SEMA News—December 2012
BUSINESS
By Steve Campbell
Trends for 2013
A Look to the Future With SEMA Council Leaders
For its December issue each year, SEMA News puts out a call to the leaders of the association’s councils and networks to seek their views about what might be in store in the near term. These industry professionals provide responses based on what their organizations and their companies are seeing within their marketplaces. Their responses are instructive and should provide helpful insights for businesses in every segment of the marketplace.
SEMA councils offer members unparalleled volunteer opportunities that will not only benefit your company, but will also help you grow as a leader in your industry. Seventy five percent of current SEMA Board members were former council members. Each SEMA council represents a group of SEMA members that share a common business purpose or market segment.
To join your automotive industry niche-specific council or committee, visit www.sema.org/councils-committees for more information or to sign up.
Automotive Restoration Market Organization (ARMO)
Alex Tainsh, Parts Unlimited Inc., Chairman
Some younger people are entering our hobby, and vehicles not considered typical “classics” are starting to be restored due to their reasonable purchase prices. Many are restomods rather than traditional restorations, and we are also seeing restorations of four-door cars, station wagons and other cars that were not considered worthwhile a few years ago. “New” classic-car bodies are also becoming available. For instance, a restorer can now build a ’69 Camaro without using a single part from 1969.
On the other hand, we need to continue to get more youth involved in our industry. Programs such as Take a Kid to a Car Show and the SEMA-sponsored Collector Car Appreciation Day are growing, but involving young people is still one of the greatest challenges we face within ARMO.
Most of the industry professionals I speak to expect modest growth through 2013. There seem to be small improvements in the economy, and car restorers are very passionate and cut spending on other things. Many local car shows saw increases in car counts this summer, although some of the national shows did not do as well because of high gas prices.
The restoration market has been successfully expanding into nontraditional outlets, with retailers that have been historically considered only performance shops, such as Jegs, Summit and Honest Charlie’s, expanding into the restoration market. With the new SEMA Data Co-op program, we have the opportunity to expand to even more mainstream outlets.
Restoration companies have embraced the Internet with state-of-the art websites. Still, there will always be a segment of the market that likes to see and touch a part before buying it. There are still some parts not yet reproduced for some cars; in those cases, walking through a swap meet like Carlisle is the best bet, and a lot of fun.
Hot Rod Industry Alliance (HRIA)
Rick Love, Vintage Air, Chairman
People want to drive and enjoy their cars, and they’re driving them hard. Events have grown that incorporate a cruise and an autocross and then a track day. Even the average guy is building a car that he can really drive and enjoy more. The trend has been to build a car that is comfortable, drives well, stops well and does things more like a late-model vehicle.
Even the best shops are not seeing the 6- to 18-month backlog on cars and work that they had a few years ago, but a lot of the shops and manufacturers that we deal with have been busy this year.
We have been fortunate as an industry to stay fairly busy, even though the leading economic indicators are sometimes pretty flat. Interestingly, many shops are doing hot-rod maintenance rather than full-out builds, and they’re doing more upgrades—disc brakes, suspension improvements and tilt columns. We have to be more inventive and smarter about what we’re doing.
Election years have traditionally been down years, but this one has bucked that trend. The interstate sales tax changes may create some challenges next year, so we are all monitoring these legislative initiatives. The Main Street Fairness Act and the Marketplace Fairness Act could affect a lot of our businesses.
The other big challenge is seeing which direction consumer confidence goes following the election.
When things are tight, people buy from the companies that they trust. We are continuing to expand our line of complete bolt-in Gen IV Sure Fit systems for ’60s and ’70s cars, and we have also developed a new Front Runner drive system for the Ford Coyote crate engine. Manufacturers and distributors that can provide customers with the most complete coverage are going to be the ones that will be in the best position for growth.
Light Truck Industry Alliance (TORA)
George Lathouris, Keystone Automotive, Chairman
Pickup sales have been rebounding, and TORA-member companies are taking advantage of that trend.
There is a strong move toward items that improve the functionality of a truck rather than just “bolt-on” items. Manufacturers are producing innovative new products that consumers value and want to buy. When you couple that innovation with the retailers’ desire to sell those new products, the combination can’t be beat!
More than ever, manufacturers and retailers are utilizing the web for dispersing information and creating sales throughout the truck industry. That will only increase in the future.
The biggest challenges during the near future will be federal regulations and our industry’s ability to not only understand those regulations, but also to harness its resources to manufacture products that meet and exceed the requirements of those regulations.
