A neon sign proclaiming “lube and oil” shines through the window of Sam Peligra’s Midas shop in Ajax, Ontario. Promotional material for “car care,” “seasonal maintenance,” and “lifetime shocks and struts” lines the walls, while a point-of-purchase display showcases batteries. You have to search for the sign that refers to the “famous Midas muffler” that was once the foundation of these franchises.
“The exhaust business has been down the tubes. You’re getting an ’89 Delta coming in with an OE system. It’s just pathetic,” says Peligra, referring to the use of stainless steel exhaust systems and their never-say-die construction.
By introducing these premium components as standard equipment beginning in the late 1980s, automakers effectively stalled the aftermarket for exhaust systems. Where the use of low carbon steel components with an aluminized coating meant three or four replacements before a typical car headed to the scrap yard, it’s not unusual to see original stainless steel systems baffling the sounds of eight-year-old vehicles. “Stainless lasted a lot longer than we expected it to, probably by a couple of years,” says Jim Fox, an account manager with ArvinMeritor, which produces Maremont and Gabriel brands. And that has had a direct impact on the number of replacements required by the aftermarket as a whole.
“Certainly the exhaust aftermarket has been declining about six to eight per cent on an annual basis on the number of units being replaced,” says Terry Heffelfinger, director of product engineering and product management for Tenneco Automotive’s Walker, DynoMax and DNX brands. But after three to five years of dwindling markets, “I think we’re pretty much at the bottom.”
Part of the recovery is linked to a simple fact: Vehicles with the stainless exhausts are finally aging to the point where they need replacements. Today, 35.2 per cent of cars in Canada are one to five years old. Just under 28 per cent of the car park is six to 10 years old, while 37 per cent is more than 10 years old, Heffelfinger notes, quoting statitics from Desrosiers Automotive Consultants.
While the overall exhaust aftermarket is still expected to drop two to three per cent for the next couple of years, the trend is expected to take a positive turn by 2008-2010, Fox adds. And the future business won’t all go to large chains, he says. “Their share is starting to dwindle. They’ve lost focus based on their expansions into other services. That’s opened an opportunity for independents and general repair garages.”
General repair shops currently hold 30 per cent of the exhaust installation market, while new car dealerships control 35 per cent, specialists have 22 per cent, and national retailers such as Canadian Tire control the remaining 13 per cent of the business, according to Desrosiers.
And the price wars recently fought by larger chains may have come to an end. “The price points have come down as far as they can,” Fox says. “They’re now charging less for parts and more for labor. The offset has been an increase … the total job is typically costing more.” Installed exhaust prices on light vehicles are actually up more than four per cent over the previous year, he adds.
But shops interested in growing their exhaust replacement business don’t have to wait for the traditional market to recover. Higher profit margins and a growing volume of business can be found in performance products for imported sport models and light trucks. Bring on the chrome tips, polished stainless steel tubing, chrome pipes and the stainless steel clamps to hold them all together.
There is an “absolute up-sell potential” in the performance market, Fox says. “There will be a six per cent gain over the next seven years or so. It’s doing real big improvements. It’s a real bright spot.” The typical customers look much like Ricky Reus, whose 2003 Mazda Proteg was on the hoist in Peligra’s shop. Although there was a mere 3,505 km on the odometer, he was paying for a second upgrade in his search for the perfect exhaust.
“It’s great, the ‘broom, broom’ like in ‘The Fast and the Furious’. But the muffler that came with it is that small,” Reus says, holding his thumb and forefinger together to display the size of the OE tailpipe. “It didn’t look good.”
“The market’s taken off since the first (The Fast and the Furious) movie came out,” Heffelfinger admits. Spikes in performance sales can be traced to every subsequent imitator, sequel or television episode that further entrenches models such as Toyota Supras as ultimate performance vehicles.
“These are the young man’s muscle car of today,” Fox says, referring to growing interest in performance-related magazines and specialty TV shows such as Super 2NR TV. While young buyers dominate the sport import market, the ever-increasing number of light truck owners are also migrating toward the use of performance exhaust systems. “We get a lot of feedback off the lot,” Fox says. “They’re taking more good systems off vehicles and replacing them with performance systems. The disposable income of the person who’s buying (light trucks and SUVs) can afford the gas mileage, and is willing to drop a good chunk of money off the back for the dual exhaust upgrade.”
The introduction of new models such as Ford’s SVT F-150 Lightning, complete with its tuned dual exhaust and ceramic-coated dual side-exit exhaust tips, help enforce the idea of light trucks as performance vehicles. But while interest in performance parts is growing, there is a shift away from universal fits in shops that want to make a profit, Heffelfinger says.
“With mufflers and converters, the time in the bay is critical. It’s kind of like glasses. You want people in and out in an hour.”
“You don’t need an expander and specialized equipment as often,” Fox adds. Forget the need for welds, or the twisting of pipes to create the proper angle. Take a flange, a couple of bolts, a gasket and some hangers, and the job is done. As jurisdictions introduce ever-tightening noise control bylaws, there will also be a greater interest in performance systems that are catalogued for specific vehicles, Fox says. Spot checks for noise emissions are now a reality in California, and could become a reality in Canada. After all, mandated emissions tests are now in British Columbia and Ontario. While the emissions tests themselves may appear to be another source of business for exhaust systems, Fox warns against installing new catalytic converters as a quick fix for a failed test.
“Be careful about solving the symptom and not the cause,” he says. “Converters don’t die — they’re murdered. Converters go bad because of issues upstream.”