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Why You Should Market Your Products to College Students
The youth market continues to receive a significant amount of attention by automakers as well as specialty-equipment parts and accessory producers. One reason: the potential for young consumers to repeatedly purchase a particular brand throughout their lifetime is high when they are exposed to that particular brand at a young age. One segment of the youth market that is worth considering is the college-attending population. According to the U.S. Department of Education, 66% of all college students are of the 24 years old or younger age group. Incomes of those who attend college are likely to be higher than those who do not attend college. According to the Census Bureau, over an adult's working life, high school graduates earn an average of $1.2 million whereas an associate's degree holders earn about $1.6 million, and a bachelor's degree holder earns about $2.1 million. Also, SEMA research shows that a majority of automotive enthusiasts have attended at least some college at one point of their life. Of the 4,896 enthusiasts who answered SEMA's Automotive Lifestyles survey of automotive magazine subscribers in June, 64% indicated that they attended at least some college (excluding trade schools).
Currently, there are nearly 17 million students attending a college or university in the United States. About a quarter of these students attend private institutions while most-about three quarters-attend public schools.
Over the next six or so years, the U.S. Department of Education is projecting an increase in enrollment on the order of 200,000 new students per year, for a total increase in the post-secondary student population of about 6%.
So why is this of interest to auto industry participants? Naturally,
it represents a market that just about everyone is trying to target their wares and messages to:
1. College market
2. Youth market
3. New graduate market
What are some potential actions and responses industry participants might take to tackle these growing, lucrative and intersecting markets?
They are wide-ranging and could include:
- Trendy marketing messages and products
- Low-cost products and programs
- Pragmatic products for budget strapped, newly minted professionals
- Experimental or radical designs
One thing is clear and that's that the value of tapping into the youth market goes beyond the initial sale.
Source: TechnoMetrica, www.technometrica.com
Opportunities in the Kit Car Market
According to a Business Week article, the kit car industry has remained strong over the years and continues to hold steady due to higher quality parts and computer aided software. The article states that kit cars are leaving behind their reputation of being "rowdy" and dangerous. According to Jim Youngs, editor of Kit Car Builder magazine, "It's no longer an exercise of junkyard scrounging."
He goes on to say that improved quality of parts is helping to fuel growth.
Of the $34 billion U.S. specialty-equipment industry, slightly less that $1 billion is comprised of kits and kit car accessories. One company, Factory Five Racing in Wareham, Massachusetts, has been doing well making kit cars for its customers. They actually predict growth for this year-they expect to sell 800 to 1,000 kits of the five models they offer this year, which will top $16 million in sales. This is up 12% from last year's $14.1 million in sales.
Kit cars range from detailed replicas of race cars of the past to custom designed cars based on old hot rods and musclecars. Kits are popular among enthusiasts because they are usually a fraction of the cost of a factory-made new or classic car. For example, 1963-model year Shelby Cobras can sell from anywhere between $300,000 to $600,000 whereas a kit reproducing a similarly designed and performance capable vehicle offered by Factory Five Racing starts at only $13,000. However, kits typically require enthusiast to have the knowledge and capabilities to assemble their kit cars, which often take between six and 12 months to build. Kit cars remain popular with enthusiasts because of their nostalgic appeal as well.
Source: "DIY Dream Cars," Business Week Magazine, www.businessweek.com
Oregon Adopts Emissions Exemptions for Specialty Cars
The Oregon Department of Environmental Quality (DEQ) has adopted new Low Emission Vehicle (LEV) requirements for 2009 model year manufactured vehicles. The adopted LEV standards will exempt newly built specialty vehicles from the state's permanent rules requiring new motor vehicles to meet California's tighter motor vehicle emissions standards. The exemptions are a product of weeks of consultation between the DEQ and SEMA. The new regulations will exempt assembled vehicles, replicas, street rods, and custom vehicles from Oregon's low-emission vehicle (LEV) standards that take effect in 2009 provided that these vehicles are used only for occasional transportation, exhibitions, club activities, parades, tours, etc., but not for general daily transportation. For details, contact Steve McDonald at stevem@sema.org.
Powerful Industry Fuels SEMA Membership
"With its traditional customer base of enthusiasts now being augmented by mainstream consumers who have discovered the huge range of performance and accessory options available for all types of cars and trucks, industry sales have grown at rates that are two and three times what might be expected. During the last 10 years the industry has had annual increases averaging 7.3 percent per year, while the total automotive aftermarket grew at an average annual rate of 4.4 percent, and the U.S. economy has increased an average of 3.1% per year," said Jim Spoonhower, SEMA vice president, market research.
