New Ponies Old Tricks

In today’s automotive landscape, where fuel efficiency is king and hybrids continue to turn impressive quarter-over-quarter sales results, it seems almost counter-intuitive to suggest that muscle cars might be playing an increasingly significant role. Yet never before have so many consumers had so much horsepower at their disposal.

According to several industry experts, the market for performance parts in this segment is on the rise, and not just from the new growth area of the diesel truck.

In fact, with the rejuvenation of the Mustang, the constant presence of the Hemi within the public’s consciousness, and the anticipation of new offerings from General Motors, the muscle car is looking a little more robust today than it has for some time.

Part of the good news, at least for the aftermarket, is the growth in consumers looking to soup up their ride; both the young tuner and the silverback are in the game.

Furthermore, the number of potential customers looking at modifying brand-new cars, as opposed to just tweaking older ones, is also a growing segment.

In fact, as a 2006 Frost & Sullivan analysis states, “Vehicle modification was once the interest of more extreme enthusiasts, but has become a popular pastime for all types of vehicle owners.”

Who’s Buying?

To capitalize on the trend, it is important to understand and identify the major movers behind the reported growth of the muscle car performance market.

“The automotive modification industry is being driven by social forces,” observes Frost & Sullivan consulting analyst Mary-Beth Kellenberger. “In North America, vehicles have become an important component of a person’s image, but that image must be unique. Modification is the key means through which consumers can achieve a unique image.”

However, while image-enhancing products (mostly on the wheel and tire side of the business) remain a common first stop for many consumers getting into the modification world, when it comes to the new muscle cars on the block, performance is the name of the game.

“We’ve seen the market for performance grow quickly, not only for our company, but from the OE side as well,” says Mike DeFord, marketing manager for Bully Dog. “For us, it’s growing all the way from the average daily driver to people looking for nitrous kits.” Top researchers have certainly taken note, and released more in-depth findings as to which segment, demographically speaking, is leading the charge.

“The extent to which consumers will modify their vehicle depends on three factors: the enthusiast’s level of interest, skill level, and budget,” states Frost & Sullivan consumer research project manager Dr. Rick Brown. Brown goes on to note, not surprisingly, that much of the modification decisions are based around the availability of a disposable income. Obviously disposable income is something not readily available to those 18- to 24-year-olds traditionally associated with the fast and furious crowd, the results of which are being noted quite clearly.

“The muscle car segment has a lot of people in the 45-and-up category,” notes Ralph Ruzzi of Keystone Automotive. “There is a lot of grey hair in those cars, because they are likely people that drove SUVs, and are now looking for something a little more economical, but aren’t going to be talked into driving a Civic.” Kevin Dundas at Karbelt notes a similar baby boomer streak among the current performance market.

“There is a huge push among the 40-plus crowd [towards] buying and modifying cars; they are really making the business these days,” he says. As a result of the heavily-weighted age issue within this current market climate, analysts suggest that it will be important for participants in the modification industry to monitor both the economic conditions as well as the life cycle stages of participants to gauge overall interest.

What Are They Buying?

While the general market segment of performance parts is incredibly broad, it is possible to clearly identify, at least in part, the most common elements being employed by this new breed of automotive tuner, specifically as it pertains to the modern muscle car.

According to the research, today’s vehicle owners see the original vehicle as incomplete.

Indications are that interest levels in terms of modification are on the rise, but more importantly, budgets are high. The latest analysis from Frost & Sullivan finds that more than 30% of vehicle enthusiasts have modified five or more vehicles to date, with strong intentions to continue modifying. Furthermore, 44% of respondents spend between $1,000 and $3,000 annually. That dollar amount becomes very significant when you take into account where the dollars can be spent.

According to Jim McFarland at Hypertech, there has been something of a shift in terms of what can be done to a new muscle car, compared to its 1960s ancestors.

“With the complexity and quality of engine systems, we’re finding that the OEMs just aren’t leaving as much on the table as they used to, and replacing things like a camshaft just doesn’t translate into the kind of performance improvement to dollars spent ratio that it once did,” he states. “As a result, the field has been narrowed a bit, to rely mostly on cold-air intake on the hard part side, and electronic management systems, which act as kind of an optimizer or enabler to any hard part you install on the car,” he says.

Where some see a marked difference, others find similarity, albeit with a modern twist.

“The first modifications people make are really the same as they were in the ’60s,” says Ruzzi. “We see most of our clients starting with things like cold-air intake filters, which basically serve the same purpose as putting a filter on a carburetor did years ago.

