From the 2019 SEMA Show
If you couldn’t get into a SEMA Education class—or if you were too busy with other show obligations to even try—Diesel World Insider has the ‘Cliff’s Notes.’ Classes this year were first-rate and sometimes standing-room-only. A few times, fire code regulations shut classrooms to people who wanted to attend. They were that good.
In the coming weeks, we’re bringing diesel businesses the most important takeaways from this year’s SEMA education sessions. We’ll delve into the economic forecasts, market research, and digital marketing trends that can help you forge a strategic plan for your diesel business in 2020 and beyond. We’ll also bring you practical how-to tips for pricing, social media, online reputation management, entrepreneurship, hiring, and retention.
Here’s a quick digest of what we learned:
The economy will slow a little in 2020. We’ve had the longest period of economic expansion in US history, observed Christopher Thornberg, PhD, founding partner at Beacon Economics. Right now, we’re seeing a leveling off that will continue into 2020. In the US, we’re experiencing a slowdown that happened about six months ago everywhere else in the world, Thornberg told SEMA attendees. Corporate tax cuts in 2018 artificially postponed the slowdown for the US. They didn’t prevent it, Thornberg explained.
This slowdown won’t be a full-blown recession, he emphasized, despite the “miserable-ism” we hear in mainstream media. Gross domestic product (GDP) will grow by 2 percent or more in 2020. “It’s going to be a good for vehicles,” he said. “Simple as that.”
To prepare for the slight slowdown in growth, build up your cash reserve, reduce unnecessary inventory, and make sure you have a strong plan to help you gain market share in 2020 as the slight slowdown surprises your weaker competitors. The economy will trend up in late 2020 and into 2021, economists predict. You should position your business now to reap the full harvest of 2021’s upswing.
Labor shortages and talent wars continue full force. Economic growth will slow down only a little in 2020—and not nearly enough to loosen the tight labor market. Wages will continue to rise, and other companies will continue to headhunt your best employees—even if your employees themselves aren’t actively looking. You’ll need to do everything you can to recruit and retain A players.
Pickups and SUVs offer the most robust opportunities for the aftermarket modification business, said Gavin Knapp, director of market research at SEMA.
The Overland Market: “There’s gold in them thar hills.” Good and services that focus on truck performance have found an emerging, affluent enthusiast market. Overlanding is no longer just for hardcore enthusiasts trekking across Africa, said analysts presenting at the Overland Experience, held at SEMA with Overland Expo. We’re seeing more folks who are overlanding closer to home during weekends and vacations. We’re also seeing what one panelist called “accidental overlanders,” people who off-road not just to off-road, but to pursue other outdoor adventures such as hiking, kayaking, or camping.
Many people flocking to the growing overland market are new to the truck enthusiast space and have plenty of money to spend. It’s not unusual to see someone spend $70,000 on modifications within six months of buying the vehicle. There may be opportunities for diesel businesses, given that popular overland vehicles such as Jeeps and Land Rovers sometimes have Diesel engines. We spoke to one diesel repair and performance shop that’s strategizing how to cater to the overland market.
If you’re business isn’t as profitable as you want it to be, it’s time to look hard at your pricing. Some items and services might be higher margin than you think, said SEMA instructor Tom Shay. We’ll be highlighting his practical, how-to pricing tips in a future post. In the meantime, check out his handy tools for analyzing pricing at your diesel business.
Digital algorithms are changing quickly. Your digital and social media need to change quickly too. “A few years ago, Facebook and Instagram were a free, easy way to gain market share. Now it’s mostly pay to play. But if you’re smart, you can still use social media as an organic lead generation strategy, said Jennifer Cario of SugarSpun Marketing. Think quality, not quantity, and make sure you’re using newer tools like Instagram Stories. We’ll cover tips from Cario and other digital marketing experts who taught SEMA Education classes in later posts.
Business owners: If you don’t have a succession plan or exit strategy, you need one. It’s a seller’s market, said SEMA instructor Gene Marks. If you plan to sell your business within three to five years, you need to take steps to maximize its value now. We’ll cover tips from Marks and other M&A experts in subsequent issues of Diesel World Insider.