Exhaust Market An Unexpected Opportunity

There are few product lines that the traditional jobber deals with that seem less like a retail item than the exhaust business. Until you think of the performance exhaust business. It is, as they say, a whole new kettle of fish.

“The biggest difference and the most significant one is that it is a want item rather than a need item,” says Jim Fox at ArvinMeritor Light Vehicle Aftermarket in Canada.

Potential customers of chrome-plated exhaust items aren’t looking because they need a muffler; jobbers would do well to think about fashion over function. “They want a performance system or a performance tip, an appearance item. When it comes down to a replacement exhaust system, nobody comes in early saying that their owner’s manual says that it’s three years and it is time to replace the system.”

That is, he says, how the retail approach plays into the performance market: capitalizing on the want. It is, he says, also true that the consumer can be swayed. They may come in looking for a specific item, a specific brand, but a skilled and knowledgeable counterperson can change that mindset. The first step, however, is to make the customer aware of what you have.

This requires jobbers to do something that they may not normally do with exhaust products: put them on display. While the standard aluminized muffler may not be anybody’s idea of a flashy retail item, polished mufflers and exhaust tips are a different matter. In keeping with this philosophy, Fox says that ArvinMeritor put together a merchandiser that has been well received in the market.

“It is basically a conversation starter. We have had a lot of requests for them and a lot of good feedback. It gets people talking about the products and from there you can start talking to people about what is right for their vehicle.”

The merchandiser, says Fox, is as at home at the service provider as it is in the jobber showroom, which speaks to the necessity of addressing the installed business in the performance exhaust market.

“When you look at the performance market there is often a fair amount of customizing,” says Gary Nix, director of marketing, Goerlich’s Exhaust. “With the specialty tips and mandrel pipes there are so many variations in the installation that can occur, that typically performance installations require professional experience.”

As a result, he says, Goerlich’s focuses on providing the individual pieces that the professional installer can use in assembling a system, as opposed to selling kits. The exception is the performance diesel kits that have become more popular of late. This, says Nix, is to simplify the sale for the professional installer, saving them the trouble of having to source large diameter pipe and clamps for this growing market.

In general, however, the performance market needs to be kept in perspective. For those managing the human resources of a jobber store, it is important to dedicate the appropriate amount of resources.

“There is far too much time and effort due to the coolness factor as opposed to return on investment,” says Malcolm Sissmore of Ultrafit Exhaust. Success in the market, he says, can rely on the ability of the potential customer to relate to staff members at the store.

“They want to be able to talk shop. I look at the Speedy stores who did well; the manager was just like the customer. The guy who was not an enthusiast, well, the product never moved.”

That necessity to fit in can be seen in the very name brands. ArvinMeritor has had its Cherry Bomb mufflers for years, and a more recent distribution arrangement with the Flow Master brand, but the newer sport compact performance Volt brand not only looks different, its name evokes a different image. Likewise, Tenneco Automotive’s DNX line of products — which cover both the suspension and exhaust categories — take a very different approach from the pre-existing Dynomax product line. And, if you look at the literature and point-of-sale material that accompanies the DNX line, you would be hard pressed to find any Tenneco identification. This, however, hasn’t stopped the company from using some familiar incentives.

Beginning June 1 and continuing through August 31, 2004, DNX will offer mail-in rebates of up to $25 each for a variety of precision-engineered performance exhaust components for sport compact applications. “Tuners understand that there are huge quality and technology differences in today’s exhaust category; they can now get money back while stepping up to exhaust products that deliver a proven advantage in terms of performance, sound and style,” said DNX marketing director Terry Heffelfinger. Heffelfinger alludes to the fact that consumers are interested in some important numbers, performance numbers.

“Our engineers understand the demands of the sport compact market and have mastered the exhaust technology now preferred by leading drag racing teams. P2 delivers this advantage to vehicle owners who are looking for the next step in performance.”

Still, Sissmore suggests caution when embarking on this market. “One of my concerns is that it is a bit of a fad. Hidden exhaust is coming into vogue now,” he adds, which flies in the face of the current trend toward larger and larger exhaust tips.

Regardless of the styling trends, the exhaust market remains one of the few bright spots in the exhaust aftermarket. While the replacement business has been stuck on a slow, gradual decline, the performance aftermarket has seen strong growth.

“There is no question that we forecast it to be a much larger piece of our product mix in the future as we have recognized the decline in stainless,” says ArvinMeritor’s Fox. “We have really focused our efforts and done a lot of product launches lately. Our metal cat, which has a metal catalyst as opposed to a standard ceramic construction, is a true performance higher flow converter.”

He recommends a balanced approach. The latest statistics split the performance aftermarket at 40%SUV/truck, 25% muscle car, and 35% sport compact. A similar split in resources might be advisable.

Certainly the part of the market that has been receiving the most attention of late is the sport compact segment. “There are a lot of offerings out there,” says Fox. “Not only do you need to have a brand that is desirable, you need to be at the proper price point. It has matured to the point where price is becoming a little more of a factor.”

Still, he says, the willingness of the sport compact enthusiast to spend freely on the products and brands they deem to be of value is significant. “On average, they can spend up to $6,800 per year, in U.S. dollars.

“It is quite amazing, so you need to make sure you are there to capitalize on that.”