current U.S. economic strength. Trend data in that regard is also bullish, although Knapp noted that American economic and trade policies are injecting an element of uncertainty into the aftermarket.

“Another area to watch is OEM sales,” Knapp added. “Although the numbers remain strong, the last decade has seen a significant shift in the types of vehicles that OEMs are selling, including a recent announcement by one automaker that it will stop producing sedans altogether in favor of crossover vehicles. Those changes in vehicle composition naturally bring the likelihood of shifts in consumer purchasing habits across our industry. Despite those and other uncertainties, however, overall U.S. consumer confidence remains high, unemployment is down, and discretionary spending is up—all of which bode well for the aftermarket.”

Emerging Technologies

The “2018 SEMA Market Report” also recognizes a number of emerging technologies alongside traditional aftermarket categories. Chief among them is the ADAS market, which for the specialty-equipment industry consists mainly of “safety performance” products designed to help drivers avoid collisions. The list of developments includes backup cameras, blind-spot monitoring, front-collision warning, lane-departure warning and related systems. The aftermarket size for those systems is presently valued at $0.63 billion and is projected to grow significantly through 2021.

“We began including data about some of the technologies in our 2017 report, and we’ve added even more information this year, creating an entire category scorecard around these systems for the first time,” Knapp said. “Backup cameras are the most ubiquitous offerings at the moment, but we’re now seeing lane-departure and collision warning systems beginning to appear in the aftermarket. We’ll be closely tracking that category from now on.”

From ADAS to traditional performance products, all of the report’s full-page category scorecards feature annual market sizing estimates over the past four years.

  Vehicle Segment
Among the major report takeaways for 2018 is the renewed strength of pickup upgrades. They represent the specialty-equipment industry’s largest sector, accounting for 29% of total retail dollars. Mid-range cars and SUVs (including the Jeep Wrangler) account for 15% and 13% of the market, respectively.
  Installed Accessories
The “2018 SEMA Market Report” has expanded its accessorizer profiles to include a host of new data reflecting how consumers buy, receive and install parts. Here we see a category-by-category breakdown of DIY versus professional installation for parts purchased throughout 2017.


“This year, we’ve also added information such as an estimation of the share of DIY installations for each product category, along with more detailed data about how people buy and received their product,” Knapp said. “For instance, if a customer bought a product online, was it shipped to them, or did they pick it up at a store? We also track similar data for in-store purchases. On top of that, we also present an industry measure as to how many companies have reported growth in each given category.”

Knapp said that a couple high-growth niches readily stand out after crunching the data.

“At more than $12 billion, pickup modifications represent the biggest single chunk of our industry,” he observed. “Obviously, pickup sales have been going gangbusters for the last few years after being hit hard during the recession. Mainstream consumers drive some of that, while some is driven by crossover businesses—people who use their trucks both as work and personal vehicles. Plus it’s not all about new-vehicle purchases, because when a new truck is purchased, very often an old truck is turned in and sold to someone else. That creates an accessorization opportunity for the person buying the used vehicle as well.”

 

Jeeps also continue to be a big market, Knapp noted, citing robust great sales of the new JL Wrangler as an example.

“We’re also starting to see more accessorization of other sport-utility vehicles and even crossovers,” he said. “They are ‘near truck but not really truck’ vehicles that lead people to purchase products such as roof racks, carriers, hitches and other items geared toward the outdoor lifestyle. Then there’s the modern muscle category—specifically the Camaro, Challenger and Mustang—bringing a large number of performance consumers to the aftermarket. Finally, rising sales of mid- to high-end branded vehicles also seem to be pulling in accessorizers who want to make a statement with their vehicles.”

Consumer Profiling

The report paints a bright picture of aftermarket consumers and their purchasing behaviors, profiling buyers by their vehicles, how they use them, and how and why they modify them. While offering insights to any type of seller, traditional retailers will likely find the numbers especially heartening.

“Brick and mortar is in no danger of going away in our industry anytime soon,” Knapp explained. “The reality is that consumers are telling us that they are making a third of their purchases online, but the majority of sales still take place in-store. Have there been changes in our industry? Absolutely, but people still want to be able to see and feel products and have the help they get in a store.

Light Vehicle
The 2018 report presents a broad range of market data in quick, easy-to-grasp visuals. This chart depicts changes in the light-vehicle population since 2016.
 
   

“The other thing to remember is that only half of purchasers in our industry are what we classify as enthusiasts. We sometimes get the idea that everybody is this real high-end car guy who is in his garage wrenching. But that’s actually a smaller group of our consumers, so the idea that everyone who wants to make a modification is going to buy it online and install it themselves is just not a reality.

“That said, the amount of research and shopping—not necessarily purchasing—is huge. So while people are very often coming into a store for purchases, they are online looking for products, information, pricing and locations. So although brick and mortar is not going away, brick and mortar also can’t ignore an online presence, because if consumers can’t find you online, they probably won’t find you at all.”

As part of SEMA’s ongoing efforts to help members engage the youth market, the 2018 report also looks closely at younger consumers. Here again, Knapp said the numbers may pleasantly surprise industry veterans.

“2018 SEMA Market Report” Fast Facts
  • The automotive specialty-equipment market has hit a new high of $43 billion.
  • The specialty-equipment market is growing by 4% per year.
  • 80% of accessorized vehicles are used as daily drivers.
  • Pickups account for 29% of the specialty-equipment market.
  • A third of all accessorizers are under age 30.
  • 47% of accessorizers own powersports or recreational vehicles.
  • 38% of specialty-equipment parts are sold online.

“We’ve probably all been inundated with assumptions about millennials and cars,” he said. “Certainly all industries are always looking toward the next generation as their new consumers. Our industry is no different. What we can say from the research we’ve done for this market report—along a future report on the 16- to 24-year-old demographic that we’re preparing for September release—is that our industry remains a young person’s game.

“While it may be true that younger people now don’t have the same amount of discretionary money to spend, they also don’t have the same financial expectations or requirements as previous generations. So a younger person now can spend more on what he or she wants before they have to worry about things like mortgages, family and kids. If we were to compare a 20-year-old today with a 20-year-old from two decades ago, the two would be a lot alike. The things they can and will do to their cars may be different due to advancing technology, but young people still love to modify and accessorize, and we are not in danger of losing that group at this point.”

Applying the Data

Whatever their place in the aftermarket, manufacturers, resellers and retailers will all find the “2018 SEMA Market Report” an essential tool for business planning. It compiles data surrounding literally thousands of products made by thousands of manufacturers and distributed and sold through thousands of retail channels.

Get This and Other Reports
Getting the “2018 SEMA Market Report” is now easier than ever, thanks to a new SEMA market research web page featuring streamlined access to all of SEMA’s current research. Members no longer have to log in. To download your free copy of this and other SEMA research reports, go to www.sema.org/market-research.


“Our industry is really a niche within a niche,” Knapp said. “We have the wider automobile industry, and then we have aftermarket parts and our cool, fun stuff. But there isn’t a lot out there to help businesses understand where they fit into the landscape. Our goal is to lay out the data so that companies can easily understand how they compare to the market and how their sales compare with the trends over time. We further design the report so businesses can get key insights into their customers and how they shop, research and buy.

“Ultimately, businesses looking to branch out, grow and make changes will especially find the report useful in identifying complementary products and new opportunities to help them succeed and prosper.”

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