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September 27, 2005 02:00 AM

Speed shops waning as specialty parts sellers

Tire Business Staff
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    DIAMOND BAR, Calif. (Sept. 26, 2005) — Forget about two- or three-step distribution when it comes to automotive specialty equipment.

    Because of the highly fragmented nature of the industry, how those products get from manufacturer to end-user can be extremely varied, according to the Specialty Equipment Market Association (SEMA). That's due, in part, to the various ways consumers approach working with their vehicles.

    One thing is certain: Speed shops, once the foundation of the automotive specialty-equipment industry, “are drawing fewer and fewer customers and appear to be going the way of the dinosaur. Over time, speed shops have lost all but a token amount of the market share they used to command,” SEMA said in a recent survey ranking by sales the retail outlets selling specialty equipment.

    As the industry's products become more mainstream and accessorization more prominent, specialty installation outlets have taken a more dominant role in the industry, SEMA reported.

    “These are typically small operations that may involve one to a handful of locations,” SEMA said. “Some are very specialized, while many work with a wide range of products. In some cases, these shops appear to be repair garages or tire dealers, but their real emphasis is in-stalling accessories and appearance products.”

    Retailers in the U.S. are a key segment of just about every industry, the Diamond Bar-based trade association noted, with the top 100 retailers in 2002 generating more than $1.24 trillion in sales.

    “Clearly, some types of retail outlets have very little impact on the sale of specialty automotive equipment,” SEMA said, “but being aware of the size of these companies and the influence they have on our culture and society is important to the industry.”

    Based on data from the SEMA Research and Information Center, specialty product/installation outlets were at the top of the specialty equipment sales heap, ringing up $2.46 billion in sales at the manufacturer level to command a 22.5-percent market share, compared with $1.13 billion in sales in 1997 for a 16.5-percent share.

    Automotive chains ranked second with $1.83 billion in sales for a 16.7-percent share vs. sales in 1997 of $8.7 million.

    Mail order firms came in at No. 3 with $1.62 billion in sales for a 14.8-percent market share.

    Tire dealerships ranked ninth based on sales—just below speed shops and performance retailers and above wholesale clubs—with $448.4 million in sales in 2004, according to SEMA.

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