FOX Factory (FOXF) Upfitter Business was a lousy investment.

First, I own no stock in FOXF. I was a paid consultant by the company FOX hired to research the new lifted truck market before their 2017 partial acquisition of the truck upfitter Tuscany. They should have consulted with me before they acquired the Kinderhook upfitter company package purchase for $312M. Being a lifted upfitter for new trucks and having a bailment program with the manufacturers, they are shipped new trucks from the factory to install their packages. It is a fantastic privately owned business but horrible as a publicly traded company segment. The business ebbs and flows with the new lifted truck market. There are still privately held "branded" new lifted truck upfitter companies, i.e., Waldoch, American Luxury Coach, or Sherrod. A previous conversation with the owner of a branded truck upfitter company told me, "We adjust to conditions; if things are cranking, we are running at 100 percent; if things slow down, we may close a building and consolidate our operation until it picks up again." The one thing publicly traded companies are always searching for is revenue growth. FOX will not have this with their truck upfitter division.

The glaring problem with the branded new lifted truck business is that you cannot control your business. Instead, the truck manufacturers control your business. For this very reason, FOX's truck upfitter division is in trouble, and why I would've never recommended them do the package buy from Kinderhook. Not to mention the grossly overpriced they paid for it, $312M with over $100M in "goodwill"! I can't help but laugh and shake my head. After Kinderhook purchased SCA Performance, Rocky Mountain Truckworks, and Rocky Ridge, which they got Rocky Ridge in a fireside sale because they were going under, I had a conversation with the owner of a privately owned new truck upfitter company who told me that before the Kinderhook purchases, his business was worth $15-$20M and that was all the money! In a previous conversation with one of FOX's Business Development employees, someone told me that FOX requires a formal proposal and a committee to evaluate and analyze spending $25K on something. From what I heard, the Kinderhook deal came from the finance division. IMO, they just looked at the numbers part of the business without factoring in all the elements of the company. As a result, I'm anticipating severe buyer remorse will be happening very soon.

Ford, RAM, and GM all control the branded upfitter business. Therefore, you depend on them sending you truck chassis, and you receive what they want. Consequently, you must conform to whatever the OEMs require for a bailment program. Before I continue, I have yet to learn of or indication that the OEMs collude in controlling the chassis bailment programs for the branded upfitters. So, after over a decade in the marketplace, why aren't the OEMs providing more chassis for branded upfitters? It all comes down to money, precisely market share revenue. The truck OEMs want to avoid another playing field, the new lifted truck market, to compete on. That's an added expense they don't need or want to deal with. Pre-Covid Ford sold 900K trucks yearly at an estimated $14K profit per truck*, representing $12.6B in yearly profit. With the tremendous profit potential of new truck sales, any slight movement up or down in market share means 100's millions to them. They will appease branded upfitters with just enough to keep the lights on and have a good family business. The notion that any new branded upfitter can ramp up and scale their business to do large new truck numbers will never happen. Again, the OEMs will not let it happen! Anything that has the potential to disrupt their truck market share will be cut off, and it's because they sell so many stock trucks that they don't need to do business with any lifted truck upfitter.

You have the issue with OEMs being in control. Let's now talk about the dealers.

Here's where I empathize with FOX; since the SCA group acquisition, we've had the COVID mess, which created an anomaly with the new truck market. First, because of the scarcity of new truck inventory, dealers called all companies with bailment programs to get new trucks. Then, not caring what upfit package they got, sending me some new trucks to sell was the focus for dealers! With trucks flying off to dealer lots and selling out of their bailment vehicles, I'm sure FOX thought they made a favorable investment decision. However, FOX is about to get a reality check as the long-standing problems with the new lifted truck market come to light.

New lifted trucks have been in the marketplace for over a decade, so dealers know the branded lifted truck upfit companies. Therefore, the first significant problem with the new lifted truck market is the lack of consumer awareness—the problem with trying to solve that it's cost prohibitive for an upfit company. The second significant problem that FOX will be feeling very shortly, if they haven't yet, is the stalling demand by dealers for their products. This hurdle validates why a new lifted truck upfitter business is not a good investment for a publicly traded company. Furthermore, it is a huge red flag for the additional growth potential of the business. Without dealers ordering your products, you're in trouble. To the credit of the remaining privately owned new truck upfit companies, American Luxury Coach, Sherrod, and Waldoch, they know the slog it is to constantly beat on dealers' doors to sell your product. The dealers' resistance is due to their problem with new lifted trucks, which is the turn time. Sure, the dealer can make additional profit with them; however, they sit on their lot, and the costs add up for having a modified vehicle over a stock one, which they can sell all day.

Furthermore, you can only sell to new dealers, so you only have X number of dealers in the pipeline to contact. Finally, you need more dealers to sell your product to when you've gone through them, so you end up with a core group of stocking dealers. Your sales team beats the phones daily to get dealers to stock your product. If a dealer orders, and the vehicles don't turn quick enough, they don't reorder. I refer to constantly chasing dealers' orders as the "revolving dealer door." When that door stops, the stall happens, and the grinding starts to get sales from dealers.

