Specialty Equipment Market Association - Case Study Example

Specialty Equipment Market Association Abstract The paper aims to prepare a case analysis based on the persuasive proposal laid by Specialty Equipment Market Association (SEMA) to the government regarding the break on taxes to the owners of antique/collector vehicles. In presenting the persuasive proposal, this paper intends to identify the activities performed by SEMA and antique car owners. Furthermore, the discussion has also been supported by evaluating the trends of automotive aftermarket through SWOT analysis along with certain alternative solutions for the identified problem. In illustrating the problem, there are certain recommendations provided regarding how the break on taxes can be successfully implemented along with the providing a cost analysis of the recommended solutions. Introduction Specialty Equipment Market Association (SEMA) is one of the leading trade associations related to car market, which was established in the year 1963. Generally, SEMA deals in the market in exchange (buying and selling) of old or antique cars along with modifying their machines. Furthermore, this dealing is particularly observed in the automotive aftermarket and it targets high income earning community (SEMA, 2012). Automotive aftermarket can be defined as the market segment where the old and antique cars are brought together for buying and selling after modifying and remanufacturing with upgraded technology. Contextually, automotive aftermarket is also known as secondary market (Automotive Industry Association of Canada, 2003). Antique/collector vehicles are those cars which are extinct in nature in terms of market presence with possessing unique features, designs and are generally available in a single piece in the entire market. In the developing world, it is observed that there is a demand of antique cars from high class society in order to fulfill their hobbies. Identify the Problem(s) The problem that has been identified in purchasing or keeping antique or collector cars is paying off excess or extra taxes to the government as compared to other new cars’ taxes. Considering the particular problem, the paper aims to present a measure to the federal, state government stating that the government should provide break on imposed taxes to the owners who have kept or bought antique cars from the automotive aftermarket. Strategic Analysis After identifying the problem, it can be analyzed with the help of a strategic analysis tool i.e. SWOT analysis to recognize the key aspects related to the problem. This is because it will help to provide a positive support to the recommended measure while presenting it to the federal government. Strengths The strengths related to justification of the demanded aspect can be identified from the fact that the demands for the collector or antique cars in the market is rapidly increasing day-by-day as the incomes of the individuals are rising. Furthermore, certain individuals are also purchasing the cars for satisfying their dreams of having a unique piece of vehicle of yesteryears. SEMA, Automotive Restoration Market Organization (ARMO) and Hot Rod Industry Alliance (HRIA) conduct an event i.e. “Collector Appreciation Day” which is granted by the United States Senate Resolution 452. One of the major strengths of this market and association is that it helps to keep hold of the native heritage. Furthermore, the dealing of antique/collector cars in the market helps in terms of bringing in growth and economic prosperity to the local vehicle market (Business Development Index Ltd., 2002). Weaknesses A key weakness which is faced by aftermarket or owners is that they have a lesser chance of available parts of the cars such as engine parts and body parts among others. The problem that can arise from these cars is that excess level of carbon dioxide emission can occur, which in turn can affect the community. At times, the high prices of antique cars can persuade an individual’s perception and prevent the person from purchasing the cars (Business Development Index Ltd., 2002). Opportunities Opportunities that can be enjoyed by the automotive aftermarkets or antique car owners are the fact that the rising demands for the cars influence the market to expand their business globally. Certain new car companies are willing to participate in aftermarket car deals in order to keep hold of their cars’ heritage in the market. Additionally, the owners have the opportunities to implement modern technologies into the re-manufacturing process as demanded by globalization (Business Development Index Ltd., 2002). Threats Threat can be viewed from the facts that the competitiveness in the business is rising rapidly in the market. Additionally, in framing the strategic planning and mission & vision the company can face problems. High price of the antique car models can also lead to certain problems in the market (Business Development Index Ltd., 2002). Proposed Alternatives The alternative solutions are the measures that should be considered from both ends i.e. government and the car owners in order to enjoy certain benefits from the laid down proposal. In relation to the identified problem which is brought into light by SEMA to the federal government i.e. to provide a break on taxes to the owners of antique cars, certain alternative solutions can be framed. In order to respond to the problem positively, federal government can frame certain terms and conditions for the owners of antique cars for facilitating them as well as the government with certain benefits regarding the taxes. Furthermore, the federal government can take certain steps