SEMA News—June 2014

BUSINESS
By Mike Imlay

The Hot-Rod Market

A Classic Segment, Still Growing Strong

	Fueled by car shows and competitive events such as the NMCA drag races at the Auto Club Raceway in Pomona, California, hot rodding is continuing to attract a multi-generational demographic of enthusiasts, making the market segment stronger than ever, according to industry sources.

Who isn’t thrilled by the look and performance roar of a classic hot rod? Virtually synonymous with the earliest days of the automotive specialty-equipment industry, hot rodding never seems to grow old. In fact, the market segment has remained incredibly resilient, even in the face of the recently bumpy economy.

“Like all aftermarket segments, hot rodding is about people and their passion for automobiles,” said John McLeod, owner of Classic Instruments and chair-elect of the SEMA Hot Rod Industry Association (HRIA). “I’d hate to call it recession-proof, but it definitely has some guards against what happens out in the real world.”

Located in Boyne City, Michigan, McLeod’s company has manufactured automotive and boating instrumentation since 1977, with a special focus on the hot-rod market. He said that the market often defies broader economic trends.

“It doesn’t follow Wall Street, because it’s all based on what people’s passions are,” he said. “Granted, it is affected when people lose jobs, but I also think some of the tragedies that have happened in my lifetime have made people think about how fragile and short life is. Instead of saving all that money and putting it in a 401K, I think they started sharing some of that money in what makes life fun for everybody.”

At Vintage Air, a manufacturer of aftermarket air conditioning systems based in San Antonio, Texas, Executive Vice President Rick Love agreed. The current chair of the HRIA, he said that his company has seen many ups and downs since it was founded in 1976, but the overall strength of the marketplace has nevertheless constantly trended upward.

“I think the hot-rod hobby and industry are stronger now than they’ve ever been,” he said. “We’ve seen a lot of steady growth since the industry started in the ’30s and ’40s. There have been a few times where it has flattened out a little bit, like in the early ’70s when the insurance companies kind of killed musclecars, and a portion of the early ’80s as well. However, the last 20 years have seen steady growth.”

Indeed, many industry sources believe that the state of the hot-rod hobby is strong, given steady and even-increasing attendance at various car shows and events along with vibrant crowds at races such as those presented by the National Hot Rod Association (NHRA; see “Racing Update,” SEMA News, March 2014, p. 22).

Now Trending

The market has been consistently healthy in part because consumer styling and performance demands have become amazingly wide-ranging. According to McLeod, while classic ’32 Fords and ’55 Chevys seem to be slightly declining in favor, Model As are beginning to regain popularity. Meanwhile, later-model hot rods are also gaining steam.

“Guys my age are getting to the point where we can start dreaming about what we wanted to have in high school,” he said. “That’s why we’re seeing our Camaros, our Novas, our Mustangs, all those mid- to late-’60s cars from the musclecar era really coming on stronger.”

Whichever their car of choice, however, consumers are reinvigorating the market with a demand for modern performance and convenience.

“What we’re seeing is that people are enjoying driving their cars,” said Love. “There was a time when a lot of people were fixing up their cars but not driving a whole lot. We’re seeing people who love the styling of either pre-’49 hot rods or ’50s, ’60s, ’70s cars, but they want those cars to be more like the late-model cars they’re accustomed to. They want them to have good power, real brakes, real climate-control systems, tilt wheels and gauges that really work and can really monitor what the engine is doing.”

When it comes to engines, the market is again wide-ranging. Although many hot rodders remain enthralled with 350 and 327 Chevys, the new LS motors are considered hot, noted McLeod.

“Then you jump over to MOPAR guys, and they love the new Hemi,” he said. “Ford guys have the new supercharged Fords that are just animals. We’re starting to see all this stuff that the Big Three are producing in the way of performance gravitating into our cars, just like the old saying, ‘What wins on Sundays sells on Monday.’”

All in all, said McLeod, “You have to be aware of what’s going on out there. You can’t just continue to sell pre-’48 parts. You still have to take care of that market because it’s still like the girl you brought to the dance. But also understand that there are these new, modern musclecar trends coming.”

Mustangs like this one on the Hot Rod Power Tour are increasingly sought-after by today’s hot rodders, along with practically any example from the musclecar era. Pro Stock is a movement gaining in popularity, with most drivers opting for brake, suspension and other handling upgrades to give their cars late-model-type performance.

While many hot rodders still favor classic looks complete with analog gauges, there’s a growing market for the latest technology, including digital readouts, tire-pressure sensors, advanced sound systems and more.

“I think GPS is going to be popular,” predicted Love. “I’ve also seen things like rearview cameras, because some of the older ’30s and ’40s cars are more difficult to see out of, especially when you chop them and things like that. A backup camera is so easy to add now, and you can make it pretty unobtrusive.”

In fact, he foresees modern conveniences growing in demand as manufacturers find new ways to miniaturize such technologies.

“That’s one thing you fight, especially in an old car,” he said. “They’re small inside. If you want to add fuel injection or some computer-controlled options to your car, you have to have a place to put that computer. Sometimes the package size of all these accessories dictates whether you’re going to use them or not. Hidden stereos are becoming very popular in these cars, because you can put them remotely somewhere and not have them in your dash anymore.”

Look also for an increasing number of consumers to expect products that bring iPhone, smartphone and Bluetooth integration into their vehicles, especially for tuning purposes.

“If you don’t embrace the latest technologies, you’re just going to get run over,” asserted McLeod, whose company recently won a SEMA Show New Product Award for its GPS speedometer. “That’s just a fact today. If you can’t understand it all, you need to hire somebody who can.”

Shifting Demographics

Like the cars that hot rodders choose to build and drive, the market itself is becoming multi-generational.

