Chevy's $2.5 Billion Corvette
The Companies, People and Money Behind Chevy's Sports Car
Corvette sales were weak last year. Chevrolet sold just 14,132 examples of its two-seat sports car. That makes just one of every 614 cars sold by GM worldwide during 2012 a Corvette. If each were a stripped-down base coupe, at $50,575 each (including destination charge) that would represent $714,725,900 worth of business at retail. Chump change in the new car business, but it's just the tip of the Corvette economic iceberg.
The Corvette economy is bigger than the car itself. Much bigger. Although there are no specific market surveys, there is evidence that the greater Corvette economy within the United States is over $2.5 billion a year. Far beyond the economic activity new Corvette sales generate.
The World of Corvette Money
General Motors has produced almost 1.4 million Corvettes over the past 60 years. Most are still around and each Corvette is a small economy unto itself. A Corvette isn't an appliance like a Malibu or a tool like a pickup. It's a car built for people who love cars. Or at least for people who love the Corvette.
And because they love it they'll pamper that Corvette with exotic waxes, fancy embroidered floor mats, a tough-sounding exhaust system and shiny custom wheels. And, when it's finally all worn out, they'll restore it back to new and start the process all over again. It's a never-ending life cycle supported by companies, shops and dealerships that make, modify, restore and recycle virtually every part of these iconic machines.
Then there are all the Corvette events around the country, from auctions that sell rare, classic Corvettes for prices reaching beyond $1,000,000 apiece, mega-bashes like the Corvettes at Carlisle in Pennsylvania to the small local events like the "Daytona Party" put on by the Corvette Club of Santa Barbara this February 24 in Goleta, California. And of course there are also the Corvette toys, Corvette logo beer steins, Corvette posters and T-shirts featuring every year and variation of Corvette, and several Corvette-specific magazines and a few hundred Web sites.
Then there's the racing that's racing through the Corvette's economic bloodstream. Corvette race teams range from the factory Le Mans effort to the guy and his son running a clapped-out 1985 C4 in Wednesday night grudge matches at Raceway Park in Englishtown, New Jersey.
The Enthusiasm Business
"You go to any city or any car show and there will be restored Corvettes there," says Mike Yager, 63, who started Mid America Motorworks in February 1974 with a $500 bank loan and a few unlicensed Corvette jacket patches and owner's manuals to sell. "I was in a Corvette club so I knew there were places that sold a few Corvette things. But there was no place that sold a lot of Corvette stuff."
Almost four decades later, according to Yager, the company has about 100 employees and does between $40 million and $50 million in sales annually. And it still relies on Corvette parts and products to bring in about 65 percent of its business.
"How many Corvettes are out there in garages being restored?" Yager asks rhetorically. "Ten thousand? 20,000? 30,000? We've barely even touched that market. A car that had a new carpet set put in it 10 years ago needs a new carpet set now. It's endless. You look at a '67 Corvette that's done to a Bloomington Gold or NCRS standard. It doesn't take a lot of $100 grand restorations and you're at a million dollars."
In the village of Valley Stream, near the southwestern tip of New York's Long Island, Kevin Mackay, 56, has been restoring classic Corvettes to the highest level since 1985. "Most of my clients aren't kids," he explains. "Most of my clients are in their mid- to late-40s or older. These are guys in their 50s and 60s who want to remember their college days. They're buying these cars instead of real estate. We've always been very busy and business is not trailing off. People ask me 'How can you have a business doing Corvettes only?' And I tell them that it's all I know."
The demographics are in the Corvette's favor for the foreseeable future. The generation that grew up lusting after first-generation "solid axle" Corvettes may be fading away, but the baby boomer generation who craved the 1963-'67 C2 and 1968-'82 C3 generations is in its most robust earning years or nearing a prosperous and indulgent retirement. According to Hagerty Insurance, which specializes in classic car protection, the Corvette remains the No. 1 collector car it insures, just ahead of Ford's Mustang.
The old Corvette restoration business in the United States has to be worth at least $200 million annually.
