Today's rapidly evolving vehicle landscape can leave many in the specialty-equipment industry wondering where and how they'll fit in to a future of battery-electric and other propulsion alternatives. What challenges will aftermarket businesses face, and what new opportunities—if any—lay ahead? Fortunately, 2023 SEMA Show attendees will discover the answers to these questions and more in a newly expanded SEMA FutureTech Studio, October 31–November 3, in Las Vegas.

Formerly known simply as SEMA Electrified, the exhibit space is being rebranded to reflect the wide range of emerging vehicle propulsion technologies designed to address emissions and carbon-reduction concerns. Relocating to the Las Vegas Convention Center's (LVCC) Central Hall, the exhibit will go beyond battery-electric vehicles (BEVs) to wow attendees with the latest hybrid, clean hydrogen, compressed natural gas (CNG) and fuel cell solutions, along with promising new developments in "synthetic" biofuels.

"When you think about the evolution of the automobile and its performance over the last six decades, the SEMA Show has always been at the epicenter," said SEMA Vice President of Events Tom Gattuso. "It's the one Show where industry visionaries come together to shape not only how automobiles are enjoyed and accessorized, but also their future direction. The drive to innovate is part of our industry's DNA, and a hallmark of the SEMA Show."

The SEMA FutureTech Studio reflects SEMA's "tech-agnostic" stance toward achieving cleaner, better-performing vehicles. Recently, SEMA President and CEO Mike Spagnola noted that "SEMA prides itself on maintaining a forward-looking vision that embraces new technology, including EVs and other zero-emissions vehicles.

"The specialty automotive aftermarket has led the way on alternative fuel innovations, from replacing older engine technologies with newer, cleaner versions to converting older internal combustion engine [ICE] vehicles to new electric, hydrogen and other alternative fuels," he said, adding that while embracing such innovations, SEMA opposes excessive regulation that limits consumer choice. Rather, SEMA favors market-driven solutions to protect the environment.

"SEMA and the SEMA Show take a 360-degree view on meeting clean-propulsion challenges," added Gattuso. "That's why we think this special Show feature is going to be particularly impactful."

Category Growth on Display

SEMA Trade Show Director Andy Tompkins noted that the Show added the SEMA Electrified exhibit in 2019, and it has significantly grown each year since. However, moving the FutureTech Studio to the Show's Central Hall now puts it front and center for attendees eager to grasp new business opportunities.

"The Central Hall, like the name implies, is a hub of the Show," he explained. "So positioning the exhibit there is very strategic. It's a showcase that helps attendees to really understand what's happening in the category. They'll see some of the latest OEM offerings, how they're being accessorized, and how the industry is already pushing the creative envelope with new innovations, parts and services."

The square footage of the exhibit space, along with the sheer variety of vehicles and products displayed, will also increase for 2023, according to SEMA Director of Vehicle Technology Luis Morales, who is playing a lead role in organizing the section. "We were able to grow SEMA Electrified to 60 BEVs in 2022, but with the addition of hybrids and other alternative powertrains, the FutureTech Studio will be much more robust," he said. "We're also reserving certain booths around the feature area for companies specializing in this category. We want to showcase what this entire category really looks like for our industry."

"Clearly, we've reached a tipping point with electrification—at least 5% of vehicles sold are now BEVs, and that percentage is growing. They're here to stay. But there are still a lot of ICE vehicles out in the consumer world already. So how do we make those clean? That's going to be through alternative fuels, and we're going to highlight that too."

The space is also adjacent to the Show's Racing & Performance section, which is also appropriate, given the racing industry's recent moves toward carbon neutrality. "A lot of advances are being pioneered by the racing industry right now,"
noted Morales.

Morales further pointed out that hydrogen is an ICE alternative, which will make it an attractive choice for many specialty-equipment businesses already familiar with that terrain. "So we're going to showcase vehicles powered by hydrogen alongside hydrogen-fuel-cell vehicles. And then we'll also showcase advances in eFuels, from propane to biofuels and ethanol."

Tompkins meanwhile believes the electrification and alternative-propulsion category is opening a fresh avenue for the aftermarket to engage with major automakers. "Obviously, a lot of the OEMs owe their histories to ICE, but we and the OEM community understand that things are evolving. We all want to deliver our customers new vehicle innovations and marketable options. This section of the Show helps us all to collaborate on that," he said.

Advancing New Opportunities

Just as importantly, the revamped SEMA exhibit is a place for Show attendees to discover fresh opportunities.