“A lot of our demographic is getting older,” conceded Love. “We have to keep in mind that our core customer has changed over the years. Twenty years ago, most of the guys we talked to were mechanics. They were very skilled at what they did. They were fabricators and guys going to junkyards, picking up parts and adapting them to their cars. As this hobby has grown, we’re now dealing less with mechanics and more with enthusiasts. They want to work on their cars, but they don’t have a lot of the tools and fabrication skills.”

	There’s something for everyone in today’s rod scene, and early- to late-model trucks are gaining in appeal for younger audiences because of their attractive price point as well as their ease for accessorization.

In response, he said, many manufacturers such as Vintage Air have had to change over the last decade or so to more bolt-in applications to appeal to today’s average do-it-yourselfer. He added that a sizable do-it-for-me market has also sprung up in recent years, expecting cost-effective, quality solutions.

“Time is such a valuable commodity now,” noted Love. “This trend has forced manufacturers to really improve their products. Products now compared to what they were 20 years ago are night and day.”

However, McLeod proudly noted that youth are also stepping up to the hobby right alongside the older generation of hot rodders.

“What’s so great about the youth is that their interests are broad,” said McLeod. “Of course, there are all the guys with the tuner cars, the Honda Civics and vehicles of that nature that are really cool. Those are the hot rods of today, what they choose to take out to the dragstrip and go 7 seconds with or modify and put on the street. But it seems to me that, once they get going with that, they kind of look over their shoulder at a Goodguys event or an NSRA event and see that ’32 Ford or that ’67 Camaro, and we see them gravitate in that direction.

“Right now I think the biggest market for the youth is the truck market. They’re accessible, they’re relatively affordable, and all of the parts are remanufactured. Let’s face it: Most of these trucks are easy to rebuild. Most of them bolt together. Our truck business is growing by leaps and bounds.”

Executive Summary: The hot-rod segment remains strong and growing. Shifting demographics are opening tastes to all sorts of vehicles beyond “the classics.” Today’s hot rodders seek contemporary performance and handling along with modern technologies for their vehicles. Builders will need to keep up with new technologies in order to satisfy demand for modern features in classic cars.

Still, McLeod believes that the industry must do more than attract youth as consumers to keep hot rodding a vibrant industry segment. It must recruit them for jobs behind the counter, in the factories and installment bays and even the front and back offices.

“I think [young enthusiasm] is stronger than people give it credit for,” he asserted. “The colleges are working very hard. It’s our job to find those good men and women who are passionate about the industry. I really believe that they’re out there, but I don’t think the avenues for them to get into our industry are very strong. Unless we take responsibility as an industry, we’re not doing our job.”

In McLeod’s mind, that means an industry reaching out to give young men and women all the tools they need, including the education to do whatever they excel at.

“As the owner of Classic Instruments, I don’t have guys or gals just building gauges,” he said. “We also have people in finance, people in sales, people in marketing. If you have a passion for cars but can’t necessarily rebuild a carburetor and engine but want to be part of it, maybe mathematics is your strength and you can be a bookkeeper for one of these companies. You can still have your foot in the industry. That’s what we’re trying to do.”

The Speed Shop

On the retail side, along with changing consumer desires, vehicle trends and product offerings, the classic speed shop or builder has also had to evolve with the times. Randy Clark, owner of Hot Rods and Custom Stuff, has been selling parts and building hot rods since 1989 in Escondido, California. What started as a husband-and-wife shop has now grown into a full-service enterprise with approximately 32 employees.

“We’ve built up a good clientele over the last 25 years,” said Clark. “We have plastic media blasting, paint, body, fabrication, manufacturing and a full service department, because many of the clients that we have now obviously don’t have the time to service their own cars even though they have the skills. With growing interest in driving cars across the country, our service business is big.”

	One of the great things about the hot-rod market is the wide range of customizations embraced by enthusiasts. Vehicles such as this Cutworm Specialties rod get tricked out with every imaginable category of aftermarket parts.

Like others, Clark said that there really is no typical customer, and age doesn’t seem to matter.

“We run the gamut from 18 years old to 80 years old,” he said. “Everybody wants a car. There’s nothing like stepping back in the past and driving an old car.”

Nor does Clark see the industry itself as necessarily aging.

“I’ve been hearing the concerns for a long time that young guys aren’t involved, but every time I put an ad out for employment, we’re getting 75% under 30 and about 25% still trying to find themselves over 30. I would say that our industry, hot rodding, customization and performance are doing good and are in good hands,” he observed.

As for consumer spending habits coming out of the recent recession, Clark said that his retail store does very well selling quality new parts to the DIY guy. He also added used parts to his sales a year ago, netting a large number of customers seeking more affordable items.

“It doesn’t make any difference if you’re working for $10 an hour or you’re a multi-millionaire,” he said. “If you want to build a car, you’re going to build a car at your level, what you can afford to do—and they’re all doing it.”

One boon for his business has been the Pro Touring trend, which has brought him a lot of customers who enjoy the stock look but who nevertheless want upgraded brakes, suspensions, transmissions, cooling systems, air conditioning and perhaps new wheels. He agreed that business in the hot-rod segment overall is much improved over 10 to 20 years ago due to the buildup of previously owned cars ready and available for all tastes. Mustangs, Camaros, Chevelles—anything with factory muscle—remain popular, he said, along with ’55–’57 Chevrolets.

“We probably have half a dozen of them in the shop at all times,” he said. “We’re also still doing a lot of ’32–’34 Fords. The Mustang first series from ’64 on up are also popular because of the fabulous amount of reproduction parts that are available for those cars.”

In short, hot rodding remains a specialty-equipment marketplace where everything that’s old has the potential to be new again.

“A lot of guys don’t have any idea about the cars that their dads had, other than that they knew they wanted them,” Clark concluded. “That keeps us busy.”