Manufacturers’ Representatives Network (MRN)
Thomas Jourdan, True High Performance Sales, Chairman
The marketplace continues to go through rapid changes. All channels of distribution are more sophisticated and tech savvy, and the end user now does online research prior to making buying decisions. Manufacturers’ representatives and agents assist distributors and retailers to access complete and clean data, allowing for maximized sales conversions. Whether the consumer chooses to purchase online or simply does research online and makes the final purchase from a brick-and-mortar retailer, the sales process needs to provide all the tools to satisfy the savvy consumer.
There is some real optimism in the marketplace, although it is guarded. The industry is slowly rebounding from the slowdown in the economy. Progressive manufacturers, wholesalers and retailers have begun to reinvest in expansion. The economic recovery has been slow, and consumer confidence is questionable. But this having been an election year with an incumbent running for president, there should be a spike in sales after November.
Vehicle sales continue to increase month after month. Passenger truck sales continue to increase as the Ford F-150 and Chevy Silverado regain their positions in the top three. Combined with modern American musclecars moving out of warranty, this will offer additional opportunities next year.
Exciting changes are in store for our market segment. The Manufacturers Representatives’ Council has been reinvented and recently relaunched as the Manufacturers’ Representative Network (MRN), the network for professional agents and representatives. It is more than just a name change. This new network will reach out to individual representatives and agents so that we will be able to better communicate with, educate and elevate our members. MRN is focused on elevating the professionalism of members as well as promoting association benefits that will make a substantial difference in the industry.
Motorsports Parts Manufacturers Council (MPMC)
Vic Wood, Hedman Performance Group, Chairman
The need for manufacturers to have accurate and detailed data on their products has become the number-one issue for all of us. The continued evolution of the electronic marketplace demands that the purchaser (whether a warehouse distributor or a consumer) be provided with accurate information to make an informed buying decision.
Rapidly expanding electronic retailing direct to consumers in all forms demands a sound and well-considered marketing plan. Sadly, the traditional distribution channels that we have all been comfortable with for so many years are now challenged by the electronic world that today’s consumer lives with and demands. While many of us in both the manufacturing and distribution worlds are not entirely comfortable with that stark reality, it’s something we all have to move with in order to continue to maintain and grow our businesses. The world has changed, and the speed of change and how we keep pace with it is the most significant opportunity.
The continued export of U.S. manufacturing jobs overseas and the influx of cheap imported copy products is a genuine concern for all of us who remain tethered to U.S.-based manufacturing. This complex issue is not unique to our industry. Generics (house brands) also are a challenge for some manufacturers.
The MPMC is highly cognizant of today’s issues and concerns and is diligently making every effort to assist our industry sector to gain understanding and background on every issue.
Professional Restylers Organization (PRO)
Eldon Bracken, Graphic Mart, Chairman
With the increase in new-vehicle sales, many of our members have seen a modest increase in business. Those who continue to stay at the forefront of trends and technology are seeing even greater gains. At PRO’s long-range planning meeting held in June in Detroit, the group identified a need to form a think tank comprised of restylers and manufacturers. Its goal is to identify what the future trends or product needs are and how to bring them to market quicker. Social media continues to be a large focus for many companies. The low cost of entry and instant access to customers is the biggest advantage when used properly.
Complete vehicle wraps by consumers continue to be a trend that many members are taking advantage of. Vehicle wraps that were once used exclusively for advertising are now being used by consumers to change a vehicle’s color from stock to matte, satin or even carbon fiber.
A round of letters from the automakers to dealers critical of aftermarket restyling products is causing a lot of concern for our members. Many companies have found it more difficult to sell items, such as leather interiors and sunroofs into their dealer stores because of unsubstantiated fear of failures. The most significant opportunity for PRO members lies with gaining back the support and confidence of the automobile dealer. With a focus on training and education, restylers can prove to their dealers that they take this business seriously and that the parts they install will be just as good as the original equipment, if not better.
SEMA Businesswomen’s Network (SBN)
Marla Moore, Hypertech Inc., Chairman
The increasing sales shift from trucks to small- and midsize cars is starting to affect our industry’s product offerings, and the number of manufacturers selling directly to consumers is growing, which impacts not only the distribution system but also the use of electronic media, pricing and manufacturer collaboration.
Everyone enjoyed an upswing in business during the first few months of 2012, but sales leveled out as the year progressed and will decline for the 30% of the aftermarket that manufactures performance products as we near the end of 2012. Much of this can be attributed to economic uncertainty and the rising cost of fuel and food.
