4WD: Testing the resilience of consumer spending

4WD: Testing the resilience of consumer spending

I recently caught up with Stewart Oldfield from Field Research. Stewart has been a finance journalist for over ten years with the AFR, a research analyst and currently provides information to investment groups through Field Research to talk about the current state of the 4wd industry and how Carbon Offroad has been tracking as well as what the future holds for the business. 

Despite current economic uncertainty, enduring demand for offroad vehicle accessories and a post-COVID shift in market dynamics will continue to drive the 4WD accessory industry forward on a path of steady growth.

That's the view of Daniel Kozaris, owner and managing director of Carbon Offroad Australia and 4x4partsstore.com.au. Mr Kozaris has over a decade of experience in the automotive aftermarket retail sector.

Carbon Offroad is a leading retailer of aftermarket 4WD accessories, specialising in lightweight electric winches, suspension and recovery equipment.

The company's products are distributed by approximately 300 dealers in Australia and New Zealand, including both independently owned 4WD specialists and large online retailers. Sales are split approximately 70 per cent through wholesale channels and 30 per cent direct-to-customer online. Carbon Offroad also has an online retail presence in the US.

Mr Kozaris says that despite economy-wide pressures on consumer sentiment, Carbon Offroad is planning for growth. The company has increased its product offering to cover a larger market segment, including with the launch of a 20,000lb truck winch earlier this year.

"In terms of volumes, we're not planning on slowing down, and we're aiming for a 30% increase on revenue compared to FY2023.

"When we make decisions about the future of the business, we are paying close attention to the state of the economy and the appetite for spending in the consumer sector, which is very uncertain. However, at both a consumer and wholesale level, it's hard for people not to consider us, because we're just such good operators.

"We're probably in the top three brands of winches available in Australia at this point, which is a great achievement for us as a business."

Mr Kozaris says Carbon Offroad's typical customers are male drivers aged between 18 and 60, seeking accessories for dual cab utes or 4WD wagons. He has noticed a steady growth in female clientele and general interest in the market space as well.

Carbon winches, the company's core product offering, are targeted at the mid-market space and aim to provide "extreme value for money", with a high level of product performance, aftermarket support, tech support and warranty support.

The company's high volume winch product retails for $1,099, and its premium winch is priced at $1,599. The majority of the company's winches are contract manufactured in China.

Mr Kozaris says that as the industry emerged from COVID, freight and manufacturing cost increases led to a contraction in the availability of winches, particularly in the budget end of the market. This has pushed a significant number of customers into the mid-market space.

"Right now, in some of the marketplaces, there's still a very limited availability on the cheaper end. People who were looking at the cheaper options are saying: 'We might as well buy a Carbon Offroad winch instead because they're here in Australia, and they'll back up their products. We'll pay extra, but we know we're going to get better value out of that.'"

Mr Kozaris says the company is taking the opportunity to engage in extensive product development, including making a number of products compatible with upcoming electric and hybrid vehicles.

"These sort of potential easing periods or slowdowns; we just see them as massive opportunities for business development activity."

Mr Kozaris says that after launching in 2016 Carbon Offroad winches were an immediate hit, catering to a long underserviced niche in the market.

"Back then we didn't really understand what the real opportunity was for the business, but it was made clear within the first two years what the potential would be.

"I think we're just at the tip of the iceberg in terms of our real capacity as a business. So we've got some solid plans for growth over the next three to five years."

You can read at the link here as well: https://mailchi.mp/fieldresearch/kozaris-310723

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