It's that time of year again, when tax returns hit hungry bank accounts and enthusiasts are gearing up to prep their cars for the summer months, meaning Honda-related businesses are often hitting a highpoint for the year. Of course, if there's a global pandemic under way, it might push people away from the non-essentials, which could mean a heavy blow to the aftermarket. Overall retail sales in the U.S. collapsed in April, while not surprisingly online transactions took a leap forward.
Depending on where you've landed in this new world that we're currently tiptoeing into, you're either incredibly stressed with how to handle your finances or somewhat content for the foreseeable future because your line of work happens to fall within an essential business category. The uncertain times have forced small businesses to analyze their next steps as the country begins to open back up under scrutiny from experts worldwide. One thing is certain: opinion on what to expect varies heavily, and rather than believing everything I see and hear from the news media, I decided to reach out directly to a group of brands who are knee-deep in the Honda aftermarket and more than willing to share their experience as a company in the wake of the COVID-19 pandemic.
What I learned might surprise you, that is, if you were expecting the slow, impending death that so many other industries have been faced with in light of a disintegrating customer base. Ours is an industry that thrives on internet sales and storefronts have really become a thing of the past in most regions. However, even with the annual tax returns and this year's stimulus action, many feared the worst.
For well over a decade, Hybrid-Racing has been catering to the K-swap crowd with not only quality goods but customer support. They regularly develop new parts to help make swap-life easier and push the Honda performance envelope and you'll find their products on countless swaps in every part of the world. Hybrid's Sales & Marketing Director (as well as an encyclopedia of K-swap knowledge), David Cordell, and his team were keeping close tabs on the rest of the country and a few weeks prior to the stay-at-home order put in place by Louisiana's governor, had already transitioned to working remotely. He adds, "Our team reacted quickly and had everything up and going in a matter of a day or two. Our warehouse remains open and our staff has been properly equipped with gear to keep building and shipping parts. Our management teams communicate through video conferences on a daily and weekly basis."
That preparation has certainly paid off, seeing as how Hybrid-Racing has experienced some of its biggest months in company history. Their V3 RSX Short Shifter, released earlier this year, was already a runaway hit, but with many pulling the trigger on parts they'd been eyeing before the pandemic, sales have increased dramatically.
You could attribute the aftermarket brand's success to its natural progression with fresh parts development and ever-growing fan base, etc., as Cordell noted that 2020 is in fact the third year in a row that they've doubled sales. However, this year recent sales signal things are changing rapidly. "With the amount of product we have been shipping lately, we are on track to break every record for our company. Sales, assembly, packages shipped, etc. All of them."
So, what about parts and supplies needed to produce Hybrid's highly sought-after parts line up? "We have the typical issues, but nothing I think related to the pandemic. If I had to pinpoint anything it would be that simple transportation of goods has been a bit of a hassle. Air cargo costs have gone wayyyy up and delays are pretty consistent coming and going out of the country. With the reduced number of flights in the air, it really isn't a surprise, but it has been a challenge. Most of our U.S. suppliers have delayed some stuff as their needs and business change."
Robert Green, also known as "TracTuff Rob," is essentially a one-man show. His precision-built, limited product runs typically cater to the K-series market with a few variations thrown in the mix. Even if you're not familiar with his fabrication or his products, you've absolutely seen them attached to multiple track, show and street builds featured on the Super Street Network. His fluid solution options and clever problem-solving hard parts never disappoint and everything he offers is made in the U.S., including the small number of pieces he outsources, which come from local businesses.
Usually Rob is working a few weeks into the month fulfilling orders from the previous month. Many of his products allow for custom additions and often times he's called upon to do one-off fabrication, which is time consuming. He adds, "I was honestly prepared for the worst but not stressed because I had several weeks' worth of work on the books I still needed to get through. I still told my wife that we should expect a hit." Just a few days into April and the incoming orders put him on par with what he'd usually hit mid-month, which is a substantial upswing. "I naturally thought it was going to taper off. Welp... that didn't happen! Things just got crazier. By month end, I had doubled my best month EVER and went from being 2.5 weeks back to being swamped with 5.5 to 6 weeks' worth of work. And that's on top of the easy to ship core parts that are sitting on the shelf and shipping daily."
Handling orders, fabrication, a barrage of technical (and sometimes not-so-technical) questions, as well as shipping—an act that in April tripled his busiest month ever—is causing a heavier workload than he could have ever expected. "I've gone from working an average of 8 to 10 hours a day to 12 to 14 and I have been working Saturdays ever since April 12th. I'm struggling to make a dent in my backlogged fab jobs. No one part is a clear-cut winner... all parts sales are up...but swirl pots and electric water pump conversions are HOT!"
In light of the jump in business during the pandemic's stay-at-home orders, Rob has increased inventory on just about everything to maintain essentials and secure any items he can't control the supply on. He noted that he's been fortunate to have suppliers and a reliable machinist step up to meet his increased demand. None of us can predict the future or how long this trend might continue, but the increased business might necessitate a major change for TracTuff. "If this trend continues...I won't be able to keep up and changes will have to be made. For my sanity, I hope June goes back to some type of normal. One thing is for certain, I'm not changing my buying/spending habits or lifestyle...at least not yet. I feel like this will pass."
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We worked with Acuity Instruments on the Project 2018 Civic Si last year as the aftermarket company was just hitting its stride with a number of parts associated with the 9th and 10th generation Honda Civic lines. With a pair of engineers at the helm, the group is producing some very well thought out upgrades and have been churning out newly designed pieces regularly. Acuity's Russell Garehan tells us that March sales were on track in terms of sales projections but April, well, there was nothing normal about April.
