SEMA Dispatch 1: Most Aftermarket Buyers are Under 40
“The bulk of our customers” are Millennial and Gen Z, according to SEMA
WELCOME TO a paid-only edition of Race Day with news, notes and rumors from the SEMA Show in Las Vegas. It’s about where consumers are spending their money, and how companies are trying to reach them.
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In today’s email:
Tire Companies are M.I.A.: SEMA all-stars no longer
Who’s Buying Parts: The surprising truth (unless you read Race Day)
Recaro is Still Here: Two new products are set to make a splash
👇 And now: Here’s this week’s paid-access article:
Where are the Tire Brands?
SEMA was once loaded with elaborate displays from tire companies. But this year, those brands are missing.
Usual stalwarts like Falken, Nitto, Michelin and Pirelli are no-shows in 2024. They may be reacting to an industry slowdown, where tire companies were hit particularly hard. Only 25-percent of tire brands reported sales growth in 2023, according to a SEMA Market Report. The rest were flat, or down.
Tire companies are susceptible to slowdowns. Most of the aftermarket is powered by passionate enthusiasts who buy parts for fun. But tire companies count on everyday drivers who simply need rubber to get from Point A to Point B. Tires are repair tools for most people. And after a slow 2023, plus rising interest rates and economic stagnation in 2024, consumers stretched out the life of their tires. Plus, work-from-home has reduced their commutes. That spells bad news for tire companies.
The most notable exception is Toyo. Each year it hosts the Toyo Treadpass, an outdoor arena of outlandish custom builds. Treadpass is back and a hot ticket once again. It’s just surprising to see them (mostly) standing alone.
Feature Article
Recaro Leans into Overseas Demand
I had a chance to meet up with Emil Kreycik, president of Recaro Automotive, the definitive seat manufacturer for enthusiasts. He told me that, like the rest of the industry, the company’s customers are getting younger. They’re adapting the product line to match.
At SEMA, the big news was the upcoming release of two new seats. One is designed for motorsports, called the Recaro Pro Racer RMS, and one is designed for style and comfort on the street, called the Recaro RCS. The company is preparing to open orders soon with deliveries to begin early next year.
The interesting thing about the RMS and the RCS is where they are built. Both seats are manufactured in Japan, and sold for the Japanese market. Here in the U.S. there’s been increased demand for products from Japan, specifically, and it was a coincidence that these two Japanese products fit nicely into the existing product lineup in the U.S. It’s the first time Recaro Automotive has made Japanese-built seats available to U.S. customers. Kreycik predicts there will be more to come.
“We want to be really cognizant of consumer shifts,” he told me. “They’re looking at the stuff and saying, ‘Why can’t we get it?’ And so we’re going to solve the problem and say now you can.”
It was a challenging year for Recaro. Over the summer its division in Germany, Recaro Automotive GmbH, filed for bankruptcy, leading to false media reports that the entire company was closing down. The truth is exactly the opposite. The bankruptcy is helping Recaro in Germany reorganize and get back on his feet, while Recaro Automotive in the U.S. is independent from that situation and unaffected. Kreycik says Recaro Automotive is currently seeing double digit growth over last year.
The RMS and RCS join a product line that draws a lot of attention at SEMA. At last year‘s show in 2023, the company launched the CF Podium, an extremely lightweight seat with wild styling. It’s also extensively constructed in carbon fiber for additional strength and weight savings. The CF Podium is a flagship product, important for establishing brand credibility as much as driving sales. But together with the new offerings from Japan, they help to shore up Recaro’s reputation as a segment leader.
SEMA doesn’t provide definitive statistics on the seats segment of the industry. In its industry reports, seats are lumped in with upholstery and other interior products. As defined, that segment saw only marginal growth in 2023 compared with 2022. But like a lot of segments across the industry that saw a slowdown in 2023, established premium brands like Recaro, or Liqui Moly in engine oil and CSF Radiators for performance intercoolers, don’t have the same challenges. They cater to well heeled customers who are largely unaffected. And continuing to spend.
Recaro is illustrative of established aftermarket brands that could emerge from a sluggish post-pandemic environment with expanded product offerings, and more consumer confidence to supercharge sales. The reelection of Donald Trump earlier this week, plus the promise of lowered federal interest rates, created noticeable economic optimism among showgoers on the convention floor.
For now, Recaro is focused on catering to its base, which is growing younger and has an affinity for products from Japan. It’s a case study in how legacy brands can not only adapt to a new generation of enthusiasts, but learn their habits and preferences in order to thrive.
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Most Aftermarket Customers are Under 40
If you’re buying aftermarket parts, you are statistically likely to be younger than me. That’s according to SEMA Director of Research Gavin Knapp, who outlined this trend in a presentation Wednesday on the state of the industry.
“The bulk of our customers, more than half, are under 40,” Knapp said.
“When you’re young, whatever money you have, you spend. And you spend it on things you care about.”
If you’ve read either of my books, or even catch the occasional newsletter, this will come as no surprise. Much of the focus of my reporting over the last five years has been driving home the point that the buying power of Millennials is largely underestimated. Now, SEMA has numbers to back it up.
Millennials, and even younger buyers, aren’t just setting trends and telling everyone what’s cool on social media. They’ve become the chief economic drivers of a $50 billion industry. The rise of direct-to-consumer (DTC) sales channels, and using social media as a tool to sell to a generation of digital natives, have no doubt played a role. I’ll continue to explore the key drivers as time goes on. In the meantime, there’s no doubt we’ll see brands adapt accordingly.
Next Time…
A.I. is finding its footing
Skyline GT-Rs are everywhere
Cool debuts from friends of Race Day
What I drove out to Vegas
Stay tuned.
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