There are few people in Canberra who have not heard of the Summernats Festival. The first festival was held in 1988 and is now one of, if not the best-known car festival in Australia. The festival has set not only records for car entries but also attendances with around 100,000 people from around the country and the world attending the four-day event.
Summernats has not been without its detractors, but love or hate the festival, it not only generates over $30milion dollars each year for the Canberra economy, but it also highlights the rapidly growing aftermarket automotive industry both in Australia and internationally.
The Summernats festival was sold to Andy Lopez and two other partners in 2009 and their focus was on building the brand into one of the world’s best-known car festivals. Over the past 10 years, the business has grown to include a suite of festivals around Australia, as well as partnerships in New Zealand and the US. It generates increasing financial returns through international and domestic tourism and is supported by a gaming app “Burnout Masters” with well over 1.5million downloads worldwide and online merchandising. Summernats is so much more than a car festival for ‘petrol heads’. The festival is for the passionate car enthusiast that is obsessed with the idea of creating that perfect car.
To put the potential size of the Summernats market in context, the Australian aftermarket automotive parts sector is worth over $11billion US dollars per year and is growing rapidly 1. Worldwide this market is worth in excess of $375billion US dollars and is expected to grow at about 4 percent per year over the next decade 2. Passionate car collectors, restorers and exhibitors support this market.
According to Andy, the festival was born in Canberra and no matter how big the business gets this will always be home to the original idea and the business engine that sits behind it. The company currently employs nine people that work full and part-time.
A bit of history
Summernats is traditionally a large live event. Andy says that this year’s event, which would have been the 34th, has been postponed because of COVID. “With the uncertainty around venue availability and crowd capacity, it just made sense to postpone it until 2022.”
Andy says that he and the other two partners bought the event back in the middle of 2009 and have run it since 2010.
“When we bought the business, it had a lot of heritage value. I had never been to the event and neither had either of my business partners, but we understood the value of the brand.
“Two of us come from an event management background and the other from advertising and our interest in Summernats was initially as an event business. It had reasonably good attendance at the time. Even though the numbers were in decline, the fall had kind of stopped and attendance numbers varied by two to 3% every year”.
Andy explains the interest by saying that he and the partner’s background was in large public events - sport, government and festival work. They also did some corporate awards and charity work, but sport and outdoor public celebrations was their main line of work.
“At the time, we were doing a lot of work with the ACT government and it was actually a government contact who said that Summernats was coming up for sale. This was about 12 years ago now and she said, while we don't really admit it, the government really likes the event because it brings so much money into the city. She suggested that we have a look at it. If it wasn’t for her it would never have come onto our radar”.
Andy acknowledges that there were some poor public relations issues associated with the event and he says while some were a perception issue; some of the problems were real. But it was a really good brand that had an almost iconic status.
“So, we made a decision after looking at the numbers and thought we can turn this around and do something interesting with it by addressing the issues that have probably stopped it from growing. We want to get back to the things that have made it really successful and then add in some new stuff to attract a wider audience”.
What does Summernats look like now?
Andy says that they have not for a moment regretted buying Summernats and the team has had a great time running the event since. To date, the company has added three new festivals to the portfolio.
An annual event in Alice Springs is coming up to its seventh year. This is delivered in partnership with the Northern Territory government and is called Red CentreNATS. It brings around a 10 or $11 million economic impact into Alice Springs each year.
A new event will be delivered for the Rockhampton Regional Council in Queensland called Rockynats. “This was scheduled for June this year but is being pushed out to April 2021 Easter long weekend. Car entries sold out months before the event and tickets have been fabulous. The Regional Council are keen to be involved because they see it as a big tourism driver”, says Andy.
The other event that has been added to the portfolio is an event called MotorEX, which is a business-to-consumer show.
“We have partnered with the SEMA Specialty Equipment Market Association (SEMA) in the US. The aim of this partnership is to work with Australian businesses to showcase their products to American automotive industry, and vice versa,” says Andy.
“We have a lot of producers and distributors in Australia which are very dependent on the American market, particularly the specialty aftermarket stuff. The US market for this is massive. SEMA’s traditional objective was to send American products out of their country, but by us forming this partnership we help profile Australian businesses to them,” says Andy.
The first MotorEX event was held in 2000, and the team took over the event in 2017. Andy says, that they bought MotorEX, which had similar issues to Summernats, in that it had a really good heritage brand. It wasn't in the same level of decline, but audience participation had stagnated. We just felt there was more to do.”
The exporting side of things
The company has really only been focusing on exports for the last three or four years.
“Our understanding of export was really about taking our culture to the US market and trying to create inbound tourism back into Australia. That was our first idea about export and we had some reasonable success,” says Andy.
“It is still too early to determine the impact on sales from the MotorEX events,” says Andy, “because we don’t have enough data yet”.
However, based on market observations, Andy says that there is clearly a more united Australian presence in the market – a strong central narrative is developing. Andy says that it’s not all due to their involvement, but getting SEMA to engage with Australian businesses has clearly had an impact.
“In our world, having that commonality – allowing businesses to talk about their products in a real live application is a big thing.
“There is a company in Australia, for example, called Rare Spares and they export parts. The biggest Holden owners club in the world outside of Australia is actually in Indonesia. While not many people take this market seriously it is in fact a multi billion dollar industry,” says Andy.
Andy goes on to say that people who get their cars ready for Summernats spend $25m every year preparing their cars specifically for Summernats (IER 2020), and many aftermarket companies have done well during COVID.
“It’s the automotive equivalent of the Bunning’s DIY COVID phenomenon.”
TV and digital is also a big part of the Summernats story.
“We started bringing American automotive influencers to Australia to report on what we do and send those messages back home. We have been doing this for four or five years.