*Al Root, "Ford's Profit Warning Shows the Truck Business Is Strong. EVs Could Make It Better." accessed May 16, 2023, https://www.barrons.com/articles/ford-stock-profit-warning-ev-51663709443

Rocky Ridge Callaway Special Edition Chevy Silverado

Callaway Cars issued a press release yesterday about the new Rocky Ridge Callaway Special Edition Chevy Silverado.  Seems Rocky Ridge has responded to Southern Comforts collaboration with Lingenfelter on the Reaper truck.  Here's the list of components that the Rocky Ridge Callaway Special Edition Chevy Silverado will be equipped with:

Rocky Ridge

• Suspension Lift Kit, 4”
• All-Terrain Tires
• Powered, Retractable Side Steps
• Smooth Fender Flares with Concealed Hardware
• Rocky Ridge Windshield Logo Graphics
• Color Keyed Front and Rear Bowties
• Aeroskin Hood Protector
• Slimline Rain Guards
• Four Wheel Alignment
• Speedometer Recalibration
• Tire Pressure Sensor System Recalibration
• Rocky Ridge 3 Year/36,000 Mile Limited Warranty

Callaway Cars

• Third-Gen Supercharger System (patent pending)
• Mid-Engine Cover Set, Callaway Carbon, with “SC540” Graphics
• “Honker” High Flow Air Intake System
• Callaway Low Restriction Exhaust System, with Front-of-Wheel Exit, Double-D Tips
• Callaway Nine-Spoke Alloy Wheels, 20” x 9.0”, Anthracite Finish
• “Supercharged” Hood Emblems
• “SC540” Grille Emblem
• Callaway/Rocky Ridge Front Door Emblems
• Callaway/Rocky Ridge Tailgate Emblem
• “SC540” Tailgate Emblem
• Callaway/Rocky Ridge Dash Plaque
• Callaway/Rocky Ridge WeatherTech^® Floor Mats, with Special Edition Badging
• Callaway/Rocky Ridge Underhood Plaque with Vehicle Identification Number
• Callaway/Rocky Ridge Authenticity Documentation Package
• Callaway “Powerfully Engineered” Key Fob
• Callaway 3 Year/36,000 Mile Limited Warranty

Specifications are subject to change without prior notice

Click on the link to read the full press release.

Promaster Low Top Conversion Van Vs GM High Top Conversion Van

With the roll out of the Ram Promaster Conversion Van, I wanted to let everyone know the difference between a Promaster Low Top, and the traditional High Top Conversion Van.  With the Promaster Conversion Van hitting dealers lots, I fear consumers maybe confused by the terminology as it relates to what's been the norm for conversion vans.  If you look at the Promaster Low Top Vans on conversionsforsale.com it can be difficult to really see the size/height of the low top Promaster Van. 

Traditionally conversion vans have been categorized into two configurations.  A low top or low profile, or high top/high profile.  A low top or low profile refers to a stock full size van.

A Low Top/Low Profile Conversion Van

You'll notice that there's been no change to the top of the van.

A High Top/ High Profile Conversion Van

You'll notice that the top is higher than the previous van.  Upfitters cut off the top of the original van, and add a fiberglass shell to the top of the van to increase headroom.

Now the Ram Promaster Low Top Conversion Van

For comparison, the Ram Promaster High Top Conversion Van

A Ram Promaster Low Top Conversion Van is not the same as the traditional Low Top conversion van terminology.  The overall height of a Ram Promaster Low Top is a little shorter than the traditional high top conversion van.  The advantages the Ram Low Top has over the traditional high top conversion van are:

• Not having to remove the roof, maintains original structural rigidity

• Increased overhead headroom due to the roof being flat, and not contoured like the traditional high top
• FWD
• Overall better fuel economy, for 2015 GM has done away with the Chevy and GMC 1500 series full size vans due to not meeting the government standards for the vehicle weight class

Here's a side by side comparison of the GM High Top Conversion Van next to a Promaster Low Top Conversion Van.

The Truth About Rocky Ridge Trucks!

With Rocky Ridge Trucks now doing more promotional events, and thus bringing the awareness of the new lifted truck market onto the consumer radar.  I wanted to let consumers know the new lifted truck market picture as it relates to Rocky Ridge Trucks.  In terms of brand lifted truck upfitters, (upfitters are the companies that actually install the lift, and cosmetic components to the vehicles)  Rocky Ridge would be close to the top.  Because of the overall lack of consumer awareness of the new lifted truck market, and the upfitters/products that make up the market.  Rocky Ridge's overall new truck market penetration is miniscule.  They will retail approximately 3,600 units this year, and the overall new truck sales in the US is on track to hit over 1.8M units.  The awareness problem with the new lifted truck market I covered in my previous blog post, The New Lifted Truck Market's Obscurity Problem Visualized. 

The largest new lifted truck upfitter in the country is DSI, or Dealer Services International with approximately 1,700 dealers in their network.  DSI is a division of TransAmerican Auto Parts, and instead of having one location that manufactures the vehicle upfit.  DSI uses it's 70 or so 4Wheel Parts locations to perform the installs on the vehicles.  DSI also supplies Rocky Ridge with the components that they use to do their upfits.  With some components Rocky Ridge re-badges them as their own brand.

