The Globalization of the Automotive Performance Market

[AAA240SX]

This article was yanked from Turbo Mag from this month. I'm citing it so I don't get sued. Newayz, this is gunna be a long post. But for wut it's worth I saw it as an interesting article. So for those who care about our aftermarket sources: please read and reply with your thoughts. For those that r too lazy to read, then .

Turbo & High Tech Perf. Sept. 2004 Issue
By Robert Choo

"The food you eat every night is boring when an out-of-towner comes to your house, the everyday entree suddenly seems like a local delicacy. Our day-to-day activities seem mundane, yet to an outsider with different life experiences, sometimes they're of noteworthy interest.

This phenomenon occured when I had dinner with the president of an overseas performance product company. We were discussing the American automotive enthusiast market. When 1 discusses one's own backyar, it's a whole different feel. Suddenly, I was forced to analyze the market from an outsider's perspective.

It was an eye-opening for me to hear the perception of the American aftermarket arena by overseas companies. The major impression? Americans are cheap. Let's just say we're bargain hunters--always looking for a good deal. While our neighbors across the pond are used to paying retail, few in the US are willing to do so. This is especially the case in California.

This poses a problem for foreign companies interested in setting up shop in the US. It's costly to relocate, open shop, import the hoods, pay tariffs, and then turn those goods around for a profit. What those companies would need to charge to make a profit is more than what Americans are willing to pay.

Why are American buyers used to getting discounts? It's even hard for local companies to make a profit in this competitive market when every corner shop is offering its customers prices that area 20 to 30% off retail. This is why many performance shops open for maybe six months and then call it quits. The US market is very cutthroat. Many retailers are willing to sell a products at cost but make their money back on the installation of the product.

This practice discourages overseas manufacturers from coming to the US. In order for an industry to thrive, the shops must uphold their retail pricing--this enables them to profit from the sale of a product and it promotes fairness in the business community.

From the manufacturer's viewpoint, growth in the American market means more business for everybody. This price-undercutting trend may be the downfall of the industry if it squeezes out innovative small businesses. I'ts also another reason European and Asian companies can't afford to do business in the US, so consumers here are missing out on a lot of cool, power-producing products.

Not only are most US consumers unwilling to pay much for individual parts, but enthusiasts are also unwilling to invest much into their entire project. While some "show ho's" drop $60K on their rides, the average US customer won't pay more than 10k or ever 5k for vehicle mods. This is a problem when most complete turbo kits will run $5k alone.

In Japan, automotive enthusiasm is more of a lifestyle. It's accepted that an enthusiast will spend as much on the mods. as he did on the car. People are more willing to spend big bucks on aftermarket products, which fuels the industry. But while both the American and foreign aftermarket industries are generating multi-billion dollar revenues, you must look at the size of the customer population in Japan vs. the US. You'd expect, given this disproportionate ratio, that the US would generate greater sales; in fact, it's to the contrary.

Another discrepancy between the US market and some foreign markets is the proliferation of knock-off goods. The problem companies have in the US is that when their brand spanking new product hits the streets, there are 3 other campanies going to the same factoryin Thailand to buy the same product, re-badge it, and sell it grossly under the establishedmarket value.

Trusted brand names are no longer a positive in the above-mentioned penny-pinching market. Cheap fakes will vastly outsell the oftentimes better-quality original product. This again limits the number of overseas companies willing to sell their wares. Brand loyalty is rare here; buying whatever is cheaper is the norm.

On a different occasion, I was speaking with the pres. of a large Japanese aerodynamics company who was interested in the US market. I told him if he tried to sell his groundbreaking, high-quality body kits in the US for full price, he'd quickly be undersold by a knock-off company that would copy his kit.

In Japan, it's a different story. According to him, it's bad business to steal someone else's product in the Japanese Domestic Market, a problem that is a surprise when Japanese companies set up shop on our shores.

While the 3 factors: retail price, consumer lifestyle, and knock-offs are the major differences outsiders have told me characterize the US market, there are likely countless more. The negative nature of the dynamics is worrisome.

I like to think there are positive, novel aspects to the US automotive performance industry. Either way, many off-soil companies are hesitant to jump into out shark-infested automotive waters. In the end, thanks to knock-offs and price wars, the consumer loses out on all the wonderful goods that are available overseas."

