The Changing Face of the Truck/SUV Market

Dec 3, 2009

Warehouse distributors recommend staying on top of new trends, embracing imports and stocking items for crossovers.

America loves trucks, and truck drivers love to personalize their rigs. The pickup and sport-utility market has seen rapid changes in the last year, including ups and downs, and new trends.

So how can truck and SUV accessory shops keep consumer interest high?

Warehouse distributors can offer more than just parts to fill your shelves. They can also advise retailers on current trends and what’s selling, and keep tabs on regional and nationwide favorites.

We competed with their busy schedules to ask a few warehouse distributors what they see happening right now in the aftermarket, and what they expect to see in the near future.

As we learned in last month’s aftermarket forecast, gas prices have impacted both new-vehicle sales and aftermarket accessories across the nation. Import pickups are gaining momentum and diesel engines appeal to truck buyers more than ever.

Insight like this can be valuable to the restyler seeking to stay not only on top of, but ahead of, market trends. Read on for more details on what’s going on, and what’s to come in the changing truck/SUV marketplace.

Gas Price Effects

Roller-coaster gas prices have been the talk of the industry for the last year. Effects of $3-per-gallon or more gasoline have slowed sales of new full-sized pickups and SUVs, but accessory retailers need not worry.

While the accessories consumers want have changed, they still want them, according to warehouse distributor executives.

“I think it requires shops to take a different look at what they market to their customers,” says Jim Graven, marketing project manager for Arrow Speed Warehouse, Kansas City, Kan. “A prime example is the surge in suspension leveling kits. Those people who were spending big bucks on full lift kits, big wheels and tires to get aggressive looks are now going for leveling kits to bring the front up. It’s a $300 kit with a little labor that gives the truck a nice, aggressive look without spending all that money on a suspension lift. It won’t increase the gas mileage, but it’s more economic-there’s less wind resistance. Also, more people are focused on performance enhancement accessories that help fuel mileage like cat-back or turbo-back exhaust systems and air intakes.”

Still, gas-price fluctuations can’t kill the truck market entirely. Buyers are still driving home new pickups, and that’s a restyler’s first chance to make a sale: when the new-vehicle thrill is still fresh.

“SEMA’s data indicates that from the time a vehicle is purchased, a consumer is most likely to purchase accessories during the first few months,” says Tim Odom, president, the AAM Group, including Parts Pro and Total Truck Centers, Johnson City, Tenn. “Any time registrations of new vehicles go down, the number of potential prospects to buy accessories has gone down. When you’re looking at accessories, the market for the guy who just bought a vehicle is a restyler’s first opportunity. When it goes to the second owner, three to five years down the road, there’s another market, but that buyer is not inclined to spend as much money.”

Others say used vehicles are still a viable market for restylers. Each time a vehicle changes hands, its new owner may be interested in adding modifications.

“While there is a huge market of people who want to buy a new vehicle and accessorize it, there are also people who tend to hang on to their vehicles longer and add additional products for styling and functionality,” says Joel Cosby, director of marketing at Meyer Distributing, Jasper, Ind. “If people hang on to a vehicle, then regardless of what gas prices do, there are always going to be people who want to update the look, style or functionality.”

Imports in the Truck Market

Import manufacturers are challenging the Detroit Three’s hold on the full-size truck market, evidenced by Toyota’s hyperbolic efforts to portray Tacomas and Tundras as the toughest things around, and the popularity of Honda’s versatile Ridgeline.

“There’s quite a few manufacturers who are producing Honda Ridgeline products,” says Cosby. “The time to come to market for a lot of these manufacturers has really turned around-we’re seeing the products being introduced before the vehicle is out on the street.”

Trucks and SUVs from import manufacturers are gaining momentum with consumers, and some say there are accessories to be sold for them.

“In major metros, there’s an increase in imports like the Tundra and Titan,” says Graven. “I think that’s something a jobber should look at and ask, ‘Am I seeing those in my area?’ Have that product on the shelves. The good news for people who are driving import trucks is that all the same parts and accessories for domestics are also being made for imports now. They’re just as popular as the Big Three.”

Others see a different side of the market for import accessories, however.

“We’re seeing a lot more demand for Toyota in general, but the aftermarket doesn’t offer as many options for a Toyota as it does for a Chevy or Ford,” says Odom.

Crossovers Offer Possibilities

Crossover utility vehicles are a growing segment of the new-vehicle market, according to industry experts, and it’s one that restylers would do well to optimize.

“The crossover products are the best of both worlds,” says Cosby. “The more use and utility you have in a vehicle, the more opportunity there is for someone to come up with accessories to fill a need.”

CUVs appeal to a different market than traditional truck buyers, however. The styling market for CUVs is not as strong as it is for pickups.

“I think SEMA research indicates that those consumers are more inclined to be an electronics customer,” says Odom. “They’re more inclined to want a DVD or navigation system than the styling accessories we’re accustomed to. I hope to see it change more, but right now it’s a very small part of our market.”

It takes the right combination of accessories to attract CUV buyers. Industry experts recommend functional or utility accessories such as cargo management, floor mats, navigation and entertainment systems over styling accessories.

