Up on Top

Oct 1, 2011

While nearly every segment of the automotive aftermarket has been affected by the economic uncertainty of recent years – everything from wheels and tires to appearance accessories, interior products and performance parts – products targeted to both consumer and fleet trucks were among the hardest hit.

Today, however, the potential for one of the best-loved and most purchased truck-specific product segments, truck caps, appears poised to rebound as vehicle buyers maintain their love affair with these hard-playing and hard-working vehicles.

The vast majority of the cap cover manufacturers who spoke with Restyling recently appears confident in the long-term viability of this product segment for both suppliers and restylers, and most are pleased with how the industry has rebounded since the economic turmoil that peaked in 2008 and 2009. During those years, most if not all cap suppliers experienced downward pressure on demand for their products.

A ‘new normal’ in sales

According to Jim Bakken, owner of Britt, Iowa-based Unicover Inc., while conditions in the overall U.S. economy and thus the truck-buying public are improving, significant challenges remain ahead.

“We have experienced a significant increase in sales this year,” he says, yet, “going forward, I think that the market will experience a bit of a headwind due to high gas prices, consumer confidence and national debt problems. But I believe, with innovation, we will be looking forward to a good 2012.”

Long Beach, Calif.-based Snugtop’s president and CEO, Hartmut Schroeder, says that although economic factors like access to credit for new-truck buyers remain, a rebound could be quick once dealer sales rebound.

“Once dealer inventories grow, we see almost immediate results since a large percentage of truck owners accessorize their trucks within the first 90 days of ownership,” he says. “The credit crunch has skewed these numbers lately as buyers may be waiting longer to purchase accessories until they feel more secure about their finances.”

That crucial relationship between new truck sales and truck cap and tonneau cover sales is one stated by many suppliers in the segment. Randy Goble, national marketing manager for Truck Accessories Group LLC, Elkhart, Ind., manufacturer of Leer, Raider and Century branded caps and tonneaus, agrees with Schroeder and reiterates the importance of the first days of truck ownership to the overall industry’s recovery.

“Truck cap sales generally track within 90 days of truck purchases because truck owners typically accessorize their truck as quickly as possible after the initial purchase,” he notes. “Consumer discretionary spending during the past two years has been much lower than previous years, [which are] spending levels that the Gallup organization calls ‘the new normal.’ The effects of lower discretionary spending mean that consumers may accessorize their truck to a lesser degree or consider more options at different price points. In the end, consumers that do their homework choose solutions such as fiberglass caps and tonneaus because of the unsurpassed durability, functionality and protection of the vehicle resale value.”

Jim Fike of Jason Industries, Elkhart, Ind., says that while challenges remain, sales have stayed remarkably strong and he is hopeful  for continued improvement overall in years to come.

“Our rate of sale is good in comparison to sales over 2009 [and] 2010,” he says. “As markets continue to improve, both domestic and international, we expect to see continued interest in our products.”

Futures in fleet sales

As truck sales rebound, the market for truck caps has a significant advantage over many other automotive accessories in that it has dual pools of potential customers to pull sales from: consumer vehicles and fleet and commercial applications.

Unicover’s Bakken notes that fleet vehicles have created strong potential for growth for his company in recent years. “We have experienced the most growth in the commercial and fleet markets and I expect that trend to continue into the future.”

Christopher Ripper, chief operations officer for Garnett, Kan.-based ATC Composites, says fleet sales to construction trades, delivery and transit companies, state, local and federal government agencies, and other large organizations has been an overriding trend in the truck cap markets in recent years.

“Fleet sales has been a growing trend as more and more companies move away from vans and into trucks that are more versatile and have a higher resale value,” says Ripper, noting that despite economic pressures consumers and companies who have need for a cap or cover will continue to purchase them. They just might be a little more selective about the products they choose.

“In this economy, people look for value,” he adds. “Buyers want more bang for their buck and a product that offers a lot of value will continue to be a leader in sales.”

Truck Accessories Group’s Goble also notes that trends within the market for fleet vehicles have the potential to further strengthen fleet sales while the consumer market stabilizes.

“Fleet operators and contractors that have historically selected vans are finding that high-capacity truck caps provide excellent storage capacity with better performance and total life cycle cost than vans,” he says. “Compared to vans, trucks offer more cab and drivetrain options; plus, the resale values are generally higher than that of vans.

Goble notes that high-capacity truck caps offer a number of functionality and configuration options to meet the varying needs of discerning fleet operators and contractors. Among them are toolbox solutions along the side doors of a cap that “create a standing work area beside the truck, and can include power sources and lighting,” he says.

Jason Industries’ Fike is among the suppliers who foresee an inevitable resurgence of demand among consumers who use their truck outside of work, but notes that – like so many things in an increasingly volatile world – it’s important to remain open to the effects of geopolitical factors on the industry.

“As the economy improves, consumers will return to the market place, so we see substantial growth in that segment,” he says. “Commercial applications will remain robust throughout the period and thus continue to lead the way to the retail consumer rebound.

“It is fair to say that based on geopolitical developments, all bets can be drastically altered. One just has to remember the effects higher gas and diesel fuel prices have on buying habits.”

Snugtop’s Schroeder believes that the general economic uncertainty can in some ways actually benefit cap manufacturers and the restyling shops that sell them. This is especially true with the trend toward “stay-cations,” or local or regional travel in place of more costly international air travel.

“Tight credit and economic uncertainty are forcing people to scrap ambitious vacation plans, and there seems to be a trend back to local travel by car and truck that involves camping and other local recreational activities,” he says. “We see more trucks being used as camping vehicles again, making the use of camper shells necessary.”