"It's important to explore new technology because that's what so many of our customers are looking for today," Tompkins asserted. "They're more focused on sustainability and environmental impact. We can continue to power our industry for years to come if we understand this emerging market."

"Those attendees who can leverage this space can outpace their competition. They can start to think about new revenue streams or other innovations that might not be available today," emphasized Tompkins, adding that the Show's education program will also feature a number of future-tech-oriented seminars.

Carbon-neutrality has become a hot-
button topic, and many automotive events have recently popped up to grab consumer media attention. But for the aftermarket, the SEMA Show remains the one global trade event uniquely dedicated to the business-to-business connections that push the industry forward.

"The reason we're uniquely situated as a home for EV and future propulsion is that we bring together the entire gamut of the automotive process from engineering concept to finished application and everything in between," said Gattuso. "What's unique about the SEMA Show is we have OEMs, suppliers, builders, manufacturers, retailers—this whole ecosystem covering every angle of the automobile and its potential."

The State of The Industry

The mobile-electronics industry took a hit during the first year of the COVID-19 pandemic, with a 5% decline in sales worldwide in 2020, according to Fortune Business Insights, as supply-chain disruptions and a steep decline in new-vehicle sales both inhibited market activation. Since then, the industry has rebounded despite continued sluggish new-car sales, with a global market valuation of $295 billion in 2022 and a forecast to reach $415 billion by 2028, with a compound annual growth rate (CAGR) of around 7%, according to a 2022 survey published by Statista.

"We are coming out of a time where initial uncertainty yielded unforeseen opportunity," said Zach Luke, national sales manager for Rockford Fosgate. "The market flourished, and companies that were able to adapt and pivot found success, growth, and a resurgence of consumer interest. Consumers' spending options were narrowed, which focused them to engage and prioritize discretionary spending to categories that were maybe once not a priority on the 'wants' list but which had now become in demand as an edifying option."

"The market is, I think, kind of flat," said Jeff Varick, founder and director of business development and connected vehicle services for BrandMotion Solutions, adding that the market appears to be fragmenting into more granular niche segments. "You really have to know your customer and the particular use cases that customer has."

The need for onboard safety has never been greater. Auto-related fatalities rose again in 2022 to an estimated 46,000 deaths, according to the National Safety Council—a 22% increase since 2019, even though total vehicle miles traveled in 2022 were still below pre-pandemic levels.

"We have big problems on our nation's roads, a big national public health problem," Varick said. "A lot of it's due to speeding, drugs or drinking, and then cell-phone distraction. So solutions for those things are where I see the most activity right now in the safety end of the mobile-electronics market."

Meanwhile navigation systems and mobile TV and video cameras for automotive applications currently constitute a North American market size of nearly $1 billion, according to recent "SEMA Market Report."

Sales of premium audio systems have also shown signs of growth. "We have seen an uptick in sales of higher-priced, higher-end car audio amps and speakers in our Hifonics and MB Quart brands," said Sherman.

Consumer demand for higher-end audio has forced companies to continue to innovate. "Our continual development of upgraded in-car solutions keeps us on the cutting edge of technology as consumer expectations of performance, reliability, overall integration, and fit-and-finish are high," said Luke. "This allows us to 'push' our propriety technologies into the platforms where we're seeing our customers engage."

Looking at future trends, Varick sees electrification as the most likely new growth market. "I'm bullish on fleet and EVs, which are coming faster than shared mobility and faster than V2X. Electric vehicles aren't that different—it's just a different powertrain—so it creates another segment of the market to look at for opportunities."

As an example, Varick explains, "We have a pretty successful digital rear-view mirror that gives you a full video screen on the mirror. You push a button, and it goes back to being a regular mirror. But when it's a video screen, it's seeing behind you. Even if you have people in the back seat, it's just a camera pointing backward. So we just added a version of that that has a wireless trailer camera for RVs or for a trailer that you're towing, and a custom third brake-light bezel that watches the bed of your pickup."

Our sources emphasized the need for a robust presence across numerous social-media channels to optimize marketing.

"Most of our brands' ad dollars go to social now as it's the most targeted way to reach consumers," said Sherman. "Niche products require niche marketing, and this provides a clean way for us to market direct to the consumer and drive business to our retail and distribution partners."

Looking Ahead

Sherman echoed the sentiments of our panel with his near-term forecast. "We feel that business will be up in all segments, but not without challenges."

"Our objective is to continue creating demand by delivering industry-leading product and service," said Luke, "which enables us to continue capturing consumers open to buy."

