Bigger Business Small Packages

Dec 3, 2009

Looking at automobile sales figures for 2008 is a contact sport, and there don’t appear to be many winners. Obviously, vehicle sales in general are down, way down. But there are bright spots in new-vehicle sales, and restylers need to always be on top of what’s selling and what’s trending. In general, fuel-efficient vehicles, including hybrids and flex fuel vehicles, are up significantly compared to 2007 (although falling gas prices did send hybrid sales down at the end of 2008). The overall upward trend seems sure to continue this year as a result of the ongoing economic challenges and the widespread belief that current low gas prices are temporary.

I recently spoke to a number of shop owners and sales managers about how they are viewing the accessory market for the fuel-efficient vehicle market. There are some consistencies throughout their experiences as well as some unique viewpoints and product uses, reflecting the coast-to-coast strengths and diversity of vehicle restyling.

Here is what some of your peers had to say.

California Customs

Rick Vallis, owner of California Customs located in Fort Smith, Ark., describes his shop as “a pretty complete restyling center.”

“We’ve diversified out of necessity. We do a lot of dealer and expediter work. If there’s a demand for products, then absolutely I want to follow whatever trends customers illuminate,” he says. “I want to supply what’s being asked for and what’s needed.”

Vallis thinks there is an entire different set of accessories for fuel-efficient vehicles. “Your trucks and SUVs are more likely to get nerf bars, running boards, brush guards and video systems, whereas you take a little Civic-type car and what accessories do you have? Window tint and a rear deck spoiler. And sunroofs and leather –  we did see an increase in those for fuel-efficient vehicles. I think for the fuel-efficient vehicles there is less available, less need and certainly less call for them.

“When gas prices were real high the local dealerships were selling more of the fuel-efficient vehicles. From our dealerships we saw the uptick in demand for fuel-efficient vehicles and even saw them selling out of some models like the Prius and the Civic. But those vehicles aren’t typically the vehicles that are getting a lot of accessories for us. If somebody is buying a vehicle out of necessity, for fuel economy, he’s probably not looking at spending the extra money; he’s a money-conscious shopper.

“We weren’t called in to do a lot of restyling on those units – mostly window tinting, maybe a Bluetooth here and there.”

Vallis observes that dealerships became “conservative as far as doing stock units.”

“I tried to preach the opposite: Sales are hard and it’s hard to make money on each sale, and now is the time to be adding to gross of each sale,” he promotes. “You pre-stock something that the guy 30 miles down the road doesn’t have, something that will allow you to add more gross to the deals. Some managers buy into that and some don’t.”

On the topic of fuel economy, Vallis notes that “what we actually experienced during that trend was more of our bigger trucks and SUVs coming from programmers. Whereas they were once popular for horsepower, they became in demand for fuel economy as people became more aware of them. Programmers alone tend to run $399-$469 for gas vehicles. Some guys will go the extra mile getting an exhaust and air intake because it is a synergistic system where the sum of the total is better than each individual part. A full package will run about $1,700 installed.”

Westminster Speed Sound

Andy Essman, store manager at the Westminster, Md., location of Westminster Speed Sound, discussed his shop’s experiences with the fuel-efficient market.

“I haven’t yet noticed an increase in fuel-efficient vehicles coming into our shop.

We are looking to expand more into the market. I’ve heard of that market doing well for shops in other areas. But it really hasn’t hit us yet.

Wholesale work through dealerships is one way Essman says his shop is reaching the fuel-efficient market.

“A local Kia dealership sends us a whole lot of their units for keyless entry because we can sell and install it much cheaper than they can. With other dealers, too, we try to help them sell the car as much as we can,” Essman notes. “If there’s an accessory the car doesn’t have that the buyer is looking for, we can do it and save them money. In general, aftermarket electronics feature a much better interface, which is a good selling point for both wholesale and retail customers. Specifically, navigation equipment is a great product for our dealers because it’s higher performance and cheaper than factory.

“We see a lot of vehicles that get bad gas mileage and we sell a lot of accessories to improve their efficiency: air intakes, throttle body spacers, single or dual exhaust, and programmers. Somebody who is specifically looking to improve their gas mileage can spend $300 to $1,200 typically.”

Performance accessories at his shop are mainly for bigger trucks, but “exterior styling isn’t just bigger-vehicle driven, it’s for any vehicle. Electronics, too: stereo equipment, navigation systems, Bluetooth kits and iPod integration.” He notes that product diversity is an important component of consistent sales. “If a store doesn’t have its hands in all sorts of things, they’re really hurting in this economy. We saw the downturn coming and we added more accessory choices and more labor-driven sales. We’re optimistic about this year.”