New features, flexibility drive sales

In addition to a generally improving overall economy in the United States, truck cap manufacturers point out that new-vehicle applications and new features are both driving an increase in sales in the market.

Unicover’s Bakken, for instance, notes that new vehicle models, including some smaller truck models with either hybrid or completely electric drivetrains, have created opportunities for both his organization and the shops that sell their products.

“We have developed commercial aluminum products for several brands of small electric trucks,” he says. “We are excited about these products and I believe they have a very promising future.”

Snugtop’s Schroeder says that beyond any single product feature, design and functionality are playing a significant role in what sells. Even for commercial vehicles, there is an important benefit to having a well-designed, attractive product.

Says Schroeder: “Snugtop is finding that commercial fleets are looking for greater versatility for their vehicles. Commercial caps that can be easily reconfigured for a variety of trucks and tasks are getting preference. Truck caps that are both practical and stylish seem to be gaining in popularity as companies realize that their fleet is a rolling billboard enhancing the company’s image.”-¨Schroeder goes on to say that the market for truck caps oriented to fleet vehicles is often a very different one than for those that are geared toward the daily truck owner.

“These are two distinctly different markets,” he says. “While the work truck calls for practicality, versatility and security; the leisure truck puts the emphasis on style, aerodynamics, user friendliness. Consumers will mostly select a truck cap with cab height while commercial users want high-profile tops with maximum usable space and easy access from the sides and back.”

Indeed, while outside appearances of commercial caps might look to be similar from the outside, that’s essentially where the similarities end. Features that enhance the practicality of a commercial truck cap, like side-access doors and sliding drawer bed systems, are favorites of commercial customers, says ATC’s Ripper.

“[Such systems] allow total access to the front of the bed by bringing your cargo to you, instead of you having to climb into the truck bed on your knees to get to your cargo,” he says.

While less expensive aluminum caps have great flexibility and remain very popular with a segment of buyers, fiberglass models have been growing in popularity and currently hold a larger market share, says Ripper. In fact, the discussion surrounding aluminum vs. fiberglass caps is among the more contentious in the market.

Bakken of Unicover, a supplier of both aluminum and fiberglass caps, says that his experience is that the aluminum cap is more practical, especially for commercial applications.

“[Making caps from aluminum] allows us to customize the product to fit the customers’ needs such as height, roof racking, shelves, doors, etc.,” he says.

Truck Accessories Group’s Goble says that regardless of the material they’re made from, accessories that increase the adaptability of a cap to a buyer’s specific needs are highly desirable, in both the consumer and commercial cap markets. Roof rack systems, for example, have become more popular in recent years.

“Roof storage options are like Swiss-Army knife solutions for consumer and work truck caps,” Goble says. “Both markets require a cap that is engineered to handle roof-top solutions and weight, topped with a base-rail system that accepts a wide variety of add-on attachments. ”

By having that ability to accommodate either a ladder or a surfboard, depending on the customer’s use for the product, shops can carry one cap that meets multiple customers’ needs.

Additionally, Goble says features like side windows that open like a door are common in both markets, and caps that are lighter overall have been trending more popular.

“Work truck owners are increasingly choosing strong lightweight work caps because a well-engineered cap can be hundreds of pounds lighter than some options, which translates to greater payload capacity and improved fuel efficiency,” he says.

Like so many other truck-specific industries, uncertainty may be about the only certainty for suppliers of truck caps and their restyler partners. However, with continued product innovation, a host of new applications and a strengthening trade in the commercial market, opportunity continues to abound.

Tonneau vs. cap

While hard-working and hard-playing truck caps continue to reign as the most common truck bed accessories, their sleek younger brother, the tonneau cover, continues to be a popular option for style-oriented consumers.

Sure, a tonneau cover can be less practical for daily use and for work trucks, but they have one selling point that truck caps do not, which is improved gas mileage.

Most tonneau manufacturers were quick to point out that fact, Snugtop’s Hartmut Schroeder, among them: “For many truck owners a tonneau cover is strictly an appearance product that enhances the look of the truck. That particular market is slowly disappearing and we are now finding that customers are looking for a secure ‘trunk space’; and if there is not a need to haul large objects, then a hard tonneau cover is the ideal accessory. Aerodynamics also plays a big part in this since it has been proven that the addition of a tonneau cover improves gas mileage quite significantly.”

Beyond mere improvements in gas mileage, Truck Accessories Group’s Randy Goble notes that style is also a significant factor for tonneau buyers.

“Tonneau covers are terrific solutions for truck owners that simply need to protect the truck bed and contents without the need for high storage capacity,” he says. “Fiberglass tonneaus are styled and painted to match the truck, providing a great-looking solution that will last the life of the truck.”

ATC’s Chris Ripper, notes that tonneau cover and lid customers rarely work out of the bed of their truck.

“If they do,” he says, “it’s for small things like salesman samples and paperwork, and not tools or equipment.”

Ripper also noted the perception of tonneau covers being more stylish than caps, and also noted the mileage improvements. He also says that tonneau cover sales vary widely be region within the United States.

“Some retailers will have a mix of 70% lids to 30% caps [while] others are closer to a 50/50 mix, depending on the region,” he says. “Southern California, the Midwest and many parts of the South are heavier on the tonneau cover/lid side. Colder regions are one demographic that appears to sell more caps.”

Despite any shortcoming in storage capacity and functionality, it appears tonneau covers have (and will continue to maintain) a strong place on top of America’s more image-conscious trucks.