2014 SEMA Middle East Recap

Whether the motivating factor is to hedge against future downturns in the U.S. economy or to sell to the 95% of consumers residing outside the United States or a combination of the two, SEMA members are increasingly reaching out to overseas resellers. Todd Lindblade, regional sales manager for Extang, based in Michigan, explained one of the reasons why his company and 41 other SEMA members recently spent a week in the United Arab Emirates (UAE) meeting with buyers from throughout the region.

"The pie in the domestic market is only so big," Lindblade said. "When you look outside the shores of the United States, you're able to grow your pie. And if you're not looking, somebody else is."

The third annual SEMA fact-finding and networking visit to the UAE, held each year in March, is designed to create opportunities for U.S. manufacturers to meet with pre-vetted buyers from the six Middle Eastern countries that make up the Gulf Cooperation Council (GCC). This political and economic alliance includes Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE. Retailers and wholesalers from Lebanon, Egypt, Jordan and India also attended.

Video: SEMA Middle East Business Development Conference

The SEMA Hall at the 2014 Middle East Motor Tuning Show (MEMTS) featured 42 U.S. brands and attracted buyers from 10 countries.

The U.S. Department of Commerce plays a key role in SEMA business-development programs, including this one to the Middle East and similar SEMA trips to China and Russia. U.S. Consul General Robert Waller helped open the SEMA exhibit and had a chance to visit with the U.S. manufacturers. Also participating in this year's events were Liz Couch from the International Trade Administration's Auto Team along with Wasif Shah from the U.S. post in Saudi Arabia, Xavier Muthu from the U.S. post in Kuwait and Ashok Ghosh from the U.S. post in the UAE.

In addition to exhibiting in a special SEMA hall at the fifth edition of the Middle East Motor Tuning Show (MEMTS) in the emirate of Sharjah, the 70-person U.S. delegation visited performance and off-road tuning shops and participated in an exciting networking evening of karting and a barbecue at the Dubai Autodrome.

"They love cars here," said first-time participant Chris Clark, director of Kooks Headers. "I would say they love cars just as much as we do in America, between the Raptor, the 4x4 industry and the American muscle that they are die-hard about. I talked to four or five shops during our visit that work on only American musclecars."

Lake Speed Jr., the general manager of Driven Racing Oil, was another first-time participant. "This is our very first time in the Middle East, ever," he said, "and it is way more than I expected. The level of infrastructure, the passion about motorsports, the sophistication of the speed shops we've visited—it's every bit of what we have on Main Street USA, right here. It's not anything I could have understood without being here, feeling it and seeing it."

Passion for Vehicles and Customizing

"Society here is in love with cars," said Mark German, CEO of Green Filter Performance. "Products sell—products that are distinctive and make the vehicle change, like suspension kits. It's all about the look, and then performance and the sound that some performance products make."

Said Kevin Floody, international business manager for K&N Filters: "The Middle East continues to thrive and grow and, in turn, creates more opportunities for the automotive aftermarket. As the economy accelerates in the Middle East, more and more gearheads are getting into automotive businesses because of their passion for cars. This helps to create the demand and affords the opportunity for companies like ours to expand into this very important market."

SEMA Vice President of Communications and Events Peter MacGillivray (left) introduced a Saudi buyer at the networking event at the Dubai Autodrome. Buyers and U.S. manufacturers had a chance to network informally the evening before MEMTS.

Buyers and representatives from 42 U.S. SEMA-member companies participated in a networking barbecue party at the Dubai Autodrome. Pictured are staff from Royal Purple (and two distributors who suited up to go karting. From left: Lars Nordberg, Royal Purple's distributor in the region; George Shepherd, Royal Purple's export sales manager; Mitch Perera, Liberty Motorsports' sales and marketing manager; and Manoj Aswani, UAE-based DAW's managing director.

Positive Perception of U.S. Products

The GCC countries are hungry for high-quality U.S. products. American television and films bring the American car culture right into the living rooms of Middle Eastern consumers and have had a positive influence, spreading information culturally along with technical know-how on vehicle customization.

