We had the opportunity to spend the day with Peter MacGillivray, the VP of Communications for SEMA, commonly known as the Specialty Equipment Marketing Association. These are the people who make all the aftermarket parts for car hobbyists, new or old.
Mr. MacGillivray gave an historical perspective on the car restoration industry, and that the SEMA trade show started under the grandstand at Dodger Stadium in Los Angeles in 1967 and catered to hot-rodders. It grew over the decades into the huge, yearly trade show in Las Vegas where over 3000 exhibitors will attend the 2014 event in November. "In 1967, 33 steaks were prepared for the exhibitors' dinner and several were left over. This year we'll serve over 3000 steaks," said Mr. MacGillivray. "This is a passion-based business."
He went on to detail the car restoration marketplace, demonstrating that the "car guy" youth market (the 16-24 age group) is the largest consumer bubble that has ever existed in the U.S. The youth market today is roughly divided into three areas: accessories account for 57% of the total; wheels, tires and suspension add up to 24%; and racing accounts for about 18%. "This youth market is influential, has discretionary income and is catered to by the very foundation of the SEMA core members. A completely different language is spoken by the youth group and we must remain in touch," said Mr. MacGillivray.
He broke down the market by spending habits, type of accessories and stressed that the industry is now global, not just centered in the U.S. He showed that over 30% of buyers spend $1000 on their vehicles while 25% spend over $5000. Accessories account for over half of these expenditures and performance parts account for 28%. The remainder includes suspension, restoration and a host of other specialty items. "Looks are critical," said Mr. MacGillivray, "today's youth want to personalize everything in their lives."
So much for the youth market, I thought, but what about the car restoration market? I asked Peter for some definitive numbers on what people like you and me spend on car restoration parts and supplies each year. He was ready with the numbers, much to my surprise and delight. The bottom line for that segment is $1.9 billion.
$1.9 Billion! Now that's a big number even at today's inflated prices, but when you look at how the money is distributed it becomes quite small. If you divide that figure by the number of makes/models of cars restored — even just the popular ones — it dwindles down quickly. That means the suppliers of repro parts are small businesses that make relatively small margins. Even the well-known suppliers like Eastwood and Coker Tire are relatively small companies. Hemmings, the mammoth car restoration hobbyist publishing empire, grosses a few tens of millions each year, but we'll bet that the company that supplies your door handles and trim parts only grosses a fraction of that amount, and the net profits are in the high 5-digit or low 6-digit levels.
The point we're making here is that those of us who derive some income from car restoration hobbyists are in this for the love of the subject, not to get rich. Although we'd all love to do so, but it's not likely to happen unless we start catering to the compact-tuners and under-the-car neon light trade. No way. We'd rather have fun and maybe make enough along the way to help us to continue restoring our cars.