Sales skyrocketed, and as we spoke about in mid-May, Acuity is pacing to outsell their incredible April. This is all under proper social distancing guidelines, and Russell mentioned that half of the employees are working from home at a reduced workload. He adds, "We've been able to manage to stay in-stock or have limited wait time on most SKU's. We actually had to hire a new person just to keep up. At first it seemed like people might have been buying out of boredom, then the stimulus checks (and maybe tax refunds) hit accounts and people were buying higher dollar items. We have seen both shifting upgrades and intake systems doing very well."
Suppliers for Acuity have been able to keep up, for the most part, though Russell mentions shipping becoming an issue. "In the US, shipping is delayed from our vendors maybe 1 to 2 days more than usual, very manageable. Overseas, however, sometimes DHL, UPS, or FedEx will take 1 to 2 weeks more, which can mean double to triple expected transit time."
When I prodded about what the future has in store, Russell's answer tells me it's something he and his team have discussed at length, noting, "Historically we have not seen big (monthly) jumps in sales followed by a valley, but these are not normal times. My gut says they will not dip below our normal sales volumes we were seeing in March, but we have financially braced ourselves for the possibility that they do, and we are using the increased capital to accelerate product development as much as we can in hopes of releasing enough products in Q3 and Q4 to either return to the current sales rates or (if things continue as they are now) to grow that much more."
Call it the little company that could. Downstar Inc., created and run by Frank Garcia, never had a chance to fail. From its inception, the young enthusiast went full tilt with guerilla marketing that filled a niche in the Honda aftermarket and has since become all but standard. From piecemeal, individual bolt and washer options to fully mapped out engine bay, suspension and engine-specific hardware kits, to now even a Skateboard spin-off company and growing podcast, the name has become household.
Like most brands, tax season is usually the most lucrative, which, as Frank mentions, begins to taper in late April/early May for Downstar. For 2020, however, the other shoe hasn't dropped, and a decline has not yet been felt. "April was our best month ever in 10 years and there's a possibility that May can beat that, seeing as how we've already surpassed May of 2019. I feel extremely blessed to be in this position and also very compassionate for those who are experiencing difficult times not only in business, but life overall."
The increase in sales has produced some surprising results from the end-user. Frank adds, "We've seen a trend in Downstar being used on many other platforms besides Hondas, which is amazing. It's very hard to break the stigma of being a 'Honda only' brand and we have been working hard to promote the other platforms that we support, such as Subaru, Mitsubishi, Toyota, etc. Also, our Fender Flare Hardware, which is used to secure widebody kits, is flying off the shelves. I guess people were tired of using wood screws and rivets."
A healthy inventory has always been part of Downstar's success, and that approach hasn't changed, as Frank reinforces having a good working relationship with suppliers. "Once you build a great relationship, the suppliers are more likely to help out in tough times where they can."
What does the future of our industry hold and how will Downstar meet their customers' needs? "I hope that things stay just how they are. We are cookin' right now and I'm definitely up for the challenge of this being the 'new normal.' But I'm being realistic and looking at the big picture. Yes, people have money for car parts now but what happens once the dust settles? Who will have a job? Who will have extra money to buy things that they don't need? I'm hopeful that we as a community will bounce back into place and we could all be laughing at this weird time later in the year at the Eibach Meet."
If you're at all involved with the 10th generation Civic world, then you're intimately familiar with 27Won. They carry an incredibly loyal following, and rather than rushing to put products on the market to fight for shelf space, they instead release products only after they're 110 percent satisfied. From their stealthy Si exhaust system to their user-friendly, W1 drop-in turbo upgrade, they've got a legion of fans itching for their product releases.
Theirs is an interesting situation, in that just prior to the world learning what COVID-19 was and how it would ultimately impact their day-to-day, they were in the midst of a major relocation. 27WON's Vincent Melon and his team have been based in the Pacific Northwest since the beginning, but late last year began the transition to Las Vegas to continue operations from a better vantage point. "As you can imagine, we had a lot of new expense go online and then boom! 2 to 3 months later everything shuts down, so I would be lying if I said I was not scared there for a bit and was feeling very uncertain. But I worked late, kept moving forward and we so far have gotten through this. I have to thank our customers and enthusiasts for being right by our side and supporting us the whole way. They are honestly the heroes in all of this."
Peak season for the brand falls between February and mid-June, and for 2020, sales were actually slightly slower than forecasted, but that all changed in April. Vincent states, "The floodgates opened and we got very busy, very fast. I do believe part of this to be in response to stimulus checks and guys looking for their show season upgrades but also because we dropped 2 to 3 really big new products that the 10th gen community was really asking and ready for. So as of now we are doing well, but given the uncertainty ahead I am still cautious about how we navigate the months ahead."
The brand's newly released Turbo Inlet Pipe and front-mount-intercooler kits are the runaway biggest sellers currently. "Orders for these are coming in faster than I can make them. Our RMM and FK8 intercooler and exhaust also continue to do well and have gained some traction. While supply hasn't been a major factor, 27WON's signature finishes have. We have seen difficulties and delays in regard to getting things back from services like powder coating and anodizing, but the bigger issue was forecasted sales on the items mentioned above. Demand was so great that I just ran out of things faster than I can make them." As for the future, now that the brand is a resident of Las Vegas, what's the outlook? "While we find ourselves in a good spot now, I am worried things will slow down a bit in the middle of the summer. I feel we have the team in place to get through this, but it will certainly have its challenges."