The market is more fragmented now," Varick concludes, "so you need to find a market that isn't getting served by the OEMs or the general aftermarket."

"That's what started hot rodding," observed Classic Instruments COO John McLeod. "If you remember, it was, 'I can't afford anything, so I went to the junkyard and there were a lot of '32 Fords. Let's drag one home.'"

"They also made a lot more trucks than musclecars," Perkins adds. "The smog-era trucks still had V8s, whereas most of the cars went to V6s and four-cylinders. They're all rear-wheel drive, and they made each body style for years or even decades without real big changes."

"They're like Tri-Five Chevys in that sense," McLeod opined. "The funny thing is, when we were asking what's next, nobody saw trucks."

"We've seen a lot of growth in the '89–'98 old-body-style trucks as well," Grantmeyer said. I think it's kind of driven by what platform is affordable for people to start modifying. So, people are going where they can and a lot of that's—and I can't believe it—the OBS trucks. We started shipping after [the SEMA Show] and things have taken right off on us."

"You know, we're working on a kit for the OBS truck now," said Vintage Air President Rick Love. "That's going to be our next new bolt-in SureFit system."

The Bad

The consensus isn't quite as solid regarding the obstacles, a good thing since the supply chain was the unifying cry this time last year. "On our end, the supply chain stuff's starting to heal up," Love said. "Our lead times for systems are going down."

"Our biggest problem right now is getting small parts to finish harnesses," Overholser added, explaining the abundance of square-body part numbers languishing in barrels due to a shortage of ignition-switch plugs. "So now we're looking at having molds made at like $60,000, $65,000 a shot."

Ford's more recent discontinuation of a connector, and Delphi's decision to discontinue connectors that GM used in everything from 1955–1979, inspired Painless to explore other options, among them 3-D printing. "We had another company draw it and we bought a 3-D printer so we can make 'em ourselves." Make no mistake: vendors will eventually fill that market gap, but by then Painless will have found other problems to solve with its printing program.

The next pressing issue? "Labor,"
Grantmeyer lamented. "Getting people to understand that it's a 40-hour work week and that work is more than just showing up is a problem," he said.

"Well, we've got plenty of people in the plant as far as assembly workers, [but] it's hard to find someone who really wants to get into engineering," Overholser said. "We've got people in the tech department, but getting them there every day is a
challenge."

"I hate to say it because I like to dabble with youth engagement," said Amy Fitzgerald, HRIA select committee member and co-owner of Cool Hand Customs in Middleton, Wisconsin. "We have a high school and an alternative school across the street from us, and they just built a $12 million addition. It's like a small college campus. But there is not even one room for automotive. They don't even have a basic welding class. So, it makes it very difficult to get any of these kids involved."

"We're running multiple ads, word of mouth, and the usual," Sandoval said. "But it's…it's just frustrating. I don't know what else we can do."

But hot rodders are nothing if not creative. "In the sales staff, I've had great success getting enthusiasts out of the auto-parts industry," Grantmeyer said. "They got all the patience in the world: They can sit there face-to-face with somebody screaming at them about their broken car on a Sunday. They also have a good foothold in automotive knowledge."

On labor's heels is inflation. "With inflation, nobody's gonna take less on the bottom line," Grantmeyer said. "Everything's going up everywhere, and we're trying to manufacture a quality product for a fair price."

The frequency of those increases doesn't help, either. "Some of our suppliers have forgotten to let us know that there were multiple increases in like a six-month period," Fitzgerald said. "So, we find out we're undercharging for materials. Well, you can't just go back and fix that."

Overholser called price increases inevitable. "We're looking at doing something because of copper prices and so forth." But he refuses to go without a fight. "We're trying our best to keep the prices low and volume high." His rationale? "We can turn that volume into labor: the more the volume, the less overhead per part."

"And it is cool," he enthused. "Most people might not be ready for it right now, but they will be soon. There's that acceptance gap, but I think that gap is getting shorter with social media."

"I've noticed that as well because I wouldn't have been caught dead in something like a four-door sedan years ago," Love said. "But you look at the musclecars of today, Chargers, BMWs, Porsches, Audis and stuff like that. It doesn't matter to people that they have four doors."

"The '55 Chevys and stuff, I think that's kind of run its course for now," said Steve Szymanski, principal at Industrial Chassis and shop manager at Phoenix Hotrod Company. "The stuff we thought was cool in the '80s is coming back." Case in point: A Mustang II competed for the Don Ridler Memorial Award at the Detroit Autorama. "It's kind of a neat car. You know something like a Nissan Hardbody is going for the Ridler one day. And I'm serious."