“With crossovers, you’re looking at a more limited pool,” says Graven. “They’re in the same category as luxury imports and domestics. Most of the accessorizing done to these is in the interior. They get more accessorized for personal taste and functionality, with floor mats, vent visors and things that are going to be more useful and functional than strictly [appearance] accessories.”

What Can You Do?

Warehouse distributor execs recommend utilizing any and all tools available to keep ahead of the market-specially when retailers face stiff competition from online accessory stores.

“The one thing that significantly improves anybody’s ability to sell a product is product knowledge-the pros and cons, the cost,” says Cosby. “If jobbers could spend as much time doing online research and understanding the products and prices as the people who buy them, they’d increase their chances to sell them.”

In a market often full of enthusiasts who eagerly look for information on the latest and greatest for their ride, knowledge is the strongest sales tool in a restyler’s arsenal.

“The best thing jobbers can do is understand the market,” says Graven. “They have to get outside the store a little bit, interacting within the marketplace. That way they can find out what’s going on, what the customers are driving, what they are looking for.”

Education is important for a retailer wanting to keep product offerings fresh and attractive. Knowing the customers, the vehicles, the products and the market is vital.

“The best retailers, in my opinion, know their area, their clientele and the types and styles of products that are strong in their region,” says Cosby. “Many products do better in one area than another. They also sell on service, and they advise their customers. If a customer comes into your store, they are depending on you to provide your professional ability to guide them to a product. Guiding the customers, understanding what they need and what they do not need, and finding a product that fits the customer’s budget is vital. Successful jobbers always know the products as well or better than the customers.”

Graven agrees, and adds that some of the easiest ways a restyler can keep up on that so-important product and market knowledge is offered by the Specialty Equipment Market Association.

“Being a SEMA member and keeping up with their reports and webinars is really beneficial,” he says. “Retailers should educate themselves about the marketplace. It’s different from five years ago. New cars and trucks are being sold and there are all sorts of opportunities to accessorize. For instance, as it stands right now, there’s only 10 percent saturation into the diesel performance marketplace. That means 90 percent of diesel owners have not done anything performance-wise. If they are towing or hauling heavy stuff, they are prime candidates for performance upgrades that will boost mileage and longevity.”

Also key, according to Total Truck Center’s Odom, is making sure your product offering is broad enough to encompass any option a customer might want-even if he or she doesn’t know it yet.

“I think the best retailers are broadening their product base,” he says. “They’re addressing gas and diesel performance, electronics and broadening their market presence so they get a bigger piece of the potential pie. Before, many were limited to bedliners-they were not getting inside or under the hood of the vehicle.

“We certainly see the market getting more competitive from a distributor level,” he adds. “We see more retailers getting into the performance business, and retail stores have more competition in the marketplace. It’s going to be important for a store to provide more than just the parts. A knowledgeable sales assistant, service after the sale and quality installations are ways a store can differentiate itself from the other stores, and also from mail order and the Internet.”

While that sounds like a daunting expenditure on inventory, Odom asserts that it doesn’t have to be.

“To broaden the product base doesn’t always mean a significant inventory purchase; programmers fit a broad range of years, and products such as cold-air intakes have point-of-sale material that can be merchandised at a retail level without a significant investment in inventory.”

Having that right amount of inventory is increasingly important in a world driven by instant gratification. Accustomed to the Internet, customers won’t want to wait very long for their parts.

“You don’t have to stock every part in the store, but in the same sense, the Internet has conditioned people to go find it and get it,” says Graven. “When they walk in a store, they expect it in the store and don’t want to wait around for a part.”

At Your Disposal

WDs can help their jobbers. Service, communication and market information are some of the things retailers can expect from distributors.

“WDs provide service,” says Arrow Speed’s Graven. “Sometimes it’s a case of if you go direct, you can buy it cheaper. If it works, then go direct and make the best deal you can. But in a lot of cases, a significant amount of inventory dollars gets tied up in that brand. There’s no need to stock up on a product line if it’s not moving. WDs provide parts in a fast manner, and they also provide technical assistance. Our people have expertise in different categories of the products we distribute. Retailers are never in the dark, they never have to guess; they get the right product for vehicles. The biggest thing we provide to the retail market is service.”

Making the connection between manufacturers and retailers is one key function of a warehouse distributor. In a fast-paced workplace, the rep from a WD can be an important source of the latest information.

“I think one thing every store needs is excellent communication from its WD,” says Odom. “They need to be very aware of every manufacturer’s current P.O.S. material, dealer programs and application information. Factory reps used to call on retail stores on a frequent basis, but today that is very infrequent. The WD takes that role of communicating to a store on behalf of the manufacturer.”

Finally, backing up its retailers is especially important to the industry, according to Meyer Distributing’s Cosby.

“We work vigorously toward protecting the distribution channel,” says Cosby. “Independent jobbers are an integral part of our business.”

The world of aftermarket accessories is an ever-changing maze of new trends and mainstays, where restylers have to juggle inventory budgets with having the right products to sell. The truck market in particular has seen numerous changes, and keeping up-to-date is key for the successful retailer.