While many segments of the automotive aftermarket are slowing down, the four-wheel and off-road market seems to be stable, thanks to new trends, new marketing strategies, and the passion of die-hard dirt enthusiasts.
According to a study by the Specialty Equipment Market Association (SEMA), it's a market on the rise. While sales are down in many segments, companies Parts & People spoke with recently were generally upbeat about the market as they addressed topics such as the growth of the segment, product trends, significant developments, challenges, opportunities, and the affect of land-use and regulatory issues.
"This past year has been a tough one without a lot of great stories to tell," 4 Wheel Parts/Transamerican Wholesale district manager Dave Rittenhouse said. "All segments of the business have seen similar difficulties. One of the bright spots is what we see with our online business. Internet sales have grown this year by double digits."
The off-road market has been expanding over the last few years, with sales growth in some areas, as well as increased consumer and competitive participation in off-road racing, rock crawling, and show events. "Anything that relates to fuel savings has done well this year," Rittenhouse said. "Lower priced products have done better in most categories. Suspension systems have had a tough time this year, but smaller leveling kits have done well holding sales year to year despite the double digit plunge in the category."
One such product is the LIFTmachine adjustable leveling kit from ProRYDE Suspension Systems (Minnetonka, Minn.), winner of the Best New Off-Road/4-Wheel Drive Product award at the 2008 SEMA Show in Las Vegas. "This product is like no other aftermarket leveling solution," ProRYDE Account Manager Shawn Leibfried said. It is easily installed on top of the strut, so there is no spring disassembly or spring 'preload' and provides front, back, and side-to-side leveling.
A somewhat different category mix is doing well for Southern California retailer Off Road Warehouse (ORW), according to Director of Operations Jay Langley. "Shocks, safety equipment, tires, wheels, lighting, Rhino and Razor UTVs and parts, communications equipment (radio and intercoms), and suspensions are proving popular." ORW Purchaser John Brindell adds that off-road racing and specialty racing products are also good categories for the company.
As off-road racing matures, new safety rules are being added that also help the aftermarket. "As we get more advanced in safety areas, it seems to be an ever growing area," Langley said. "Racers will race and sanctioning bodies make rules to keep them safe which causes new equipment to be needed."
Rittenhouse sees that economy and alternative fuels (like propane) will be big winners in the coming months and years. "The customer that buys a real off road vehicle, for instance a Jeep that is used to drive on trails, will not change so much what they buy, but maybe how much and how often due to the economy."
In addition to traditional four-wheel and off-road shops and retailers, a number of opportunities also present themselves to general repair shops, collision repair shops, jobbers, or other non-off-road specialists that are willing to pursue them. "Especially in axle and drive train repair and installation," Rittenhouse said. "Also, for those that maintain or install tires, there is a real opportunity to sell into the specialty sizes that many tire shops choose to shy away from."
Langley agrees that general repair shops can pick up additional business from this segment. "But it will always be a question of their focus. Traditional OE repair shops charge a much higher rate than shops in the aftermarket. We make 20 to 40 percent on a part, OE repair shops make 50 to 100 percent on parts in addition to doing flat rate labor which allows for much greater profitability."
"New vehicles, including SUVs, are showing some popularity with off-road enthusiasts, but traditional vehicles, including Jeep and all light trucks, are still the staples of the market," Rittenhouse said. "Shops that are currently providing sales and service for vehicles like the Toyota Tacoma and Tundra will profit from adding some off-road parts accessories."
"The SideXSide (two-passenger off-road vehicle) market is also growing rapidly with more companies making vehicles. Many retailers are now selling the vehicles and parts," Langley said. "I see many service and repair shops and specialty companies catering to the SideXSide market."
Working with local four-wheel and off-road clubs is another great way to penetrate the market and build your customer base. Many people see Southern California as the birthplace of off-roading. One of the premier off-road clubs in the area is San Diego 4 Wheelers, founded in 1990. Currently the club has just over 100 members who are active in local and regional off-road events as well as working with companies and manufacturers like Off Road Warehouse and BFGoodrich Tire for the good of the sport.
The club also supports various local charities and off-road associations, brings out vehicles for grand openings of local retailers and sets up booths at off-road events and shows like the Off Road Business Association (ORBA) Off-Road SuperShow at the Del Mar Fairgrounds.
Recently, the club was awarded a $4,000 grant from BFGoodrich Tires for the restoration of the aging Information Kiosk at the Black Cat trail in Superstition Mountain near San Diego, honored by BFGoodrich Tires as one of the 2008 Outstanding Trails.
Club Vice President Lloyd Savoie said that only about 15 percent of their members are true DIYers, with about 60 percent handling most of the work with help from club members or other mechanics. He also notes that what their members look for in a shop is quality work and knowledge of aftermarket products that work well together.
ORBA is also very committed to the four-wheel and off-road market and keeping trails open by working with the Bureau of Land Management (BLM), land managers, federal lawmakers and law enforcement. "We have also partnered with other off-road organizations to form EcoLogic Partners, Inc.," ORBA Media Relations and Land Use Director Megan Grossglass said.
"The bad news is that with the growth of the sport and industry there are many more public land users, which brings more visibility to the issues and problems. The good news is that with a louder voice, unity, and responsibility, groups like ORBA must be funded and supported with more than just a pat on the back," Grossglass said.
"If we all realize that there is only so much each of our markets can sustain in time of slowdown and we pay attention to our own businesses we will all come through this and be ready for the growth that will come," Langley said.
