AAA240SX
07-21-2004, 08:05 PM
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 :down: .
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.
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.