I thought this article was very significant in seeing the future of our own lifestyle and our cars (what we love...).

I have my own 2 cents, but I want 2 see wut you all think of this issue b4 i say something.

[citizen]

capitalism works a little too well sometimes...

[HaLo]

that is so true... !

[240Stilo]

American cheapness has also brought up a lot of DIY car stuff. Then again there is a lot of DIY stuff that goes on in America. Such has DIY plumbing, electrical, turbo kits, even ran into a DIY filming equipment. Seems people are tired of retail and rather depend on raw material and a little skill to save a few bucks. And there's nothing wrong with making your own shit, well as long as it works.

[mk20116]

i guess no one's gonna complain about why we don't get such great stuff here.

[TheSnail]

I'll just buy the second hand stuff from Japandy, fuk what ya heard, They can keep their APC crap, I'll buy the parts from a Japanese junk yard.

[TurDz]

seems like the general attitude in the US is, "whatever works!" japan seems to have a higher standard for quality overall. not saying that the US doesnt have any quality products, but it's a lot diverse here in terms of build quality and customer needs.

[AAA240SX]

Personally I think the article is right. But, I'm a DIY person too...Installation wise.
I shell out nasty cash on auth. parts, but rather install myself for more experience with my car.

[kandyflip445]

Originally Posted by AAA240SX

Personally I think the article is right. But, I'm a DIY person too...Installation wise.
I shell out nasty cash on auth. parts, but rather install myself for more experience with my car.

That's how I am. I also feel it's important to support a shop if it means spending a few dollars more it will pay off in the long run.

[PBucch]

Originally Posted by TheSnail

I'll just buy the second hand stuff from Japandy, fuk what ya heard, They can keep their APC crap, I'll buy the parts from a Japanese junk yard.

if dumbasses would stop buying cheap shit, and vendors would stop stealing ideas, making cheap shit, then you would see better quality and better prices. The Market would also broaden and be more inviting to innovative companies

[Hawd]

well it aint going to happen so keep dreaming.

[mad s13]

i support my local shop too..even though i get a discount on parts they still get to make thier money off of me..and i have spent more on items there than i could have gotten them online, but when i buy from them they stay in buisness, therefore i have a place to hangout every day after i get off of my 8-5 monkey suit job. and me buying from them gives me access to the lift and air tools..hell i wasn't charged for using thier shit for 5 days when doing my sr swap. now about americans being cheap..yep they are..thanks to ebay and apc, and the many other knockoff places selling stuff to honda owners and now nissan owners for rediculously lower prices..i've even seen things selling for lower than what my local shop who has a buy in with some distributors can buy shit for...its stupid. i'm one to pay for the high shit cause I like quality and fit, and the trusted name you get from high end parts..

Gray

[420sx]

yea i feel ya on that one bro. quality cant be cheap (to an extend of course).

quality kicks APC in the ass. a big nasty celulite covered one...

[TheSnail]

Hey, I'm flying to GreenVille NC tonight, Stay with some friends off of 10th st for a week. Cool...
-Snail

[mad s13]

well cool definatly need to look me up..we have a BIG 240 group here in town...hit me up at work when you get in...252-757-0333 ext 205..if i'm not at my desk leave a message..

Gray

[TheSnail]

Cool man, I'll give you a call. The last time I was there, I saw a Sileighty with a wangon wing. Maybe you know who that was. I wish I was done with my car, but next month I'll bring it so you guys can see it. Either way I would be more then glad to see what you guys are working with, up in G-ville this weekend.

Thanks,
-Snail,
-Voya

[mad s13]

hmm was it dark gray with an unpainted front end or white with an unpainted front end? mine is silver with an unpainted front end with no wings, and definaitly bring your car when you can...we'd liek to see it..

[ZK]

Its not just the US which has all the knockoffs and people being cheap. If you go to other parts of Asia, people are more interested in looking like the real deal than actually having it. All the super stickered up rides and knockoff body kits, wheels etc.

I went to Autobacs in Taiwan :
(pics: http://oiishi.150m.com/taiwanautobacs/ )

All the wheels and a lot of parts are knockoffs. They instead of Spoon parts for Honda they have Spoom. AVS wheels becomes AVA, Kosei/Buddy Club K1/P1 wheels become E1 wheels. And this is AUTOBACS, a Japanese company!