“We would find a high profile, automotive content or television brand like Street Outlaws in the US; one of Discovery Channel’s highest rating shows and not just in the automotive segment, but general viewing. It is a massive brand in the US and we managed to convince those guys to come to our show way back at Summernats 30.
“Now we have started bringing in digital and social YouTube influencers. We fly them into Australia and bring them to Summernats and they pump our message out. This not only increased our fan base in the US but also encourages people to actually attend,” says Andy.
Around 300 US visitors attended their last event and Andy thinks that is a decent result for a Canberra-based car show. New Zealand is also a big market.
“When we created the TV show with the Street Outlaws, we did a similar thing in New Zealand. This is what led us to develop our game, “Burnout Masters’.”
“New Zealand and the US are currently Summernat’s main markets. Europe has a really big automotive scene. Sweden for example, is massive,” says Andy.
“It is strange the countries where you find this level of passion. We set a Guinness World Record for the world's biggest burnout. We did it as a stunt but ended up with an official Guinness World Record. We went on to do it three times, but a group in Poland tried to break our record and a group in Saudi Arabia eventually beat it in 2017. We took the record back and then Guinness World Records said that they didn’t want to see it anymore and cancelled it,” says Andy with a laugh.
South East Asia is also a big opportunity by Summernats.
“Our medium to long term goal with MotorEX, for example, is to make that the Asia Pacific business-to-consumer trade show and the must go to trade show in the Asia Pacific. We have found that our events provide a really good opportunity for consumers to tell businesses what they think as well as buy their product.
‘Rare Spares have been coming to Summernats since the beginning and they said that while they sell a lot of product, it's not really why they come. It’s because their customers will tell them what they think about want they should be doing. The sellers get to meet hundreds if not thousands of potential customers over four days. This becomes an essential part of their product development cycle - feedback and improvement,” says Andy.
Diversifying while remaining true to your core
While Summernats has created a calendar of new events that fit within current COVID-19 parameters and prepares for a move back to larger scale events, the company has also focused on two other streams to assist its growth. One is the game and the other one is online merchandise.
“We had kicked the game off around the beginning of January this year,” says Andy.
“The game was a tool to help us grow our US and domestic markets. We kind of anticipated that more than 50% of the uptake would be international. It started out as a big marketing exercise for us and then started generating income.
“The game sales and being able to stage our festival in Alice Springs, the Rockhampton event and a small test event in Sydney during COVID have helped maintain our cash flow and keep all the staff paid,” says Andy.
COVID has also provided the opportunity to place more focus and resources into the game to make it more successful and in turn increase its importance to the business.
“The game is built locally by a bunch of passionate game developers – Roadburn, and is a free download with in-game purchases. We have done a partnership with them and it’s great to have different expertise and influences on its development. We have actually started looking at things within our events that we think would translate into a game activity,” says Andy.
Summernats also sells merchandising overseas.
Andy says that the company looked at its merchandise sales at events and found that they had a really good merchandise business.
“We sell more than some small clothing companies in Australia over the four days of Summernats. We design produce and retail these. I talked about partnerships with influencers and at every event they attend we create specially branded products and then build it into the game.
“The game profiles our events and hopefully brings people to Australia – so we are also exporting tourism.”
The company has never sold merchandise online. Andy says that it’s almost like we hadn't heard of the Internet until this year.
“We decided during COVID that we were going to become an online clothing business as well. We have worked hard and fast and went live in July. It's going well and we are generating sales overseas. This is something that we will continue to grow exponentially. We are also starting to partner with American influencers to produce and develop merchandise to sell online,” says Andy.
Summernats has partnered with a company called LIfestyle Merchandise in Queensland for some time. Andy says that for many years Summernats had their products manufactured overseas but as exchange rates and other things changed, producing it overseas became a case of increased effort for limited saving. They went back to the local producer who now manages the input and manufacturing process. This means that Summernats haven’t really experienced any direct supply chain issues during COVID.
Andy says that about 40% of their merchandise is sold overseas.
Working as a team
Andy says that before COVID the company had people working remotely, so this wasn’t a big pivot for them. He believes that working from home will remain an option for Summernats, but in the creative sector nothing beats the dynamic of being in the same place tossing ideas around and collaborating – or at least for Summernats.
“We do meet more as a team now than we ever have. When this first happened, we made sure that everyone was on the daily team catch up, which is something we've never done. We still do this every day even though most of us are now back in the office. We've learned to have really good discussions about new opportunities.”
Lessons learned
Andy says that given what they have learned the company will keep focusing on the digital business. “The game is part of that and we are looking at how to better to work with Summernats and our associated events in our community to support it – these are an amazing source of content and data. International downloads are outpacing domestic downloads four times over.
“We have also put a lot of focus on understanding our audience beyond just wanting to sell them a ticket. And now we can give our partner businesses access to this audience. For our Australian businesses, we give them a profile in a community that has an international reach, whether digitally or at our face-to-face events. We are latecomers to the digital space but it's never too late to have a good time and generate some income,” says Andy.
Andy is also focused on how to create additional sources of income for the business.
“We want to leverage off what Chic Henry did in establishing Summernats and what we have all done over 35 years, to make the brand itself more valuable and meaningful. Our event changes every year and we want to grow it and continue introducing new events. It is hard to replicate the excitement and enthusiasm without a physical event. Events and festivals are important to the community because they create a sense of belonging to a “team” that shares a common interest and passion.”
1 (https://www.prnewswire.com/news-releases/australian-11-48-billion-automotive-aftermarket-trends-to-2025--300724487.html).
2 (https://www.grandviewresearch.com/industry-analysis/aftermarket-automotive-parts-market)
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