Tricked-Out Cars
Rev Revenue Across Valley,
Small Firms Cater To Enthusiasts
By Yvette Armendariz
The Arizona Republic, Nov. 23, 2004
The quest to make cars go faster and
look better - from classics to your every-day sedan - has created a $28.9
billion retail industry.
But unlike other industries, it's dominated by small businesses and auto
shops that offer enthusiasts willing to drop a few hundred to tens of
thousands of dollars everything from custom seats, fancy rims and tricked out
paint jobs to supercharged engines and Comptech/Brembo brakes. Audio systems
and tires generally are dominated by chain retailers.
Businesses in the Valley cashing in on the trend include auto shops like
Haskell Auto in Glendale; parts manufacturers like S&S Headers of Glendale and
Baer Brakes in Phoenix; restoration parts sellers like J& W Classic Auto in
Peoria; and car builders like Peter D. Motorsport in Phoenix. And their
success has been fueled in part by enthusiasts here.
Michael Morse's eyes sparkle when he starts talking about cars. He loves to
talk about his pride and joy, a 1934 Ford three-window coupe.
He's given this baby all the conveniences a man could want: a 4.3-liter Vortec
engine, 700 R4 transmission, power windows, suicide doors with an alarm to
notify the driver if they aren't locked, an electric trunk and satellite
radio, just to name a few. The hobby isn't cheap, but "It's well worth it,"
the banker said.
It's not only baby boomers plopping down plenty of cash to own their dream
cars. Teens are taking their parents' old compact cars and adding some
bling and zip with custom paint and super-charged engines. Soccer moms are
adding custom storage racks and DVD players to make hauling the family to
games and on trips a bit easier.
"$29 billion . . . that's a pretty substantial amount of money
because these are all discretionary dollars," said Peter MacGillivray,
vice president of marketing and communications for the Specialty Equipment
Market Association, which tracks the industry.
"These are not products that anybody needs, but that
everybody wants. That's what defines this industry. These are products that
make your car look better, perform better."
On average, vehicle owners who buy specialty equipment
spend $932 per year, according to SEMA's
market research. Enthusiasts who restore, build and collect cars will
spend more than $1,500 per year.
But spending can be much higher. Adding a supercharger to an engine can run
between $5,000 and $10,000. And serious enthusiasts building a car from
scratch can spend well over $100,000.
Most dollars are dropped on the car's appearance, followed by audio, specialty
tires, custom wheels and engines.
Retail sales of these parts and accessories grew 7.7 percent in 2003.
And sales are expected to remain strong as auto sales continue growing.
That's attracting some interest by big auto-parts chains. Market share for
auto chains has grown from 12.7 percent to 16.4 percent, according to SEMA
data.
Even auto dealers, faced with shrinking margins, are talking to accessory
manufacturers to help their buyers customize at the dealer level, MacGillivray
said.
"Car manufacturers are looking for new revenue streams," he said, pointing to
the new Ford Mustang, which has more than 50 manufacturers making specialty
parts and accessories for it.
"Ford is smart. They know the potential of it being
accessorized increases the potential to sell that vehicle to the consumer."
Still, the majority of work and specialty parts come from
small local manufacturers and auto shops.
Among them is S&S Headers, which builds exhaust systems to help cars
go faster. It started in 1968 in California to serve hot-rod and roadster
markets. It relocated to Glendale eight years ago.
"A lot of it is male testosterone that's making it (the industry) grow," said
Betty McCalla, vice president of S&S Headers. But also pushing growth is "the
baby boomers who wanted the '57 Chevy in school but couldn't afford it."
People also are keeping their cars longer and women are finding an interest,
she said.
But by far, the fastest-growing segment is the sport-compact performance
cars, or import tuners as some call them.
This $3.2 billion segment, which grew 35.1 percent in 2003,
first hit California in the early 1990s as teens gave their parents'
old Hondas a bit of zip and individuality. And small auto shops, such as
Glendale-based Haskell Auto, became the go-to places to rev up engines, add
performance brakes and install headers, an exhaust system enhancement that
makes the car perform better.
Andreas Haslim, owner of Haskell Auto, has his own Honda S2000. The car
showcases his services, as he's supercharged the engine and modified the
suspension, differential, transmission and brakes. And it has a pretty cool
audio system.
"It (modifications) increases the horsepower tremendously. And the
acceleration is so quick and the sound and the noise, it's a high," said the
43-year-old, who only occasionally drives the car.
Haslim began tinkering with cars at 15 while growing up in Indonesia. Haslim
points out that sales for supercharging engines have slowed some, partly the
aftermath of a sluggish economy and increasing competition by other auto
shops.
Still his business is good and has come a long way since he first opened his
doors in 1992.
Many of these small local companies evolve out of the car
hobby.
"They either come up with an idea or technology that gives them some kind of
competitive edge, and their friends see it at the car show or track, and ask,
'Can you make one for me?' " SEMA's MacGillivray said. "They then turn it into
a business that they are very passionate and excited about."
Peter Dozeman, owner of Peter D. Motorsport, is among them. The Phoenix
entrepreneur was running a small semiconductor manufacturer when he found a
passion for racing on weekends. Soon he sold his business and started building
draft cars in his spare time in a shop behind his home.
"I'm doing something I'm passionate about and I'm paying the bills," said
Dozeman, who employs five people.
McDonald's franchisee Mark Kramer isn't surprised by the growth in the
after-market parts and accessories industry based on the turnout at his
weekly auto show at the Scottsdale Pavillions, which began in April 1990.
The first weekend, about a dozen cars were on display
at the Rock and Roll McDonald's Saturday Night Car Show. Today,
the show attracts 500 to 600 vehicles, ranging from classics to muscle
cars and about 150 motorcycles.
The popularity of the import tuners has Kramer considering how to display some
in the future.
"When we were young, we had our hot rods, the muscles cars. And now they have
theirs" with the supercharged sport compacts, he said. "We feel they are a
viable segment of the automotive world."
The growth in vehicle add-ons also is likely having an impact on the insurance
industry, but how much is not known, said James Frederikson, executive
director of the Arizona Insurance Information Association.
The industry does recommend that when cars and
trucks are modified, the owners consider adding additional coverage.
* This article
was reprinted from the "Business Section"
of the
11-23-04 issue of The Arizona Republic.
Written by Yvette Armendariz. You can reach
the reporter at
yvette.armendariz@arizonarepublic.com
or (602) 444-4842.
** Link to the
original article at;
http://www.azcentral.com/business/articles/1123cars23.html
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