Top Notch

Aug 17, 2010

Pickup trucks have long been the backbone of the light-truck accessory market. Once used almost exclusively for utility purposes, today’s pickup is more than just a workhorse. In the mid- ’90s, as vehicle designs became more stylish and less boxy, the market underwent a transformation as Americans gravitated to pickups like bees to honey. Sales went through the roof, spawning the first significant truck-styling trend – the sport-truck craze that swept the U.S. creating a huge market for lowering kits, monochromatic paint schemes, billet wheels and other styling touches.

Over the years, truck sales grew rapidly. By 2005, light-truck sales accounted for more than 10 million units, outpacing new-car sales for the third consecutive year. The accessory market flourished, as well. It wasn’t long before accessories for light-duty trucks came to represent the largest segment of the specialty equipment market for both manufacturers and retailers.

Flash forward to 2007. Despite predictions that light-truck sales would exceed 11 million units in 2010, the market began its descent in 2007. By September 2008, new-vehicle sales were in freefall, off by more than 26%. As the economy tanked and gas prices soared, much of the truck-accessory market felt an immediate trickle-down effect.

The return of the pickup

Thankfully, after months of sluggish sales, there are bright spots. The economy is slowly recovering. New-vehicle sales are gaining strength, particularly in the hard-hit truck segment.

Beginning last December, new-vehicle production began a slow comeback, growing 14% over the same period in 2008. By January of this year, U.S. truck output was up 40%, and sales have continued their upward swing. Already they’ve exceeded last year’s sales to date by more than 1 million units.

For the truck-accessory market, there is no better news. In fact, according to tonneau cover suppliers interviewed for this article, the mood among manufacturers and retailers is upbeat and the forecast bright.

“There’s a definite improvement when it comes to truck sales. Our sales are up by a healthy margin,” notes Hartmut Schroeder, president of SnugTop, Long Beach. Calif. “But what I find especially encouraging is that the automotive press and other media are now relating pickup sales to the pulse of the U.S. economy and using these sales as a leading indicator.”

That, says Schroeder, augers well for the market. “If people feel better about the economy because business is better, maybe now is the time to buy the pickup truck they want. They wouldn’t be doing that unless they felt the prospects are brighter.”

Nils Forssman, president of Truck Covers USA, San Diego, sees the industry moving in the right direction: “We have definitely felt an upswing in the economy. We also are well aware, however, that the recession is by no means over. But there are good signs. As we all know, truck sales are up, and once truck sales improve, we see it immediately.”

Unbridled enthusiasm best describes the outlook at Bak Industries, San Fernando, Calif. In fact, says Julian Maiman, company president, “Our company experienced more than 200% growth last year by capitalizing on a golden opportunity to expand our business, which is in recessive times.”

Adds Dan Beaulaurier, national sales manager for Roll-N-Lock, Pompano Beach, Fla.: “We’re definitely seeing signs that the market is recovering, both domestically and internationally. We’ve seen significant double-digit growth this year.

“We are seeing an improvement in all regions of the country. Some of that’s coming from pent-up consumerism. People are beginning to open their wallets again and purchase things they want,” he adds. “In conversations with some of the key distributors around the country, the back-of-the-truck segments are the shining stars within their overall offerings.”

New-model, late-model markets spur growth

David Wells, president of UnderCover, Rogersville, Mo., couldn’t agree more. “We actually gained measurable market share in 2009,” he says. “While the first quarter of 2010 was weak, the second quarter has been huge. Certainly truck sales have had an impact on that. So we anticipate that 2010 will end up being better than last year.”

Wells attributes the growth in part to the new Ford F-Series. “The Ford F-150 has done measurably better. It is our No. 1 selling model. The Ram does OK,” he notes, “but overall Ram sales are relatively weak compared to the GM Silverado and Ford F-150.”

Progress also has come from another arena. As consumers resisted the urge to purchase new trucks, they often opted to buy a used truck or keep the one they already owned. This has opened a door of opportunity.

“With truck sales down from their historic highs, there’s a major pool of vehicles out of the market,” says Wells. “But there are millions of trucks on the road, and a lot of them don’t have a tonneau cover of any kind. Plus, used-truck sales went through the roof. That’s one of the things that sustained us through 2009. There was another wave of customers buying products for a used vehicle to make it more personalized and bring it to life.”

Truck Covers’ Forssman says, “A lot of tonneau cover companies tend to underestimate the used-truck market. Many people are not in the market for a new truck, but they are in the market for a tonneau cover.” So much so, that Truck Covers USA saw a 30% increase last year in sales for older-model trucks.

Roll-N-Lock experienced a similar uptick, says Beaulaurier. “During late 2008 and all through 2009, we saw older-model applications increase in popularity, indicating consumers were either purchasing pre-owned trucks and accessorizing them, or continuing to invest in personalizing their existing trucks.”

