Posted: August 09, 2014
Changes Beyond Our Control
David Herrmeyer Looks At Changes That Affected Our IndustryBy Dave Herrmeyer
Continuing with my glimpse into the rear-view mirror, a good place to begin this installment is with a look at how changes that are beyond our control sometimes have either actual or potential consequences. A news story I ran across while perusing back issues of Trucking Times indicated a proposed rule by the NHTSA on limiting the center of gravity height on trucks and other vehicles. At the time, SEMA's chairman of the Suspension & Tire Committee said, “Virtually all sectors of the specialty accessories industry could be affected if the National Highway Traffic Safety Administration decides to unreasonably limit center of gravity height.” The NHTSA's proposed ruling was an effort to develop a rollover prevention standard and would ostensibly cover suspension componentry which raises a vehicle above the stock height, as is the case with many off-road vehicles, in particular trucks and some utility vehicles. At that time, I recall Thom Cepek of Dick Cepek, a member of the SEMA committee, saying that “If a rollover prevention rule were to be adopted and taken to an extreme, even moderate changes to a vehicle could be ruled illegal.” He cited slide-in campers installed on pickup trucks as one example and said,” Even putting a luggage rack on the roof of a passenger car could be construed as illegal under a proposed rule.”
You know how roller coasters have humps lovingly referred to as gut-rollers? This was one of them. Fortunately, the steep climb eventually bottomed out when NHTSA backed off after being shown the unintended consequences its rule would have had.
Over the years, there have been many other twists and turns. Some resolved themselves. Some keep reappearing, while others simply require us to adapt, be creative and make changes. The list of challenges is too lengthy to cover here. But after reviewing 25 years’ worth of news, events and trends -- both good and bad -- I’ve singled out a few that provide interesting insight and, hopefully, some direction for the future.
The Trickle-Down Effect -- Then And Now
Governmental, environmental and economic factors often have an impact -- real or perceived -- on our industry. Another example of government going overboard was the “luxury tax,” which posed potentially onerous legal requirements on business owners, especially car dealers and accessory providers. The 1992 tax was slated to be added on accessories purchased up to six months after a vehicle purchase. Accessories which brought the vehicle’s value to more than $30,000 would’ve been subject to the tax. However, the tax generated such an outcry it was never fully enacted or implemented.
Some states, such as California, refuse to wait for federal standards -- they just set their own, sometimes with positive effect. California’s banning of red and blue hood shields, for example, has certainly saved many lives by ensuring no one can mount lights behind them and pretend to be law enforcement.
CAFÉ standards and threats to change them have also loomed large over our heads. Years ago, there were many stories vilifying light-duty trucks. They were often portrayed as evil polluters, which posed a threat to our industry. Environmentalists and some journalists promulgated the myth that light trucks ran over small cars with impunity, as an Associated Press article intimated in1997.
The rise in SUV sales incurred the wrath of environmentalists who targeted these so-called pollution machines by burning SUV dealerships and closing off-road trails. They used websites and e-newsletters to report on their progress and recruit followers. We chronicled numerous articles on this issue. Thankfully, the movement has run out of steam.
Other government rulings have impacted our industry. Here are a few examples. In 1990, the CHMSL law challenged cap makers to incorporate third brake lights into their designs. State laws prohibiting occupants from traveling in a pickup bed put carpet-kit manufacturers out of business. More recently, suppliers of aftermarket leather kits were challenged by seat-implanted air bag regulations, but overcame the problem.
Sometimes, market forces or trends also play a role. At one time, tailgate nets were hot, then not as mileage-improvement claims were negated. Hard tonneau covers came on the market and sales continue to rise. Big box stores, first seen as competitors when they took on truck accessories, have since dropped them or have limited SKUs. Spray-in bedliners took hold after a slow start in 1998, resulting in a decline in drop-in liner sales.
Our industry segment isn’t the only one affected by market forces. In 1999, there were 22,400 new-car dealerships. In March 2000, R.L. Polk forecast a 17 percent drop in dealerships. By 2005, there were 20,770, and by 2010, the number had dropped to 18,673. According to the latest stats, there are now 17,851 dealerships. Pretty good forecasting!
