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Consumers shell out to boost cars' looks, performance

Automakers' troubles notwithstanding, so-called aftermarket businesses seem to be thriving without big discounts.

November 06, 2002|John O'Dell | Times Staff Writer

The economy has been soft all year, pummeled by plunging stock values, politicians' war talk and consumers' fear of winding up at the short end of the stick.

The mainstream auto industry has camouflaged its problems by forcing up sales volume with no-interest financing and delayed payment plans that represent thousands of dollars' worth of discounts.

But an often overlooked part of the industry -- the thousands of so-called aftermarket businesses, most of them small, that design, make, sell and install automotive appearance and performance equipment -- seems to be doing quite well without extraordinary discounts.

A report issued Tuesday in Las Vegas by the Specialty Equipment Market Assn., trade group for the industry, says appearance and performance equipment represented $25.9 billion in retail sales last year, up 4% from 2000, and is expected to top $26 billion this year.

"That's more money than was spent on video games and movies on DVDs and VHS tapes," said SEMA spokeswoman Rosemarie Kitchin, citing a recent economic survey of the video game and recorded movie retailing industry by ACNielsen Corp.

The automotive aftermarket industry's growth in 2001 far outpaced the hike of barely 1% in the nation's overall economic output and was fueled mainly by spending among the generally young enthusiasts in the sport compact market, said Jim Spoonhower, market research director for Diamond Bar-based SEMA. The group represents 4,600 companies worldwide, 29% of them in Southern California.

Last year's retail sales, Spoonhower said, were divided into three broad groups:

* Accessories such as upholstery, vinyl graphics, custom instrument panels and steering wheels and some audio and entertainment equipment, which accounted for $14.7 billion in retail sales, up from $13.8 billion in 2000;

* Suspension components and custom wheels and tires, which accounted for $6.3 billion, up from $6.1 billion; and

* Performance equipment, including specialized engine management controllers, superchargers and high-performance ignitions, which accounted for $4.91 billion and represented the only decline, down from $4.98 billion in 2000.

The performance segment was off a bit, Spoonhower said, because the engine control computers in many newer cars can override add-on equipment, eliminating its performance-boosting benefits.

As a result, he said the market for such equipment is shrinking and will continue to shrink until aftermarket firms develop more engine control chips that can override the factory tuning specifications. Such chips exist only for a small fraction of the car and truck models sold in the U.S.

"But even with the decline in performance sales, our industry continues growing," Spoonhower said.

The sports compact market, which supplies performance parts and appearance equipment for cars such as the Honda Accord, the Ford Focus, the Dodge Neon and the Mitsubishi Lancer, racked up $1.5 billion in sales last year, a 25% increase over 2000, and is expected to hit $2.25 billion this year, Spoonhower said.

One example of the industry's growth is the ever-expanding SEMA trade show taking place this week in Las Vegas.

The four-day show, which is not open to the public, occupies 2 million square feet at the Las Vegas Convention Center, up from 1.5 million square feet last year, and has almost 1,600 exhibitors, up from just under 1,400 last year. More than 400 of this year's exhibitors are at the show for the first time, Kitchin said.

Major automakers have discovered SEMA and in the last five years have become significant players at the annual trade event.

This year, for example, Chrysler Group is the official vehicle manufacturer, and there will be more than 125 customized Chrysler, Dodge and Jeep vehicles scattered around the show floor, along with scores of vehicles from other manufacturers.

Chrysler, Ford, General Motors, Honda, Toyota, Nissan, Hyundai and Kia all are scheduled to make major product or marketing program announcements at the show.

*

John O'Dell writes about the auto industry for Highway 1 and the Business section. E-mail: john.odell@latimes.com.

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