Thread: Specialty Auto Equipment Business Idea -- Please Critique

Okay here I go with another business idea, this again would be a future project if I did it.

Anyways, here is the Wikipedia description of the Specialty Automotive Equipment industry:

Specialty Equipment Market Association (SEMA) of the automobile aftermarket was formed in 1963 by Roy Richter, Ed Iskenderian, Willie Garner, Bob Hedman, John Bartlett, Phil Weiand, Jr., Al Segal, Dean Moon, and Vic Edelbrock, Jr. and now consists of over 7,094 companies worldwide, bringing together aftermarket manufacturers, original equipment manufacturers, media, car dealers, specialty equipment distributors, installers, retailers and restoration specialists.

Products in this $31.85 billion-a-year industry include performance and racing components, cosmetic and functional accessories, wheels and tires, mobile electronics, safety products, restoration parts, handling equipment, drivetrain parts and more. The industry covers muscle cars, classics, luxury vehicles, sport compacts, street rods, light trucks (off-road and sport trucks), SUVs and recreational vehicles.

Anyhow, this industry is fragmented. So I was thinking like my beverage company idea from before (form a conglomerate of beverage brands), I could build up a huge company that consists of multiple brands of specialty automotive equipment.

Basically thus each brand, unlike most such companies which are small, would have the benefits of individual branding, but the economies of scale of a huge organization.

This concept I know has been applied successfully to other industries, for example, locks and luxury goods.

With locks, the largest company is called Assa-Abloy. It was formed in 1994 and basically is just a big conglomerate now consisting of dozens upon dozens of individual lock brands. Each brand is a smaller company, but it has the economies of scale from being part of the large organization.

With luxury goods, there is the conglomerate LVMH, formed by Bernard Arnault in the 1980s. Basically it's the same deal. Individually, most luxury goods companies and brands aren't that big, except for a very few.

Arnault's idea was the creation of a conglomerate of luxury goods brands, thus each brand/company has the benefit of being an individual luxury brand or company, but it has the economies of scale of a multibillion-dollar organization.

I was thinking maybe the same thing could be done with specialty automotive equipment? I mean look at all the areas:

Performance and racing components
Cosmetic and functional accessories
Wheels and tires
Mobile electronics
Safety products
Restoration parts
Handling equipment
Drivetrain parts "and more"

...and all for muscle cars, classics, luxury vehicles, sport compacts, street rods, light trucks (off-road and sport trucks), SUVs, and recreational vehicles.

I would grow the company through organic creation of brands and also acquisition. Building such a company I'd imagine would be a decade to fifteen-year process (and yes I know I'd first have to build the initial company to get the whole project started), for example LVMH is a HUGE luxury goods conglomerate today, but this is 2009 and Bernard started it in the 80s, and Assa-Abloy was formed in 1994 by combining two already existing companies, then taking the company public, and then using the stock as capital to go on an acquisition spree.

That is what LVMH did too, went public and then use the stock as capital to make acquisitions, grow new brands, etc...imagine if you had just ten brands/companies of specialty auto equipment products, and each made $50 million in revenue, that alone could be up to a $500 million company at least.

Okay so what do you think people, is this feasible or did I come up with another clunker

If you want to read about consolidating a fragmented industry from scratch, read about Wayne Huizenga. He did that with waste management (created WMX), video tapes (Blockbuster) and car dealerships (AutoNation).

The thing is you need enormous capital and leverage, dealmaking-skills and very talented people to run the thing (if the companies you buy dont perform youre in deep trouble).

Take a look at Summit Racing or Jeg's Racing products. Same deal. They have been in business for YEARS.

Thanks for the responses. Yes, Jeg's and Summit are retailers of the various brands, I mean a company that literally owns a whole bunch of different specialty auto equipment brands.

ALTHOUGH, Summit and Jeg's have given me the idea of ALSO having a retail brand (like Summit or Jeg's) under the ownership of such a company as well

365, yes Wayne Huizenga is the man! He is who I initially got the inspiration for that for. He consolidates service industries. One can also consolidate manufacturing industries, such as locks or luxury goods or (hopefully for me maybe) specialty auto equipment