Economic fluctuations have been a roller coaster. The auto industry has always been cyclical, but we’ve experienced a long recovery. We’ve been hampered by rule-making uncertainty and issues with national healthcare. The threat of global climate change makes future planning difficult, and worldwide concerns may force the implementation of carbon taxes. These factors, combined with fluctuating fuel prices, made buyers more wary of spending on wants over needs, and makes our industry’s planning and decision-making more difficult.
While these factors will remain on our radar for some time to come, there is an upside. Auto dealerships that have remained in business are on track to set per-dealership sales records. Consumer confidence is at the highest level in years, evidenced by strong new-vehicle sales, particularly in the light-truck segment. Somewhat ironically, full-size pickups and SUVs are selling especially well, as noted recently in the automotive press. With new-vehicle sales expected to surpass 16 million units this year, this likely bodes well for our industry.
Milestones and Musings
Many other factors have influenced our industry. Here are a few worth noting. When I began Trucking Times in 1989, I asked my brother Dennis what he thought was the biggest change in the industry to date. He wisely proposed that the bold body style of the 1988 Chevy pickup might qualify. It had the potential of limiting the rampant splashing of competitors’ cap molds and resulted in serious product development and styling changes that ultimately benefitted our industry. The same would hold true for many other truck accessories.
Over the years, truck models have proliferated the market. In 1992, Detroit automakers offered 64 light-truck models. By 2008 that number had increased to 168. Between 1994 and 1996, the Big Three all set truck-sales records, and by November 1998, light-truck sales surpassed cars for the first time, capturing 50.8 percent for the month. And while I was first to predict in 1992 that trucks would outsell cars by 2000, it took until 2001 for total annual sales to surpass that of cars.
When Toyota entered the truck market in 1998, followed by other import OEs, U.S. automakers feared losing market share. Over the years, Toyota’s trucks have made inroads and sales remain strong -- notwithstanding Toyota’s earlier recall problems -- while Honda’s pickup has been relatively unsuccessful. And despite pre-recession problems plaguing the Detroit Three, their truck sales have rebounded, and they still garner the lion’s share of the light-truck market.
While the abundance of truck models has created more opportunities for accessorizing, varied design and model changes have created challenges for our industry. Nearly all aftermarket players are impacted by changing OEM production plans. When truck models are discontinued -- such as the often-accessorized Hummer and mini trucks -- it affects aftermarket product planning, product obsolescence, and capital investment, to name a few.
Conversely, when OEMs introduce new truck models, accessory manufacturers are challenged to invest in new tooling, product design and development, marketing and so forth. Nonetheless, new models like the full-size GM pickups, the redesigned F-150 and Jeep Cherokee, and GM’s soon-to-be-released Colorado and Canyon, among others, create new opportunities for aftermarket companies to cash in on accessorizing.
Though the popularity of vehicle personalization has held fairly steady, other factors have come into play. The Internet and its resulting price competition with brick-and-mortar accessory outlets began in earnest in 1996. With more consumers researching product information and purchasing online, it continues to pose a challenge for our industry to engage consumers, particularly the youth market -- our future customers.
At the same time, technology advances provide new opportunities for the aftermarket. Bluetooth connectivity, navigation, collision-avoidance and back-up warning systems, DVD monitors and other gadgets create new sales and profit opportunities for those able to keep up with the changes.
While there has long been a love-them or leave-them relationship between our industry and the automakers, they are not the enemy. They may drive us crazy with forays into accessorizing or warning letters cautioning auto dealers not to install certain aftermarket products. But they are in business to make money on the vehicles they sell, and do what they have to do. Most important for our industry, their vehicles provide the canvas on which to paint our masterpieces and create myriad opportunities for our industry.
In closing, I can’t help but think what an old friend would say about all the challenges we have faced and continue to face. Larry Gould has long since passed away, but I can hear him saying, as always, “So what.” A lifer in the aftermarket, he often encouraged us in association meetings by telling how his generation confronted and overcame similar challenges. They never go away. When the going gets tough, the tough get going. Sure, this industry is like a roller-coaster ride -- but what a ride it is!