Rising pop-culture interest in car customization has been a boon for industry revenue
Los Angeles, CA (PRWEB) January 28, 2012
The Auto Customization Shops industry has experienced a bumpy road over the past five years. Industry revenue is expected to fall 0.7% annually on average over the five years to 2012, with revenue estimated to grow 2.7% in 2012 to $4.4 billion. According to IBISWorld industry analyst Nima Samadi, “the recession has had lingering effects on the industry, with consumers holding off non-essential alterations and customizations of their vehicles.” This industry derives its revenue from drivers that pay auto customization shops for certain aftermarket automotive accessories and other customized alterations to their vehicles. Nearly all of these projects are discretionary luxuries, and as such, industry demand and revenue is subject to consumer and discretionary spending levels. In 2009, consumer spending declined and discretionary purchases like automotive alterations were put on the chopping block. Consumers who continued to invest in car customization tended to scale back the amount they spent on their projects and increasingly opted for lower cost services and projects. Some patrons who still wanted to customize their automobiles chose to handle the purchases and installations themselves, bypassing industry establishments. Between 2010 and 2012, consumer spending has increased, which has resulted in a steady increase in spending on car customization and rising revenue for auto customization shops.
Despite recessionary declines, there have been a number of industry-specific trends that increased demand for car customization shops over the long term. One of the biggest driving forces has been rising pop-culture interest in customized vehicles. Moreover, according to Samadi, “changes in automotive electronics and stereos have also driven demand for industry services over the last five years.” An increasing number of consumers want premium aftermarket stereo and electronics systems for their automobiles, such as in-car DVD and Blu-ray players, multiple TV screens throughout the vehicle, integrated aftermarket navigation systems, MP3 player and iPod connectivity and Bluetooth connectivity for hands free calling and Bluetooth audio streaming. All of these factors bode well for auto customization shops, with demand for their services expected to grow, prompted by an expanding economy over the next five years.
During the five years to 2017, this industry will remain highly fragmented, with no one company dominating even a regional market. In larger markets, such as urban centers like Los Angeles and Detroit, some shops specialize in subsegments of the industry like airbrush paint jobs. These industry players include West Coast Customs and Galpin Auto Sports, which are both located in California. Companies rely primarily on word-of mouth recommendations for business due to the high-end luxury nature of many customizations. Consolidation has not occurred in this industry for several reasons. Firstly, employees must be led by a highly skilled manager that is responsible for the technical nature of the work. Additionally, companies order parts as a need for them arises. Consequently, bulk orders are rare, eliminating one of the major benefits of owning multiple shops that, in other industries, leads to cheaper input prices for larger players that can buy in bulk.
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This industry customizes automobiles. Operators modify cars to improve their performance, often by altering or replacing the engine and transmission. Conversely, businesses in this industry may customize cars to make a style statement for the consumer, making the car look unique and unlike any factory-finished car. Freight truck and trailer customization services are also included in this industry. Remanufactured vehicles are excluded from this industry.
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