The industry's strength is also reflected in SEMA's increasing number of member companies. For fiscal year 2005, the association's membership grew to an impressive 6,817 members. That is up 351 from 2004, following an increase of 739 from the previous year.
"Our industry has achieved strong growth over the past two decades. Sales are at an all-time high, and consumers are clamoring for specialty products. Success breeds success, but it also breeds competition. We continue to meet the challenge with innovative products, efficient distribution and expert installation," said Christopher Kersting, SEMA president and CEO.
Trade professionals and media are invited to visit the newly-opened SEMA Show registration website at www.semashow.com to obtain credentials for the 2006 event. Online planning tools such as the My Show Planner and TradeLink - a service that links buyers and sellers - will make doing business at the 2006 Show easier than ever.
Dodge Challenger Returns After 35 Years
Chrysler Group President and CEO Tom LaSorda announced that the Dodge Challenger will return to production after a nearly 35-year hiatus. According to Chrysler, the all-new Dodge Challenger will debut as a 2008 model in calendar-year 2008.
"We haven't seen this kind of spontaneous, passionate response to a car since we unveiled the Dodge Viper concept in 1989," said LaSorda. "But it's easy to see what people like about the Dodge Challenger. It's bold, powerful and capable. It's a modern take on one of the most iconic musclecars, and sets a new standard for pure 'pony car' performance."
The Challenger originally made its debut in the fall of 1969 as a 1970 model. It joins the Mustang and the Camaro as the official American musclecars of the 2006 SEMA Show.
Missouri Enacts Broad-Based Emissions Test Exemption
SEMA-backed legislation to exempt vehicles manufactured prior to 1996 from the emission inspection process was passed by the Missouri Legislature and signed into law by Governor Matt Blunt. Under the new law, motor vehicles manufactured prior to 1996 will only be subject to a gas cap pressure test as part of the state's biennial safety inspection program. In addition, newer motor vehicles which have not been previously titled and registered will be exempted from emissions inspections for the four-year period following their model year of manufacture provided they are driven less than 40,000 miles for the first two years. All motor vehicles driven less than 12,000 miles between the biennial safety inspection are also exempt.
Powered-up Saturn Sky Coming Soon
The '07 Saturn Sky Red Line, powered by General Motors Corp.'s highest output four-cylinder, will carry a base price of $27,895, Saturn Corp. says. The high-end variant includes the direct-injected 2L turbocharged Ecotec four-cylinder, mated to a five-speed manual transmission with self-adjusting clutch. The same engine powers the '07 Pontiac Solstice GXP and Opel GT roadsters. It produces 260 hp and marks the automaker's second application of direct injection in gasoline engines and its first use of the technology in North America.
All three vehicles will be assembled at GM's Wilmington, Delaware, plant.
The Red Line also comes with Stabilitrak electronic stability control, four-wheel antilock disc brakes and a limited slip differential.
Pontiac sets the '07 Solstice GXP at $25,995, including a $600 destination charge. The GXP delivers 47% more power than the base Solstice, GM says. Both cars hit showrooms in the fall but aren't likely to stay there for long. The base '07 Sky went on sale in March and already is sold out for the remaining six months of the calendar year. Through May, Saturn has logged 1,787 Sky sales in the United States.
Pontiac hoped to produce 20,000 Solstice roadsters for '06, its first model year on the market. But a slow production start up means only 18,000 will be built, GM says. Model year to date through May, Pontiac has delivered 14,464 Solstices in the United States, according to Ward's data.
Source: "GM Prices Sky Redline, Solstice GXP," www.wardsauto.com
Volvo that Runs on 5 Different Fuels
Lately there has been a lot of press regarding alternative fuels-gasoline versus E85, natural gas, etc. But one car maker has developed a concept vehicle that actually has the capability to run on five different fuels. Reported in a recent BusinessWeek article, Volvo has developed a prototype car, dubbed the "Multi-Fuel," that can run on any one of these five fuels: gasoline, E85, biomethane, natural gas (CNG), and hythane (10% hydrogen and 90% methane).
The Volvo Multi-Fuel prototype not only runs clean but also performs well, which earned the car several awards at the Michelin Challenge Binendum in Paris. The vehicle produces 200 bhp from its five-cylinder 2.0-liter engine, which will push the car from 0 - 62mph in 8.7 seconds. The car uses two fuel tanks: one for E85 or gasoline and one for hythane, biomethane or CNG. The engine automatically adjusts itself to the right blend of gaseous or liquid fuels, and the driver would simply press a button to switch between fuels. And as far as being clean, the two catalysts involved in reducing the emissions of prototype car could qualify it as a PZEV/SULEV in the U.S. market.