The media landscape is definitely changing. Aggressive companies are going to develop a five-platform media strategy that will include print, TV, websites, smartphones and tablets. Others will stick to the familiar outlets. But everyone will be proceeding with caution, analyzing results and looking for return on investment.
Luckily, we are an industry of passionate, creative thinkers, because this next year will be a time to reevaluate your company’s strengths to take advantage of all its abilities and create new business opportunities.
The SBN’s big project, the SEMA Mustang Build Powered by Women, definitely raised the awareness of the talented women in our industry and the opportunities available for women in the aftermarket. Additionally, our highly attended Gear Up Girls female student reception at the SEMA Show proves there is a growing number of women interested in a career in the aftermarket. We need to find ways as an industry to retain these bright new enthusiasts.
Street Performance Council (SPC)
Tyler Tanaka, Cie Digital Labs, Chairman
The way consumers—particularly young people—are purchasing and using automobiles is radically changing. Reasonably priced vehicles tend to be focused on fuel consumption rather than performance, and the oil and gas industry has not helped with exceptionally high prices. Engaging young people with the automobile is a main priority of the SPC.
The widening gap between manufacturers selling directly to retail businesses also continues to be a major topic, especially now that the interstate tax laws are changing. The changes will help determine how online retailers will do business and how relevant jobbers and distributors will be in selling manufacturers’ parts. At a recent SPC educational seminar, the entire conversation was about how manufacturers share information and how distributors obtain all of the data they need to actually sell a part.
We are focused on mobile and tablet marketing for many of our clients. Marketing will continue to move into handheld devices. That has created an arms race between the manufacturers of these devices, which can now accommodate anything you would normally and naturally do on a desktop or laptop. For instance, I now give my presentations from my iPad, and my backup is my iPhone.
The biggest opportunities lie in how companies are able to engage with and react to consumers. The days of marketing new products by sending a brochure through the mail are gone. Companies must be where consumers are online—inside communities and sites where decisions are taking place—and be able to use websites and social media to form bonds to their brands.
Wheel & Tire Council (WTC)
Joe Schaefer, Konig American, Chair-Elect
We are seeing modest economy improvements, and we’re making gains at a slow but steady rate. Customers are turning to companies that will be able to provide better delivery and incur fewer issues in this climate.
We continue to experience a large changeover to electronic and digital marketing, with social media leading the way. Still, it’s important not to neglect traditional advertising mediums and direct business-to-business engagement. Social media is constantly evolving, and keeping track of where it will go next is one of the larger challenges at hand.
We are seeing more elements appear from older wheel styles, and even intentionally inspired retro wheels are lending elements to newer designs. On the tire side, the expiration of the Chinese tire tariff this past September will have serious repercussions on pricing, though the final results will not be known for some time.
The single most important item that will allow any company to excel is customer service. Providing your customer with confidence and follow-through is needed to weather the storm. It’s important to remain in touch with and watch your target demographic. As technology appears desirable to today’s youth, we have to closely look at what they want. Cars were a key in the social arena among youth years ago; now iPhones, iPads and other largely social gadgets are competing with what cars once did for young people. Our approach will have to change to capture the same attention that used to come with far less effort.
Young Executives Network (YEN)
Lee McGuire, Skyjacker Suspension Systems, Chairman
We are seeing more companies concerned with youth engagement, which is a good thing. We need to find ways to connect with Gen Y and Z. It isn’t just the traditional marketing mix anymore; it is far more complex, and you have even less time to grab young consumers’ attention and keep it.
Marketing will continue to change as YEN members find effective ways to communicate with their generation and Gen Z. A marketer’s job is to find the connection to our youth and identify what motivates their buying habits. We have to create emotional connections to the product and help them justify the reason they want it and need it.
The biggest challenge will be adapting to the changing market. The economy is far from where it needs to be, and young executives must be mindful of the decisions that will help their companies succeed. The YEN group covers a range of markets, from street performance and off-road to light truck and more, and the overall economic change this year showed gains. That’s encouraging since our members represent so many areas.
The most significant opportunities lie in finding how to do things more effectively with smaller budgets and staff. This is a time for young executives to shine by showing your talents and demonstrating to employers that you can wear more than one hat and come up with creative ideas to help company growth. That growth may not be possible in traditional terms, so being able to think outside the box is a big opportunity. We at YEN are helping to equip our members to do just that through our webinars and our seminars at the SEMA Show and with other educational initiatives.