While many of the 17 million annual U.S. vehicle sales satisfy frugal car buyers looking for the newest design or biggest incentive, a large and growing subgroup can't stand to drive a new car until it has been loaded with thousands of dollars worth of performance and appearance options, such as giant chrome wheels, a supercharger and subwoofers.
These consumers are 20-something “tuners” who live with their parents and spend every penny they earn customizing their Asian sport-compact car; they are wealthy Baby Boomers customizing their prized SUVs — and every possible combination in between.
The SEMA trade association, which has 5,222 member companies, estimates the market for aftermarket parts related to engine performance, appearance accessories and handling equipment is growing steadily and nearing the $30 billion mark.
That big number, plus a variety of compelling demographic and psychographic trends — and a little desperation among auto makers — has spurred a gold-rush mentality.
After ignoring the aftermarket for decades, Detroit auto makers have embraced the SEMA universe with a vengeance, trying to capture some of the success being enjoyed by their Asian competitors. (See also page 56)
Much of the focus is centered on the so-called millennial generation of buyers ages 16 through 24, because they represent one of the largest automotive growth segments. This group is expected to buy 2 million new vehicles in 2006 and 4 million in 2010.
According to Ford Motor Co. research, about half of them plan to personalize their vehicles the moment they buy them — just like they do with their cell phones, computers and other personal items.
“This accessorization thing is really one of the most important things for youth coming,” says Jim Farley, vice president of Toyota's new Scion brand. “I think (BMW AG's) Mini definitely charted the way, not only for that but for a premium small car. I think Scion is taking it to the next level.
“About 60% of our customers so far are actually coming to the dealer and saying ‘build me this exact car,’ just like a Dell computer,” he adds. “So accessorization not only is important for us and our dealers and for our customers, it's also a great new business.”
OEMs want to convince consumers to buy their customizing parts at new-car dealerships or factory-affiliated distributor networks, instead of buying accessories piecemeal from small, independent shops.
The benefit is that customers get fully warranted factory-built parts from their dealership — and the cost can be folded into the new-car financing package.
To a buyer considering a complex supercharger package that will void his engine warranty if installed by an independent, that's a powerful pitch.
Most aftermarket suppliers see the recent big push by Detroit auto makers more as an opportunity than a threat.
When GM announced its accelerated moves into the aftermarket last November, it talked to about 40 independent SEMA members about partnering on various initiatives, says Carl Scheffer, SEMA's vice president-OEM relations.
Says Will Handzel, GM Performance Parts' program manager, “A lot of the aftermarket does not view what we are doing as a direct threat. They believe that if performance comes out of the factories, it expands the market because a lot more people are thinking about performance, and it legitimizes it.
“The feeling is that, if corporations come in and do this, the business is only going to grow faster.”