Others have their own brand name but clearly rip off others. Tein has some knock off suspension with the same green color scheme.

I could go on...

In Japan, people will dump their life savings into a car. When is the last time you heard of someone investing 60K into a 4K car? In the US people rarely do that. People would rather spend the money to have the "look" and be done with it or invest in other stuff. Also, people "outgrow" cars and invest in family, house etc. The high prices in Japan make homeownership near impossible to most people so they spend their money elsewhere.

I think the current trend towards cheap stuff will continue but the few who do spend the big bucks on the real stuff will continue to support the companies that make the real deal... at least for now.

That's capitalism for you!

[Toahk]

Many enthusiasts are also students/younger people. They cannot always afford the top end stuff, thus buy what they can afford that will "work". They would like to get brand name, expensive parts but just cannot justify it. A lot of middle aged people who are enthusiasts seem to be able to spend more, and get the name brand parts, because they have a steady job and are established in life. There's nothing against the name brand companies, quality is definately better and if money was available they would love to have it, but sometimes its just not possible. I am one of these people, so this is coming from my perspective about it.

[nightwalker]

don't forget the shit heads that are always stealing cars making it near impossible to have a really nice car.

[ZK]

Originally Posted by Toahk

Many enthusiasts are also students/younger people. They cannot always afford the top end stuff, thus buy what they can afford that will "work".

It is definitely a younger crowd in the US. In Japan, the enthusiast crowd is anywhere from 20s through 40s for most cars. And so a higher income bracket for the older people.

It's sad that import cars and such get stereotyped towards younger people. The US domestic car crowd has a wider age audience and better acceptance. Then again you have to remember Japanese cars are "domestic" in Japan.

don't forget the shit heads that are always stealing cars making it near impossible to have a really nice car.

That's a different problem but kinda ties in. It's a different culture - car theft is very low in Japan... Heck, a lot of people don't even drive! The public transportation is so good you can easily go just about everywhere without a car.

[240eggsx]

WORD... I have and will continue to pay the premium for authentic JDM parts. It's worth it to me to be able to look at my car and know that it is 100% non phony bologna bullshit. [mama bouchet] APC is the devil! [/mama bouchet]

[AAA240SX]

OK you guys, story time...

I first posted this as a concern for my business. I'm pretty sure no1 on this forum knows about me.
My brother first opened up a biz in 2000 called "Arlo's Auto Accessories / www.arloautoaccs.com" Very original: my bro's name is Arlo. haha.
It was going well until 2003, cuz he started going to college again.

2003-2004 current, I have been running local sales. We've closed the website or under construction for now.

NOW HERE'S MY SITUATION...

We do not stock, since we don't have a warehouse. Usually items are drop shipped, yada yada (u all know how that works). So turn over times are a little longer than say HeavyThrottle. They stock up the ass, which is good.

With all the knock-off products and price wars between internet businesses I know competition will be tough. But, I am willing to take on a challenge. Instead of concentrating on just Nissans, I'll be selling parts for all make and models (like my bro did from 2000-2003). No phony bull shit though (APC, Neons, Stupid Lighting, etc.).

But, my question to all of you is: Would 240 owners be interested in trying out a new shop?

I'm not even looking at reopening the business for profit. I'm not looking to be noticed as a nissan parts super power. I just want to keep it alive and be able to get to know more people on this forum (in a business matter as well). Let me know...

I'm blueprinting product pricing, web site, etc. right now. I just wanna keep it real n see what you guys think about this. I'd really hate to throw away 4 years of work and just drop the business completely. We have some deep connections for brands this forum would love...

Keep posting too on the Globalization topic, I'm happy I brought this up...

[citizen]

only if you name it arlo's awesome autos!

[240Driver39]

eh, i think the article is crap and clearly using bias to prove some "point" that they think they have.......i think a lot of people forget the HUGE domestic car market...yeah, u know cars that are made in the us. Ever watch shows where they show street rods and such? well that would be the comparible item to their point "oh japanese people pay top dollar for stuff for their cars...." American's are cheap, always lookin for the deal? okay, whats wrong with that, americans are a consumer machine, i personally think its a joke to pay the prices for much of the items that flood the market, why? because i think so, do u? maybe so, maybe not, who cares, im sure u dont care what i think either. blah blah blah...


cliffnotes: i think the article is retarded.