Sandoval recognized it in broader cultural terms. "Hey, that Maui and Sons ['80s surf lifestyle brand] style is coming back too. I was shopping with my wife, and I'm like back in the '80s and early '90s with these clothes! Now's the time for that style to come back."

"I think you know [that] part of the allure of this whole hot-rod thing is nostalgia," Love said. "What was cool when you were younger still is cool when you're older, you know? My daily driver's an '87 Monte Carlo Aero Coupe. I guarantee you I get more reactions from people in that Monte Carlo than I ever got in my '39."

"That group that graduated between 1980–1990, that's the sweet spot right now," McLeod concluded. "Now that they have a little extra money, they build the cars that they liked as kids—it's the same thing we did with Tri-Fives and first-gen Camaros."

Summary

"You know, everyone's so worried about the industry declining and I just don't see any signs of that," Fitzgerald said. "Is this going to stay, or is this a fluke?" Grantmeyer asked. "That's a conversation we constantly have. Every economic indicator out there says that business should absolutely suck right now. And it doesn't."

"You hear that layoffs are happening or we're heading into a recession, or we are in a recession, or whatever," Mohr said. "Well, we're not seeing that."

But Love had something to ponder. "We all compete for discretionary income," he said. "You know, during COVID, people weren't going out to eat. They weren't going to concerts. They weren't going to football or baseball games. But, you know, car stuff was still there. And I think part of the boost we're enjoying is due to that. There was less competition for that discretionary income.

"And now all that stuff's back in place, now we've got to go back to competing for that limited discretionary income," he said. "And I think that's the biggest challenge yet."

You can never go fast enough." That's the motto of Alex Taylor—racer, builder, influencer, TV personality and successful business owner.

Starting at her father's shop as a child, Taylor learned the craft of building race cars at a young age. While still in high school, she began building her first car, a '68 Camaro that she raced the following year at Hot Rod Drag Week; at 16 years of age, she was the event's youngest competitor.

In the 10 years since then, she's managed to earn a bachelor's degree in marketing, run a 6-sec. quarter in her '55 Chevy 210, won back-to-back Roadkill Nights Hellcat Grudge Matches, and launched another career as the co-host of "Hot Rod Garage." Her business has recently expanded to an 8,000-sq.-ft. facility in Booneville, Arkansas.

We chatted with Taylor recently to learn more about this multitalented individual. What follows has been edited for clarity and length.

Show Preview: What's your latest project? What's in your driveway/garage/studio?

Alex Taylor: My latest project isn't a car—it's the shop I just purchased! I am currently in the process of remodeling it and setting up a space that will allow for race car storage, an area for content creation, and room for the ATR brand to grow.

In concept, wheels and tires seem simple enough. They're round, grip the road, spin on their axles, bear the load of a car or truck, and take a vehicle where it needs to go. What more can be said?

For the aftermarket, plenty more. The right wheels and tires enhance a vehicle's performance, but more than that, they also make a statement. Plus, they continue to advance in complexity and design year after year. These and other factors have made them a favored category for the aftermarket.

In fact, wheels and tires, along with suspension components, rank among the industry's healthiest product segments, according to SEMA Market Research Director Gavin Knapp. "We often say the wheel and tire segments are the 'gateway drugs' to our industry. They are great categories to be in because when consumers are spending, that's their starting point. It's a place where they can get the most bang for the buck in terms of customizing and personalizing their vehicles," he said.

That spending is especially strong among pickup owners, he added. "Whatever you're going to do with your pickup or 4x4, you're going to get the wheels and tires for it. And if you're going to lift it, you're definitely getting new wheels and tires to go with that lift kit."

Younger consumers with a penchant for sportier cars also find wheel and tire upgrades irresistible. "Whether you have a true performance vehicle and want its outside look to match what's under the hood, or if you just want your Camry to look like it's a performance vehicle, wheels and tires offer an ideal way to do it," explained Knapp.

No wonder that—despite some initial worries in 2020—wheels and tires managed to not only ride out the pandemic but grow in sales. (Of course, tires had the added advantage of being a perishable necessity. "No matter what kind of car you have, whether it's a gas car, an electric car, a truck, a van, or whatever, there's always a need for tires," Knapp observed.)