such as imposing less tax on fuel consumption and certain subsidies upon the emission of carbon dioxide from the vehicles in order to protect the green environment as compared to the recent policies laid down by the government upon the heavy cars. In doing so, the federal government will be able to keep a firm hold of the United States and car companies heritage related to car markets and models. Contextually, the buying and the selling of antique/collector cars also help the native country to develop and improve the economic conditions because the transactions do bring in substantial amount of monitory benefits to the nation as a whole (British Colombia, 2012). Recommendations In relation to the stated problem, government should take certain measures in order to provide break on taxes to antique car owners. The measures that should be implemented by the government to the antique/collector car owners include easy sanction of the loan with less interest and tax, seeking by the owners while buying antique cars from the different markets. The import duties or taxes those are imposed on the antique cars bought from the outside of the native nation could be reduced to a minimum level as compared to other heavy or luxury cars bought from foreign countries. Additionally, government should allow the owners to hold certain number of antique cars i.e. around five to six cars without any tax, after this specified number of surpluses, the owners should pay the tax as prescribed by the federal law. Furthermore, the sales tax that has been imposed on the automotive aftermarket should be reduced. Government should also take certain measures to influence individuals or companies to participate in the programs like “Collector Appreciation Day” along with introducing certain other programs through facilitating effective information sharing by the conductor for the participants for purchasing the antique cars. Cost Analysis Cost analysis is a process considered by different individuals or markets for future budgeting by analyzing the present trends. Furthermore, cost analysis can be defined as the process of analyzing the present costs while budgeting or planning for the costs imposed on the future products or services (University of Pennsylvania, 2009). With reference to the aspect, the recommended strategies could also provide certain benefits to both the owners of the antique cars and the federal government. This is because imposing less tax on the antique cars will encourage the individuals to purchase the cars from the market as a result government will get less return in terms of tax. However, in the long run with these prescribed recommended strategies government will be benefitted because these trends will influence the individuals to purchase antique cars from the market along with increasing the demands of the products of the automotive aftermarket. Moreover, certain individuals will also pay the taxes as formulated by the federal government because in order to fulfill their hobbies the individuals can be expected to hold more than six antique cars as specified in the recommendation for which they would have to pay taxes in its entirety to the government. For example, if price of an antique car is US$ 400,000 and after charging 7% tax the price of the car would raise to US$428,000. If the tax is reduced to 3% then the price would be US$ 412,000, which is comparatively less as compared to the tax imposed before. Furthermore, this rate difference in prices can lead to significant demand for antique cars in the market. Conclusion By analyzing the automotive aftermarket, SEMA has provided a proposal to the federal government in order to help the individuals to satisfy their hobbies in keeping or purchasing of antique cars through encouraging them to pay less tax to government. Furthermore, this proposal can help the country and the car companies to keep hold of their heritage in the streets and in the market. Moreover, the break on taxes upon antique cars provides benefits more to the individuals as compared to the government, however this process will also help the government in the long run because the demands for such cars are rising rapidly in the markets. Contextually, it is also observed that the automotive aftermarkets also have opportunities to expand their businesses globally helping the individuals to meet with their dreams. References Automotive Industry Association of Canada. (2003). e-Commerce in the Canadian automotive aftermarket. Retrieved from http://www.aiacanada.com/downloads/e-Commerce_Report.pdf British Colombia. (2012). Clean transportation. Retrieved from http://www.bcairquality.ca/plans/clean-transportation.html Business Development Index Ltd. (2002). The process of strategic planning. Article, 1/10, pp. 1-28. SEMA. (2012). About SEMA. Retrieved from http://www.sema.org/about-sema University of Pennsylvania. (2009). Cost analysis overview. Retrieved from http://www.med.upenn.edu/finance/user_docs/03_CostAnalysisOverview_WebVersion.pdf Bibliography Aftermarket News Staff. (2012). The Pulse: Quarter-to-quarter automotive aftermarket price analysis from TLG research. Retrieved from http://www.aftermarketnews.com/Item/102581/the_pulse_quartertoquarter_automotive_aftermarket_price_analysis_from_tlg_research.aspx Smith, D. (2012). Editor’s Corner: SEMA Celebrates National Collector Car Appreciation Day. Retrieved from http://www.hotrodandrestoration.com/news-events/editors-corner-sema-celebrates-national-collector-car-appreciation-day/ SEMA Action Network. (2012). Ties that bind. Retrieved from http://www.semasan.com/page.asp?content=sema-action-network-df-2012-07-cover-story&g=SEMAGA Read More