SEMA Market Update

SEMA News—December 2011

BUSINESS
By Mike Imlay

SEMA Market Update

A New Research Report Drills Into Industry Economic and Market Trends

 
The new SEMA Market Update offers a comprehensive analysis of the economic indicators and trends currently shaping the specialty-equipment landscape, including the consumer shift toward smaller cars and CUVs.  
   

To navigate an up-and-down economy, your business needs sound, ongoing reports and analysis of the major economic and market trends affecting the $28 billion automotive specialty-equipment industry. Thankfully, you can now find that information via the SEMA Market Update, a completely new report series developed by SEMA’s marketing research department.

Recently made available for download to all SEMA members, the first of these reports tracks industry and economic growth from the first quarter through the second quarter of 2011. In addition, it zeros in on current topics that help provide more accurate snapshots of current and projected consumer habits. The comprehensive research is drawn from a variety of government and leading expert sources.

Obviously, such information can be crucial to aftermarket businesses as they chart their courses as far into the future as the next five years. While SEMA has long provided data along these lines, this report takes an entirely new approach in its packaging.

“Over the last couple of years, we’ve gotten feedback from members indicating that they didn’t have time to take deep dives into everything we were providing to get the most value out of it,” said Tom Myroniak, SEMA vice president of marketing and member services. “SEMA members were looking for something that was more of a top-line summary of everything that we’re doing so that they could find it all in one place. We set out to deliver additional value by repackaging some of the content we already had and presenting it in a new format that’s easier to digest
and understand.”

According to Myroniak, the department plans several similar reports at regular intervals throughout the coming year. How members receive and use them will ultimately determine whether the reports become quarterly or semi-annual publications.

Numbers Crunch

   
The second quarter update also pays significant attention to the accessories consumers most request from dealerships, breaking them out by OEM and aftermarket categories. 
   

For a general look at the economy, the current second-quarter SEMA Market Update draws data from a broad range of sources, including Ward’s Auto Group, the U.S. Bureau of Economic Analysis, the U.S. Bureau of Labor Statistics, the U.S. Census Bureau and the Federal Reserve Board. While the economic indicators supplied by these entities is in the public domain, the SEMA update has aggregated and referenced it in one place.

Readers will find useful information about industry growth against the backdrop of recent gross domestic product, retail sales, consumer credit and employment trends, among other factors. The report then turns to industry-specific topics, beginning with five-year sales forecasts for light vehicles, trucks, SUVs and vans. Next is a look at accessory sales, which have received increasing dealer emphasis. Again, consumer buying habits are extensively crunched and analyzed to provide readers with accessory data by automaker brand as well as the top generic accessories requested by consumers at dealerships.

A strong component of the SEMA Market Update is its in-depth review of 2010 vehicle brand retention and nameplate dynamics. Readers will find a wealth of detailed brand-by-brand analysis pertaining to what consumers are currently driving, what they previously owned, how likely they are to stick with a brand and vehicle type and, if not, what their next vehicle is likely to be.

Also covered are consumer responses to questions such as: “Which sources influenced your purchase decision?” and “What vehicle attributes were you looking for?” The report drills down to brand demographics, including age versus income, generational mix and other psychographic attributes (demographics relating to consumer personality). The update also breaks out OEM versus aftermarket accessory trends.

“As dealers push accessories, the more they drive those accessories, the more they have to get them from the aftermarket, because OEMs don’t cover all the possible accessories that customers are looking for,” explained Gavin Knapp, SEMA senior market research manager. “SEMA-member companies can get an idea of the type of person who is purchasing in each of these different segments and the attributes that they see in each segment as well as what segments people are coming from to get here and where they expect to go after their current vehicle. If I’m hitting people in one segment, where are they likely to move to? And should I be following them into these other segments as well?”

Knapp noted that SEMA’s research partners, AutoPacific and the Insignia Group, served as major contributors to these portions of the update.

Overall Industry Indicators

 

RETAIL SALES

 
The SEMA Market Update tracks economic and industry trends affecting the $28 billion specialty-equipment industry. The current downloadable edition contains data through the second quarter of 2011. 
   

On the economic front, the SEMA Market Update notes that “…Q2 2011 offers mixed messages for the immediate returns of the specialty-equipment industry.” While most indicators were trending toward modest growth in the auto industry earlier in the quarter (and mirroring the overall U.S. economy), such recent instabilities as the federal budget and stock market volatility have caused experts to revise expectations. According to Knapp, they now predict growth at a slower, more cautious pace through the fourth quarter.

The report also confirms significant consumer market shifts in car preferences toward small cars and crossovers during the past five years and predicts that those shifts will continue for several years to come. The document bases its conclusions on indicators such as gas prices, new-vehicle sales figures,
consumer demand indexing and financial benchmarking.

Among the report’s most interesting highlights is the correlation between automotive parts sales and the nation’s overall retail and food sales. Although parts sales lagged somewhat in 2008 and 2009 and have faltered somewhat more in 2011, the industry’s sales curves uncannily mimic those of the retail and food category. For example, just as U.S. retail sales plummeted from around $375 billion to well under $350 billion from January 2008 to January 2009, automotive parts sales fell from roughly $6.5 billion to about $6 billion during the same period, although somewhat less abruptly.

Similarly, as of January 2011, retail sales had rebounded to nearly $400 billion, again with auto parts following a slower and more sputtering climb. Based on the last few years, then, overall retail sales have proven a reliable indicator of specialty-equipment sales health.

While this may seem intuitive to many, demonstrating the correlation statistically is important: Specialty-equipment businesses can now look with some level of confidence to retail and food sales as predictors of how industry sales may grow or decline.

GAS PRICES

   

NEW VEHICLE SALES


As might be expected, rising U.S. prices at the pump directly correlate with the shift in consumer car preferences.

   
Based on reporting by Ward’s Auto Group, the new-vehicle sales mix has changed remarkably over the past five years as buyers seek fuel efficiency.
       
Equally noteworthy, the trend curve for motor vehicles and parts production since the first quarter of 2007 has mirrored that of overall U.S. manufacturing of durable goods. Both showed almost identical rates of decline from 2006 to the second quarter of 2009. Both have shown noticeable rebound from that point forward, although the pace for automotive segment production has risen less dramatically. In the case of each, the report forecasts that current industrial production will remain “well below 2007 levels.” In other words, manufacturing in the specialty-equipment category will not likely fare better (or significantly worse) than U.S. manufacturing as a whole.

RETAIL SALES

   

INDUSTRIAL PRODUCTION


One of the most noteworthy industry indicators has been the close correlation of auto parts sales with retail and food sales from 2000 through 2011. pected, rising U.S. prices at the pump directly correlate with the shift in consumer car preferences.

   


Manufacturing in the specialty-equipment segment has also closely mirrored overall industrial production in the United States.

       

Accessing Your Report

The best part of the Q2 SEMA Market Update is that it’s available free to SEMA members. To download a copy, go to www.SEMA.org, select the “Research” tab and choose the “2011 SEMA Market Update–Q2.” The price for non-members is $199.99.

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