A License To Print Corvettes
According to General Motors, the Corvette represents about 25 percent of Chevrolet product licensing and "is the highest licensed product of any Chevrolet or GM product." Considering the Corvette represents only about 0.75 percent of Chevy's product sales in the United States, the dominance of the Corvette in the licensing arena is amazing.
Product licensing — the use of trademarks and proprietary designs within merchandise licensed to outside vendors — used to be something GM barely seemed to care about. In the '60s and '70s, when sports leagues like the NFL and TV networks were turning the product licensing businesses into revenue juggernauts, GM did little to enforce its trademarks. That has changed.
"They're a pain in the ass," says Mike Yager, whose company makes licensed Corvette products. "You can quote me and every other licensee on that statement."
According to Global License, a New York-based trade magazine, GM was projected to be ranked 12th in retail licensed product sales during 2012. That's worth about $3.5 billion and, spit-balling if Chevrolet is worth 75 percent of that and Corvette is 25 percent of Chevrolet, that puts the Corvette licensed revenue at about $656 million, of which GM collects about $70 million a year for just picking up checks at the mailbox.
The Corvette Lives On
Picayune, Mississippi, is a small town that serves as a bedroom community for nearby New Orleans. It's also home to Dino's Corvette Salvage and Sales, the self-proclaimed "world's largest Corvette-only salvage facility."
"We have several thousand on the lot," says owner Dino Behler, 46, with his New Orleans drawl as he looks out over four acres of C3, C4, C5 and a few C6 Corvettes. "We're a few years behind the curve. The C7 will make the C6 easier to find. There's more of a finite market for C1s and C2s, so we don't really deal in those."
Behler opened his business back in 1998 when he began brokering Corvette parts on eBay. A few years after that he began buying wrecked Corvettes and parting them out in the parking lot of his New Orleans apartment building. By the time he moved everything to Picayune, he was buying three or four wrecked Corvettes a week. Now the business is robust enough that he owns the land and building it occupies debt-free, has six employees and the $250,000 a year the company makes on eBay alone is enough to cover expenses. "Unlike other cars, every part of a Corvette is worth something," he explains. "We can pull the bolts out of a car's interior, bag them up, and sell that to people who need original bolts."
Behler's company has been so successful that he's split it into two: one to handle complete car sales and the other parts. "If we went over a million in sales, that would bring a lot of hassle," he says. "But I've never increased my own salary and most of our money is in inventory."
Even when a Corvette has reached the end of its life, there's still money in it.
In yet another small town, this time Templeton, California, in San Luis Obispo County, Newman Car Creations is putting C4 Corvette parts to good use underneath even older C1 Corvettes and other old Chevys. Paul Newman, 66, whose middle name should be "Not That Paul Newman," is a pioneer in the hot rod chassis replacement industry, and what he builds depends mostly on Corvette suspension components.
"The C4 suspension is a complete unit," Newman says. "And it fits perfectly under the tri-five [1955, '56 and '57] Chevys. The cores are coming out of junkyards and I try and acquire as many fronts and rears as I can."
Newman's business has been hammered by the downturn in the construction industry. "The contractors were dropping like flies and when they went away, my phone stopped ringing," he laments. But he still has four employees and he's still building rolling chassis and complete cars.
"I've had to make some C4 parts," Newman continues. "And had to re-manufacture ball joints and such. I'm not a coil-over fan; the coil-overs are hard to fit and require maintenance. Vette Brakes & Products out of Florida makes good leaf springs."
So even when a Vette dies, parts of it are likely to live on even under cars that aren't Corvettes.
Corvette Bottom Line
This look at how the Corvette industry spreads out can't be anywhere near comprehensive. We didn't even get into used or Classic Corvette sales or even mention media related to the sports car. Plus, much of this is spit-balling and speculation. Sill, let's take a shot at determining how much the complete Corvette economy is worth every year.
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And that's bound to grow with the introduction of the new C7 Corvette. "Corvette licensing is growing and there is a tremendous amount of excitement and anticipation from licensees for the new C7 Corvette Stingray," GM's licensing team told Edmunds.com. "A range of high-quality licensed merchandise is being developed for release in 2013. Since the introduction of the C7 at NAIAS, there has been a high demand for Stingray pins."