Volvo believes that no one alternative fuel will replace current fossil fuels. Due to differing local conditions in markets around the world, different markets may need different alternative fuels, says Volvo. Because of this, Volvo says that they have developed a car that can be powered by any of the five energy sources available anywhere in the world.
Automakers often use concept cars to test new technologies that may one day make their way into production cars. If the engine used in Volvo's prototype becomes used in production vehicle, it could change the way we look at alternative fuels.
Source: "One Car That Runs On Five Fuels," www.businessweek.com
Ford F-150 to Get 4.4l V8 Diesel?
Truck enthusiasts may be able to drive a Ford F-150 with a diesel engine in a few years, according to a recent Automotive News article. Ford is developing a 4.4-liter V8 diesel engine that, if approved for production, could find its way into the F-150 pickup in two or three years. Ford is well along the planning process for producing this diesel engine, which is a scaled up version of a 3.6-liter V8 that Ford began producing for Range Rovers at a plant in England. Ford says that they have wanted to put a diesel engine in a half ton pickup for years and was looking at outside suppliers to build the engine. The company now says that they wish to produce the engine themselves. The engine would be manufactured in the same plant in England that produces the 3.6-liter diesel and be shipped to the United States, and Ford says that they could produce up to 100,000 diesel-powered F-150s per year.
Industry experts have been indicating that the diesel market is poised for growth in the coming years. For example, Pierre Corriveau, Director of Marketing for Honeywell Turbo Technologies, the manufacturer of Garrett Turbos, says that "the demand for heavy duty pickups over 8,500 GVW continues to grow despite an overall flat industry." He expects the demand for diesel-powered heavy-duty pickup trucks to increase further over the next several years. How much will diesel vehicle volume increase? Corriveau forecasts an increase from 600,000 sold in 2005 to 1,000,000 diesel passenger vehicles around 2010.
Source: "Ford has an F-150 diesel in the works," Automotive News / SEMA Research and Information Center
THIS MATTERS TO YOU BECAUSE
- Modifications made to diesel trucks usually include exhaust, air intake management upgrades and engine computer management upgrades-all of which are meant to increase torque and horsepower, according to SEMA research.
- As the heavy-duty diesel pickup truck market continues its upward growth and new diesel passenger vehicles enter the market in the near future, opportunities continue to grow for SEMA members to enter the performance diesel market.
Need more information of the diesel market? SEMA members can download a copy of the 2004/2005 Diesel Market Study now on www.sema.org/research, which details consumer perceptions of diesels, technologies that affect diesel-powered vehicles and industry forecasts.
More Automakers Add High-Tech Transmissions
According to an article in USAToday, more automakers are adding CVTs (continuously variable transmissions) to their new models as a means to achieving better fuel economy. CVTs use belts, pulleys instead of planetary gears, and they enable a vehicle to achieve up to 10% fuel savings.
Audi has a CVT on all its sedans-the A4, A6, and A8. Audi claims that the CVT is very popular among its buyers. DaimlerChrysler is offering its second generation CVTs on its new Dodge Caliber, Jeep Compass and Jeep Patriot as an option, which it claims offers an 8% fuel savings. Nissan is already using its CVT in their Murano crossover, but it is now bringing it to its Maxima, Altima and the new Versa subcompact. Ford is also offering a CVT in some of its models. The company is using it in the V6 version of the Ford Freestyle for better fuel economy along with the Ford Five Hundred and Mercury Montego. Saturn tried to use a CVT in its Vue, but it returned to 6-speed automatic transmission because it says it is better for the vehicle in the long run.
Automotive enthusiasts do not always favor the new CVTs. In some vehicles, CVTs may cause high-revving at maximum RPMs, which can be unnerving to some drivers. DaimlerChrysler engineers have addressed this problem by adjusting its CVT to feel like the vehicle is driven in low gear as speed increases. Toyota uses a CVT in its Prius, but says that some drivers prefer to feel gear changes.
As more vehicles come equipped with CVTs, the specialty-equipment industry could face challenges in manufacturing performance parts that work with the new type of transmissions.
Source: "Automakers turn to gearless transmissions to improve gas mileage," USA Today/ www.automotivedigest.com
Chip-Resistant Paint Process From Corn Sugar
A new generation of tough, chip-resistant DuPont automotive refinish products, reinforced with newly invented bio-based polymers, could be available for use by specialty-equipment manufactures by 2008. The new coatings will be made using renewably sourced intermediate ingredients that are biodegradable and virtually non-toxic.
"This is truly revolutionary science," said John McCool, vice president and general manager of DuPont Automotive Refinish Systems. "The inherent performance and environmental benefits of these new sealers, primers and clear coats make them incomparable to anything on the market today."
DuPont is a supplier of finishing products for the automobile manufacturing industry as well as aftermarket products used in collision repair centers. The renewably sourced polymer content of the new finishes will enable them to last longer and better resist stone impact.