At Conversions For Sale, in addition to our vehicle listing platforms, we also own/operate golifted.org .  The golifted.org website is a consumer resource website about the new lifted truck market.  We've amassed all the new lifted truck upfitters, and their product offerings for consumers to browse in one location.  After announcing the site to the upfitters, and at absolutely no cost to them.  Rocky Ridge was the only upfitter that declined to participate, and was removed from the site.  Their reason for declining is unknown, however what we know is that our position of informing and educating consumers about the new lifted truck market is part of our mission.  Due to the awareness issue, our concern is consumers potentially being misinformed about the market.  Our position is that, whether you're considering a new Ford, GM, Ram, or any other truck manufacture and are considering a new lifted truck.  That you're aware of your options when it comes to upfitters, and their products.

An Even Bigger Problem With The Lifted Truck Market!

There's clearly an awareness problem with the lifted truck market, and especially with the New Lifted Truck market.  What's tied in with that, and is probably the most challenging thing to change or improve is the consumers perception of lifted trucks.  Ask anyone outside the auto market what comes to mind when you say lifted trucks, and they will probably answer "Big Foot" or something along the lines of a big monster truck.  I've already tested this out on many people, and that's the overall consensus.  In order for the lifted truck market, in particular the New Lifted Truck market to grow, we not only have to increase consumer awareness, but change the consumer's perception of these vehicles.

         If you're a dealer that stocks lifted trucks, I'm going to show you proof of the current lifted truck situation.  As with our previous blog post focused on the New Lifted Truck market, this is encompassing of both.  After all the lifted truck market itself is larger than either new or used lifted trucks.  These are the search queries for the previous three months, July, August, and September from our Search Query report in Google Webmaster for our LiftedTrucksForSale.net site.  Our average position for these terms was less than 10, and thus we were on the first page of the Google results for these terms.

July Queries


August Queries


September Queries

        Overall, consumers aren't searching for lifted trucks, and if you're a dealer stocking them, that's the reality.  Now, you could do what some dealers do, and spend thousands doing a marketing campaign for the lifted trucks.  That would be a waste of resources on the dealerships part, because you're putting your money into something that consumers aren't even aware of.  You could do nothing, or you could come on board with a company that has a solid understanding of the problem in the market place, and has a plan to solve it!  Conversions For Sale has just as much vested interest in your dealership sending lifted trucks "over the curb", as you do.  We know that you could stop stocking these vehicles tomorrow, and your dealership would still be successful.  The problem is then we don't have a service to offer you.
        Our unique position with being neither a dealer, upfitter, or in a sales position to the consumer is the leverage position that we have.  We have put ourselves as the nucleus when it comes to the lifted truck market, and consumers have responded with the exposure of these products on larger platforms.  Again, due to the awareness problem, we have to tap into larger online platforms where there's a large audience.  You use these same platforms, however it goes back to our neutral positioning with consumers.  Your dealership can tap into what we are doing, and get exposure to your inventory!  Here's our numbers from some of these platforms:




 

The New Lifted Truck Market's Obscurity Problem Visualized

For years I've been saying that the biggest problem with the New Lifted Truck market is the awareness problem.  Consumers are not aware that these products exist in the marketplace.  Now, I am going to show you the facts that support my position. 

With Google being the number one search engine.  I am going to let them tell me what the numbers are.  Most people don't realize that Google will tell you exactly what the volume of searches are done per month over the course of a year for any word or phrase.  If consumers aren't searching Google for your company by name or product, they don't know you or your product exists!  I will add, it doesn't matter how long you've been in business!

So lets see the numbers...

Before we get into brands, lets just start with the lifted truck market as a whole.  Consumers do not differentiate between new or used lifted trucks.  That is due to the lack of awareness of there being new lifted trucks.  Consumers lump all lifted truck types into just lifted trucks.

New Lifted Trucks Monthly Searches

Used Lifted Trucks Monthly Searches

Lifted Trucks Monthly Searches

As you can see by the results, consumers do not differentiate between lifted trucks being new or used.

Now for the brand name New Lifted Truck Upfitters monthly searches, and I will not do all of them.  The one's below give you a good idea of what's going on, or not going on!

Rocky Ridge:

 

Southern Comfort, also known as MCM Vehicles

 

Tuscany

American Luxury Coach

So there's the numbers according to Google.  The good news is that, there's only up to go, and there's massive revenue growth potential in the infant New Lifted Truck market.  Conversions For Sale has assumed the almost insurmountable role, and task of being the nucleus that drives consumer awareness, and thus the revenue growth.

The Automotive Website Hierarchy

There's an automotive website hierarchy that exists.

The order is:
Third Party Sites
Manufacture Sites
Franchise Dealer
Independent Dealer

No matter where you fall on the list, you can never compete online with those above you. The variables that determine the list are based on facts similar to the food chain. The second part to determine position is how they are viewed by the end consumer.