Just as U.S. goods flooded global markets in the post-World War II era, U.S. culture is now penetrating every continent through the dramatic growth of mass communications, such as music, television, films and the Internet throughout the region.

"The Middle East represents a viable market filled with customers eager to buy American-made products," said Dee Zee Vice President of Sales and Marketing Jason Mrachina. "We were surprised by the quality of the vehicle builds and the knowledge of the people managing the stores we visited."

Lisa Chissus, president of Flex-a-lite, found the UAE to be very progressive. "I've been impressed with the architecture we've seen and the reception that we've received," she said. "As far as doing business with Americans, it's refreshing that they want the quality of our products genuinely and seem appreciative that we made the trip here to see them and their businesses and to understand their marketplace. The impression I've gotten is that they truly want to develop relationships with their suppliers, which is great."

Relationships

As Chissus mentioned, business in the region puts a heavy emphasis on relationships.

"We were here last year, and a manufacturer who has been here before told me that things will take a long time to develop," said Kyle Fickler of Weld Racing. "Don't assume that there is a bag of money at the end of the jetway and all you have to do is get off the airplane and there it is. You've got to build the relationships, maintain the relationships and nourish them. It's driven by the product, by the reputation of the company, but it's also driven just by human interaction. And you've got to build that trust to make it work."

The fact that English is widely spoken makes things easier.

Size/Breadth of the Market

The GCC market is about the same size as the French or Canadian automotive markets. The roads are packed with all types of vehicles from all corners of the earth. Trucks are big in the market, and it's an important destination for U.S.-made vehicles.

Passenger vehicle sales in the six GCC countries were up an average of 10% in the past year to 1,632,908 registrations, according to a blog on www.bestsellingcars.com. That nearly equals sales of France (1.79 million) and Canada (1.74 million).

All segments are represented, said Wayland "Butch" Cox, vice president of sales for Royal Purple Inc., including American performance, truck, powersports, off-road, sport compact, exotic and European.

"The vehicle mix in the Middle East resembles that in the U.S. market or the European market," he said. "In addition, Japanese vehicles are quite abundant, thus giving a well-rounded market. As you might imagine, off-road is a very popular segment and continues to grow."

The delegation had the chance to visit a number of off-road and speed shops. "I love the shop tours because I'm very hands-on," said Kyle Fickler, Weld Racing LLC vice president of sales and a second-time attendee. "You want to see how other people do things, and what's most interesting here is that it is a developing market, so you can't base what you see here on what we see back in the United States. They may not have access to the same equipment or the same technology, but the fact that they don't have it today doesn't mean that they won't have it tomorrow. The shop tours give you a real sense of their technical capabilities and just how things get to market. They have to build trust relationships with their end consumers, so you're relying on them to build trust in that local market if they're a dealer of your product. Sometimes just seeing how someone conducts business is going to be a good indication of whether you want them representing your brand or not."

Floody concurred regarding both the diverse vehicle mix and the region's passion for customizing. He said that applications ranged from Toyota Land Cruiser to a lot of General Motors and Ford products, but the region is pretty much dominated by Japanese vehicles from Toyota, Nissan and Mitsubishi.

German said that the popularity of trucks is evident in the Middle East and is similar to that found the United States.

"People love their trucks out here," he said. "They love off-roading, and they love looking big and muscular going down the road.

Top Speed was the first stop on a day-long trip to tour local tuning shops. Pictured are (left with back to camera) Rick Trudo, president and CEO of SCT Performance; Adrian Croot (center), marketing director of Bully Dog Technologies; and (right) Saeed Al Al Marzouqi, managing director of Top Speed.