“I guess the difference today, though, is that customers aren’t just looking for pure horsepower; they also want to go further in terms of fuel efficiency, programmers, and appearance packages; I think the aftermarket is really helping to drive that growth.”

Where Are They Buying?

Where are consumers buying these highly technical and profitable products? The answer to this question is hopefully an easy one, as the answer should be “from you.”

In terms of product selection, many manufacturers and even some distributors would love to get their products into your store. In fact, many are so eager that they are offering some pretty tempting sales incentives. For example, chip and download companies like Bully Dog are using their solid customer satisfaction numbers to their advantage, and incorporating that into their promotional campaigns. “We’ve seen a great return on a try-before-you-buy download program,” says DeFord. “We offer a free three day trial, and after that expires, the customer can choose to either buy the full program or not. So far, we’ve been running around the 80% mark in terms of people that have come back to buy the full package,” he says.

Programs like these seem ideal for the jobber, in that they are exceptionally easy to sell. All you need to convince a customer to do is try a free download, and then let the extra 60 hp sell itself.

As DeFord mentioned, with an 80% return rate, you can’t really go wrong. However, some manufacturers warn you do have to be cautious as to who you do business with when it comes to downloads, because some companies are certainly better than others when it comes to warranty issues. According to McFarland, some jobbers have experienced problems with customers coming back claiming their warranty has been voided, or the car has failed a government-mandated emissions test. However, McFarland says that some companies will provide more support and backing than others.

“It’s important for jobbers to understand what can happen when there are problems downstream, like a car failing emissions testing. As such, they have to be confident in who they are doing business with, and know what kinds of warranty suppor
t they offer,” he says.

Some distributors are trying to make the performance upgrade as easy on the consumer as possible, by pre-packaging specialty performance kits. “We’ve tried to dissect what is popular in the market, and then link that to our customers,” Ruzzi says. “As a result, we now offer a kit that features a programmer, an exhaust system, and a cold intake, all in the same box and purpose-designed for each other. It just makes it easy for the customer.” Suffice to say, that when it comes to the domestic performance market, some of the top manufacturers and distributors can really act as a partner in your business, in terms of offering genuinely solid programs and products. These programs are designed to obviously help them sell more, but they should also make those sales substantially easier and more profitable for you.

Despite the fact that technology has changed the way that today’s muscle cars make horsepower–cleaner by far than their fire-breathing ancestors–clearly the domestic performance market is one that will continue to grow. North American automakers, and GM in particular, seem keen on introducing new products into that particular niche.

In fact, while Dundas notes that the Mustang seems to be currently on top of the game, the aftermarket is eagerly anticipating the arrival of the new Camaro.

In terms of the domestic performance market in general, Dundas is obviously thrilled. “I think the new car and truck segment is going to be very big. People are looking for more power, more mileage, and more drivability, so the growth potential on the aftermarket side is very exciting.”

Diesel and Trucks Still Big Players

The diesel market is experiencing undeniably strong sales among truck enthusiasts who are flocking to raceways and desert rock-walls to see purpose-built machines do the extraordinary.

“The market is growing just about as fast as it can,” says Mike DeFord, marketing manager for Bully Dog. “The growth is also expected to continue, not only with the help of a number of drag racing circuits, but also truck racing, rally car, and rock climbing events as well,” he adds. However, the resurgence of diesel as a legitimate performance icon is not only attributable to the raceways and rock faces of North America, as some of the world’s top racers have turned to diesel in recent years to power their entries down the Mulsanne Straight at Le Mans, with Audi taking the checkered flag last year, and Peugeot set to launch its diesel entry at the storied 24 hours this coming year.

All of this attention is something DeFord sees as a positive for the future of the business. “There is obviously a push for purpose-built diesel race vehicles,” he says. “That awareness will likely drive customers into the jobber stores, because they will want to emulate those race vehicles.” On the truck side, Jim McFarland of Hypertech notes that although his company is making some inroads in the muscle car segment, it remains the diesel trucks that butter his bread.

“Our business is very market-driven,” says McFarland. “As the muscle cars of the ’60s went away, the trend moved towards trucks, and so those have been our major movers.” With the push for green cars playing a major role in just about everything these days, expect some potentially serious growth in diesel engine performance parts, as more domestic auto makers augment their clean diesel offerings to include CUVs and passenger cars, along with their standard bevy of pick-ups and heavy duty trucks.