The pendulum has since swung in the other direction. “With the resurgence of the new-model trucks this year, the trend has shifted to newer model applications, with the F-150 off the charts,” says Beaulaurier. “As a result, our dealers are refreshingly positive about the long-term outlook.”

“Ford trucks are the clear winner,” declares SnugTop’s Schroeder. While SnugTop’s sales of fiberglass lids for all Ford models are vigorous, he says a new application for the Raptor tops the list. “It’s a hot truck, dealers are selling them over list price, and we saw immediately that there was a demand, which tells us something about the market.”

“When people buy a work truck, they look for something basic,” Schroeder continues. “When people buy a top-of-the-line truck like the Raptor, they want to make a styling statement and feel comfortable about spending their discretionary dollars to accessorize it.”

Paul Campbell, marketing and communications manager for Truck Accessories Group (TAG), says things are looking up. “Certainly the upturn in truck sales has benefitted the accessory business. There are definite bright spots in selected markets.

“It’s good to see the attention that Dodge is bringing to its trucks through the new Ram marketing strategy,” adds Campbell. “The new Pace Edwards retractable cover for the Dodge pickups equipped with a RamBox option has proven to be a real sales winner.”

Special-edition packages also generate keen interest. “Packages like Leer’s Rocky Mountain Special Edition have earned the attention of truck owners who have an affinity for outdoor activities. Tonneaus continue to be a strong styling statement for truck enthusiasts.”

Capitalizing on fleet sales

Suppliers agree that rising truck sales, combined with improved consumer confidence and spending, are contributing to a stronger accessory market. They’re also boosting fleet sales.

“Fleet sales are the bright part of the picture,” says TAG’s Campbell. “A significant portion of the current sales volume is for fleet trucks. Many fleets that delayed new-vehicle purchases during the toughest part of the downturn are back in the market replacing vehicles that have served their time on the road.

“Fleets are very interested in fuel-saving technologies and are spending money to convert fleets to alternative fuels, more efficient drive trains and other ecologically advanced systems,” adds Campbell. “Our Leer commercial product lineup is well poised to help dealers capitalize on commercial sales.”

Truck Covers USA has had considerable experience working with fleet accounts in its local San Diego market. The company has secured government contract approval through the General Services Administration. The designation has been instrumental in building fleet business, both for Truck Covers and its dealers.

“Commercial fleets always need product,” says Forssman. “Government departments – Border Patrol, police, utility companies – have money to spend, so it’s definitely a good market for us. We are fortunate to be GSA-approved. It helps us in our hometown market. But we also share our successes with our dealers nationwide to help them apply what we’ve learned to their businesses.”

Positioning for growth

Tough times call for tough measures. And suppliers have drawn on every available resource to build their business and market share, investing in new products, ramping up marketing efforts and focusing more attention on customer service and sales support.

Says Beaulaurier: “Our inside customer service and tech support team, along with our outside regional sales team, remains as focused on interacting with retailers as we were in 2003. In fact, we’ve committed to expanding our teams. One of our strengths is our connection to the retailer/installer base, and we will always be focused on improving that connection.

“Participants,” he adds, “are also refining their Internet presence and collateral materials in an effort to elevate their images and increase consumer awareness while simultaneously making ongoing product improvements.”

That, says Maiman, has been Bak’s approach. The company invested in developing new products, expanding its workforce and building brand image. “We put more money into marketing, more dollars into R&D to create better product, explored new avenues to expand our business and increased our employee base.”

To build brand awareness, Maiman turned to the Internet. “The Internet is the window to the world. It’s the least expensive way to increase the equity of our brand,” he says. “By going after the consumer, and creating a pull rather than a push effect, we’ve created a ton of brand awareness.”

Maiman points to two other achievements: a new Tier-One supplier relationship with Ford and a new aluminum tonneau cover. The new cover, the BAKFlip G2, provides full access to the truck bed. “We took the concept of a hard tonneau and made a modular cover unique to the market, which folds up against the front of the bed. This allows full, easy access without removing the cover,” he says.

UnderCover took a similar approach. “We revitalized our brochures, revised our website so it’s more cutting edge, upgraded the number of people we have in the field to see our dealers more often, and we launched a brand-new product category,” Wells notes.

The company’s newest addition, the SE Smooth, features an ABS lineup of paintable tonneaus. “If there’s anything that’s ringing the bell right now with our distributors, it’s that we have paintable tonneaus,” he adds./

To gain momentum, TAG opened new facilities in Indiana and California, took steps to improve paint finish and protect products during the shipping process, and developed a new merchandising unit for truck cap and tonneau options to help improve accessory sales on the showroom floor, notes Campbell.

“We’ve done many things to strengthen our valued dealers as they have met the challenges posed by the economy,” Campbell says. “We’re in the field constantly, making sure dealers have the know-how they need to satisfy customers. We’ve brought dealer groups together to get their direct input on new products and merchandising strategies. We acknowledge that our dealers are the essential link between our products and the people who buy them, and we are committed to making them successful.”