The bio-based polymers to be used in the new finishes are based, in part, on the science used by DuPont to create 1.3 propanediol (PDO), the key ingredient in DuPont Sorona, a new polymer now used to make fibers for clothing and carpets. PDO will be produced in a plant now being built in Tennessee by DuPont and its joint venture partner, Tate & Lyle. The plant will use a fermentation process to make Bio-PDO from corn sugar.
This new paint technology could be used by specialty-equipment manufacturers of automotive body panels, fascias, tonneau covers, or any other body part that could be subject to future chipping. Although it may beÊmore than a year before the new product becomesÊavailable to paint shops and manufacturers, knowing what products are coming could help one's business for future business decision-making.
Source: "New DuPont Car Finishes Will Be Tougher Due to Polymers Made with Renewable Resources," DuPont / PR Newswire
House Panel Passes Tire Fuel Efficiency Program that "Sounds Good" (But Isn't)
A tire fuel efficiency bill (HR 5632) was introduced last week and then quickly approved by voice vote in the House Energy and Commerce Committee. The bill would require the National Highway Traffic Safety Administration (NHTSA) to establish a consumer information program on the fuel efficiency of tires sold to replace those that came with the vehicle. The legislation contains a SEMA provision exempting limited production tires (manufactured in lots of 15,000 or less) from the program.
Despite the exemption, SEMA opposed the legislation over concerns that tire fuel efficiency initiatives will dissuade consumers from buying tires that have improved performance, handling or appearance features, based solely on a rolling resistance rating. The initiatives may also distract motorists from more important issues such as maintaining proper tire inflation pressures. In fact, a report recently issued by the Transportation Research Board, a branch of the National Academy of Sciences, acknowledges that correct tire inflation, misalignment and misbalancing are major contributors to rolling resistance.
The legislation would not override a similar California law passed two years ago that also included the SEMA exemption. California officials will probably begin drafting implementing regulations in 2007.
The House bill was introduced as part of "energy week," a high-profile demonstration that Congress is considering measures to conserve or produce energy. While well-intentioned, SEMA will remind lawmakers that tire fuel efficiency programs will not likely achieve the desired fuel savings but will divert motorists' attention from more crucial tire issues impacting safety. Details: Stuart Gosswein at stuartg@sema.org
Avalanche Owners Love Big Wheels
Based on a study done by Foresight Research, more Avalanche owners buy custom wheels that are 22 inches or larger than any other model of fullsize pickup.
Buyers of Tundra and Dodge Ram are more likely than all other owners to install 17-inch wheels. Ram buyers also install 20-inch wheels significantly more often than do others, while owners of Titans and F-Series show a significantly stronger preference for 18-inch custom wheels.
Source: Foresight Research 2006 Pickup Truck Accessory Market & Option Packaging study
New Engine Combines Turbo and Supercharger
Volkswagen's new TSI 1.4L DOHC I-4 is a gasoline engine that combines turbocharging with supercharging. The "beefed-up version" of the existing 1.4L DOHC I-4 has 170 hp at 6,000 rpm and a maximum torque of 170 lb-ft between 1,750 and 4,500 rpm, according to an article written by David Scott of WardsAuto.com.
A belt-driven mechanical Root's-type unit provides the supercharging by boosting pressure at low engine speeds. As the engine revolutions increase to about 2,400 rpm, an exhaust-driven turbocharger takes over. Charge air at 36 psi passes through the intercooler, and the supercharger then decouples from the crankshaft drive pulley via a magnetically actuated clutch while a control flap closes its channel to the inlet manifold. Basically, the two boosting components are installed in series.
When compared to the naturally aspirated version of the TSI, the advantage of the turbocharged/supercharged engine is evident. The standard TSI 1.4L available in the VW Polo is rated at 75 hp at 5,000 rpm, with a peak torque output of 93 lb-ft. In order to handle more than double the combustion pressure and more than double the power output, "engineers specified the TSI cylinder block and head to be cast in vermicular graphite iron, Volkswagen's name for compacted graphite iron, or CGI".
The biggest advantage of this motor is its ability to create so much horsepower and torque in a compact size. A TSI-equipped Golf in Europe has achieved 38 mpg on the highway, compared to 35 mpg in the standard Golf, and emits CO2 emissions of 178 g/km, compared to 192 g/km. Volkswagen has not yet confirmed whether the TSI will be used in North America. Some sources suggest that VW will introduce a subcompact model smaller than the Golf in the future, which will be equipped with the TSI.
Source: David Scott, "Impressive Power, Economy From VW Twin-Charged Engine," www. Wardsauto.com.
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