The GCC accepts vehicles built to U.S. or European standards, with very few GCC-specific changes. The U.S. exported more than 130,000 vehicles to Saudi Arabia in 2011, and that number increased again to more than 167,000 units in 2012, according to a recent study published by the U.S. Department of Commerce. Saudi Arabia is the second-largest market for American sport utility vehicles (SUVs), behind only the domestic market. U.S. vehicle exports to the GCC region totaled 318,511 units, or nearly 17% of all U.S. vehicle exports. In terms of value, light-vehicle exports to the GCC have more than tripled from $2.7 billion in 2009 to more than $8.7 billion in 2012. The new figures for 2013 show that another 271,647 U.S.-made vehicles made their way to the GCC. It was GM's second-largest export market for U.S.-made vehicles, and Saudi Arabia was second only to its sales to Canada.

Motorsports

It is said that the UAE spends more per capita on motorsports than anywhere else in the world. The Dubai Autodrome and the Yas Marina Circuit are within an hour's distance of each other, and the Bahrain International Circuit is in nearby Bahrain.

The Yas Circuit on Yas Island off the coast of Abu Dhabi in the UAE became the first drag-racing track outside the United States to be sanctioned by the National Hot Road Association. The Bahrain International Circuit followed in June 2011.

 
SEMA members visited a local performance shop.

In a post-trip survey, 100% of the companies responding reported obtaining leads from their participation, with the vast majority reporting that they were "likely" or "very likely" to see the leads translate into new business within the next 12 months.

Follow Through

Companies expect to be busy over the next few months building on the relationships they began or strengthened during their GCC visit.

In export businesses, it's all about the follow up. You have to be diligent, and you have to be willing to spend the time, effort and energy to follow through before you are successful. You have to stay at it sometimes four or five years, noted SCT CEO Rick Trudo.

For more information on SEMA's business-development trips to China (held each September), the Middle East (held each March) and Russia (taking place in May) or international events at the SEMA Show or other international resources, e-mail Linda Spencer at lindas@sema.org.

The U.S. delegation spent a day touring specialty shops. Fancy's owner Javad Pisheh (center in the light blue shirt) and his family posed with the U.S. participants.

 

Pisheh treated the U.S. delegation to lunch between visits to Fancy and other wholesalers, speed shops and off-road shops.

Josh Abbott (center), international sales manager for Borla Performance Industries Inc., said that this was the company's third year of participation at the SEMA Middle East Business Development Conference. "As always, it turned out to be a great success," he said. "These events keep providing us with the unmatched chance to meet many prospective buyers as well as our existing customers. We are proud to be a part of this effort of bringing companies and markets together for the greater good of the industry."

 

"International growth is continuing to build our performance lubricant business," said Karl Dedolph (right), director of international sales at Champion. "At Dubai this year, we gained relationships with warehouse distributors, dealers, jobbers and race teams. It's a wildly active market, and this huge Middle East region is a great hub for high-end synthetic lubricants and motor oils. To properly manage this new business, Champion is adding partners to represent all of our lubricant lines and the growing demand in the region."

"This is an amazing market," said Jason Early (second from left in white shirt), director of sales for Green Filter USA. "It's very Americanized, from what I've seen. It's big cars with big engines, big trucks with big engines, big roads. These people are automotive people, and they love their vehicles. Much of it is similar to what we already have developed and tooled, so it's just about building relationships with the right customers and getting the message to the end user. They want our products. On our bus tours, we got to see the dusty, dirty conditions—and this is perfect for what Green Filter makes!"

"It's a very interesting truck market, because it's different from the United States," said Kyle Fickler (top), vice president of sales for Weld Racing LLC. "The FJ is very strong here, whereas it's not strong at all in the United States. The JK is strong here, but the types of modifications they do are different from in the United States. But we are seeing Hemi transplants here, and we're starting to see superchargers here. One of the things we like to hear most is that they are weight conscious. We like to hear about that, because our Ford wheel is going to be lighter than a cast wheel."

"It was great getting to meet the shop owners in the Middle East," said Jim Fike (left), sales and marketing manager for Jason Industries Inc.

"I was amazed at how their passion for racing and 'duning' off-road were so similar to that of our customers in the United States. Having the opportunity to meet face to face with international buyers really helps to cement long-term profitable relationships."