Sizing the Market

Just how big are wheels and tires with consumers? According to the "2023 SEMA Market Report," the wheels, tires and suspension category accounted for $12.21 billion in sales, with wheels and tires contributing $6.60 billion to that total. Breaking down the figures further, the performance and special-purpose tire market was sized at $2.84 billion, off-road and oversized tires at $2.18 billion, and custom wheels at $1.58 billion. All these figures represent robust growth over prior years.

In terms of tire sales, performance and specialty categories do well across nearly every vehicle segment. Not surprisingly, pickup applications comprise 64% of off-road and oversize tire sales, with SUVs coming in a distant second at 25% of sales. The bulk of purchasing for all tire types is done in-store, although DIY installations account for 17% of off-road and oversize tire buys, and 20% for performance and specialty tires.

Pickup applications also make up the highest percentage of custom wheel sales (31%), followed by SUVs (18%), midsize and large cars (13%), CUVs (10%), small cars (9%) and sports cars (8%). Nearly 40% of all wheel purchases are made for in-store pickup and install. Online ship-to-home orders account for 25% of purchases, and online orders for in-store pickup and installation comprise 28% of purchasing.

• Increasing competition among China, India, Thailand and Vietnam will likely help manufacturers contain costs while expanding production.
• Advancing technology and logistics will allow manufacturers to make and move product faster and more efficiently.
• The rise of EVs will spur wheel and tire makers to address issues associated with higher torque, increased wear and tear, rolling resistance, weight and quiet operation.
• Additionally, as EVs go mainstream, their owners will likely become more open to vehicle modification than they typically are now, increasing wheel and tire sales in this space.
• Green and sustainability regulations and initiatives will undoubtedly also exert greater influences on the choice and sourcing of raw materials as well as manufacturing processes.

With these trends taking shape, competition is already heating up, especially among tire makers. And that competition has made marketing more important than ever, said Roman Racela, marketing director for the Venom Power and Predator Tire brands, subsidiaries of Transamerica Tire based in Memphis, Tennessee. Both the brands target the coveted truck
demographic.

"Obviously, there are many tire companies [and] other brands that we have to compete with," he explained. "We need to make sure that we have a good product and that people know about the brand."

For Racela, that has meant strong print and social-media campaigns with a heavy dose of influencer endorsements and consumer education.

"The selection for tires on any vehicle is really important," he observed. "It really boils down to philosophy of use. If you're going to use it for a specific purpose, you have to match your tools to accomplish your goals to reach your destination."

Fortunately, in today's tire market there's something for everyone. Aided by advanced technologies, tire designs and compounds continue to evolve, delivering constantly improved handling, grip and wet traction, plus improved rock and debris ejection to boot.

"We're able to offer superior powdercoating and acrylics," said Jim Kruse, the company's senior account manager for aftermarket wheels. "As far as finishes go, we offer any color you can imagine in the rainbow."

According to Kruse, Superior Industries also boasts the only OEM-approved PVD chroming process in the industry. "We've learned there's a lot of interest in coming back to bright chrome, and the PVD option is very environmentally friendly," he said.

The company further specializes in a laser-etching process that can reach down through different color layers applied to a wheel to create daring, intricate line patterns in the finish.

In regards to the wheels themselves, "flow-forged" products continue to gain in popularity due to their weight savings compared with cast wheels and their lower price points compared to forged wheels.

"Flow-forging technically is one of the most up-and-coming [manufacturing techniques] that we see," said Nazzaro. "There are a lot of new brands coming out of the Asian Pacific sector that are doing flow-forging, taking that path and kind of rolling the wheel out. That is probably the most advanced product that's coming out because forged wheels were usually on the highest end of spectrum on price, with your cast, flow-form stuff on the bottom." Bridging that gap would be key to success, he added, "because end users get a really well-put-together product for a mid-level price."

Meanwhile, the wheel accessories market is also looking up, said Chris Buck, owner of Custom Wheel Accessories. Based in Murrieta, California, the family-run wholesale distributor is dedicated to supplying a full line of lug nuts, spacers, valve stems, wheel weights, and all the hardware needed to mount and balance wheels.

Asked what the current big sellers are, Buck replied: "OEM, Ford and GM lug nuts are very hot, but probably our hottest commodity are aluminum spacers. Whether you're spacing the wheels out for a more aggressive look, or if you have a set of wheels you want to put on a vehicle of a different bolt pattern, we offer almost 400 SKUs of just spacers and adapters alone."

"Some of the old vintage stuff has definitely been dying off—hubcaps, knockoff spinners, things of that nature," he continued. "But we're trying to bring that stuff back because they've been phased out over time and there is still a demand for older vehicle stuff [like] wire wheels and
spinners."