Auto Spa

When contacted at his Mesa, Ariz., shop, Steve Nappi reported light exposure to the fuel-efficient market, but expressed interest in accessorizing cars for this growing market.

“We’ve accessorized a few fuel-efficient cars, but it isn’t a major part of our business,” he says.

“Probably, what’s happening with the economy is one reason we aren’t seeing as many of these types of vehicles. In my opinion owners of fuel-efficient cars are budget shoppers and aren’t motivated to spend extra money on accessories. Owners of fuel-efficient cars tell me that they pay a little extra on, say, a hybrid car, drive it and save money driving it through its fuel economy – satisfying their vehicle need and their need to be green. I’m just speculating, but I think a large percentage of these owners see accessorizing counter-intuitive to going green.

“We are accessorizing a number of flex fuel vehicles. Owners of flex fuel vehicles tend to accessorize in the same manner as traditional-fuel vehicles. If I have a flex fuel Silverado pickup owner in, he’s going to go for the same accessories as a regular Silverado guy goes for.”

Auto Outfitters

Vance Maxwell, owner of Auto Outfitters in Noblesville, Ind., describes his restyling approach: “We are a unique, one-stop accessory shop providing products and services for all types of vehicles. We have seen a shift from full-size trucks and SUVs towards the more fuel-efficient models. Everyone is concerned with fuel prices and the economy in general. I expect more opportunities in the fuel-efficient market for several reasons. I believe the relatively low fuel price today is only temporary, so the trend towards better fuel economy will continue. I also think that as the economy begins to turn the corner aftermarket sales will rebound.

“I see a difference in aftermarket accessories for fuel-efficient vehicles vs. other vehicles. I think that many times the add-on sale is proportionate to the price of the vehicle. Customers don’t hesitate to spend $2,000 for an in-built navigation unit or vehicle entertainment system for a $50,000-plus SUV. I think they are more hesitant to spend comparable dollars on an $18,000 compact fuel saver.

“Other than lifestyle accessory brochures, I see very little out there to promote accessories to this market. We need to promote customization and lifestyle accessories to this new buyer. The most common items are sunroofs, leather interiors, remote starts, and power windows and door locks. The average gross sale for add-ons is still relatively low but I believe that has more to do with the economy in general. People are cutting costs and going without the wants and focusing on the needs.

“I think there are some opportunities to work with dealers. Some dealers understand and embrace the opportunity to participate in the aftermarket segment. One obstacle that dealers face in a tight credit market is the ability to get the aftermarket add-ons financed for prospective customers. Many of the manufacturers’ affiliated lending companies allow or residualize only OE accessories. There are some accessories that the OEs will not offer, such as sunroofs and leather interiors. Many of the base-model fuel-efficient models don’t offer these as OE.”

Auto Sport

Sal Marsilla, owner of Auto Sport on Route 17 in Upper Saddle River, N.J., is very familiar with the fuel-efficient vehicle market.

“Within the last two years I’ve been seeing more of a trend of customers coming in with fuel-efficient vehicles looking to accessorize them. I see this market increasing this year, positively. These clients are no more price sensitive than other clients. We install the basics: vent shades, all-season weather mats and cargo liners – these seem to be the best sellers for fuel-efficient vehicles right now. Remote starts are also looking good right now. I think 2009 is going to be a hard year to figure out if there’s going to be a trend.”

Like many other restyling shops, Sal stresses that fuel-saving accessories are an important market segment, too. “K&N air filters and the Tornado Gas Saver are products that work. These products are the simplest ways for vehicle owners to save fuel, as well as improve performance. They are hassle-free, easy-sell items that work,” says Marsilla.

“Most of my business is dealer work. I’ve lost five major dealers in the last nine months due to the lack of car sales. Many of the SUV, pickup, Hummer stuff has just evaporated. In the last year I’ve seen people become more humble in their accessory choices, probably to save money. Accessory sales to my dealers are down, partially due to car sales, but also salesmen just aren’t pushing accessories. Deals are so few for them that they don’t want to do anything that might jeopardize the sale.”

In reviewing conversations with the shops, it’s clear that accessorizing the fuel-efficient market varies in volume and product from shop to shop. The contributing reasons to this variety are economic factors, a shop’s thematic approach to restyling, exposure to dealer/wholesale work and regional differences in vehicle popularity.

Sources for this article consistently noted also a lack of involvement on the part of accessory suppliers/distributors in promoting products for the fuel-efficient vehicle market. Just as consistent, however, was the report that accessory manufacturers are doing a great job of helping the restylers’ awareness of products for this important and growing market.

And most importantly, every restyler indicated a willing interest in growing with the fuel-efficient vehicle trend.