"The Middle East continues to thrive and create more opportunities for the automotive aftermarket," said K&N International Business Manager Kevin Floody (second from right). "As the economy accelerates in the Middle East, more and more gearheads are getting into automotive businesses because of their passion for cars. This helps to create demand and affords the opportunity for companies like ours to expand into this very important market."

SCT Performance, based in Sanford, Florida, is a manufacturer of Ford, GM, Dodge/Chrysler/Jeep tuning software and hardware and recently acquired Bully Dog. Both companies exhibited at the SEMA event. Rick Trudo (right), president and CEO of SCT, said that the Middle East market is very active and shows lots of interest in performance tuning. There was so much interest that the firm held a training class in the use of their products, and 26 dealers attended it.

"Customer contact was great at the show, with qualified buyers who spoke perfect English and were ready to find distribution products," said Wayland "Butch" Cox (left), vice president of sales for Royal Purple Inc. "Customers in the Middle East are performance savvy and have almost a California-like relationship with their cars. All segments are represented."

"The Middle East represents a viable market filled with customers eager to buy American-made products," said Jason Mrachina (center), vice president of sales and marketing for Dee Zee Inc., with Salih Hamid (right), Dee Zee's export sales manager. "We were surprised by the quality of the vehicle builds and knowledge of the people managing the stores that we visited."

In addition to exhibiting at MEMTS, the U.S. delegation toured local distributors and installers and participated in a networking event at the Dubai Autodrome with buyers from more than 10 countries. Among those in attendance at the SEMA Middle East event was David Rochau (second from left), president of Armageddon Turbo Systems/Motiva Performance Engineering.

Sterling Logan (center), design engineer and R&D specialist for Bushwacker Inc. in Portland, Oregon, talked to local buyers about the company's product line. Bushwacker was participating in its second trip to the Middle East with SEMA and had also traveled with SEMA to China. Buyers from 10 countries traveled to the 2014 SEMA Middle East event.

"The Middle East has become one of Radflo Suspension Technology's most important markets," said Glenn Classen (left), the company's president. "Through the SEMA program, we have been able to present our brand to an increasingly enthusiastic market audience. The key for Radflo has been working with great distributors and resellers, companies that understand the importance of our brand and have the technical knowhow to service the customer."

"Since the SEMA Middle East event, Diablosport has brought in a half dozen new customers," said Daniel Dolan (left), the company's national sales manager. "We have been selling to the Middle East for years and knew that there was a great deal of disposable income and demand for quality aftermarket parts, but until we made the visit and spent quality time with shop owners, we really had no idea how much potential there was here."

Forty-two SEMA-member companies exhibited in the SEMA Hall at the MEMTS. Pre-vetted buyers from 10 countries attended the SEMA event from the nearby countries of Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE. In addition, buyers traveled from Jordan, Lebanon and Egypt as well as India. Among the SEMA attendees were Sean Logan (second left), CEO of AC Americas LLC, and Kelly Berends (second right), sales with AC Americas LLC.

"We have been doing business with a customer for almost eight years, and we were able to get him to bring one of the vehicles that he had been using our product on," said Lisa Chissus (center), president of Flex-a-lite. "Because I got to see what he was actually using it on, I can now recommend some other products that would be of value to him. I now understand better what his business is about. When you figure that out, you can start thinking about what products make sense. It's been a really great learning experience."

Forty-two SEMA-member companies exhibited in the SEMA Hall at the MEMTS. Pre-vetted buyers from 10 countries attended the SEMA event from the nearby countries of Bahrain, Oman, Kuwait, Qatar, Saudi Arabia and the UAE. In addition, buyers traveled from Jordan, Lebanon and Egypt as well as India. Among the SEMA attendees were Sean Logan (second left), CEO of AC Americas LLC, and Kelly Berends (second right), sales with AC Americas LLC.

"We have been doing business with a customer for almost eight years, and we were able to get him to bring one of the vehicles that he had been using our product on," said Lisa Chissus (center), president of Flex-a-lite. "Because I got to see what he was actually using it on, I can now recommend some other products that would be of value to him. I now understand better what his business is about. When you figure that out, you can start thinking about what products make sense. It's been a really great learning experience."