FOX Factory Projected to Sell Off SCA Group Within the next 18 Months!

 I do not own FOX stock.

Offloading SCA Group

I expect FOX to sell off their SCA Group and retain the Tuscany upfit brand within the next 18 months, and here's why.  During the four years FOX has acquired the group, the auto market has experienced well-reported massive swings in their business during and immediately post-COVID.  With things returning to "normal" regarding inventory levels, the glaring problem with the new lifted truck market is now visible to everyone.  That is the obscurity problem; no one knows the market exists, even though new lifted trucks have existed for over a decade.  As I mentioned in a previous blog post, FOX's acquisition of the SCA Group was a lousy investment.  With the current aged new lifted truck inventory and dealer contraction with stocking new lifted trucks, FOX faces massive headwinds in the truck upfit segment.  It makes no sense for them to continue to operate multiple upfit brands that carry large overhead expenses.

Nothing to gain

The SCA Group acquisition wasn't necessary, as FOX had nothing to gain from that purchase.  Despite being in business for decades, none of the SCA Group "brands" had or have any market penetration with consumers.  They certainly could've solved whatever was missing from their existing Tuscany brand without dropping over $300M as they did with the SCA Group purchase.  For a fraction of that amount, FOX would've been better off putting the resources behind pushing their existing Tuscany Brand out to consumers.   To put things into context, in 2023, the big three sold over 2M new full-size trucks, and FOX upfitted <10K.  FOX's only consumer-recognized brand name is Shelby, licensed under their Tuscany division.  Moving into mass consumer awareness would be the easiest move with that name.  I believe that this is what FOX is planning with Shelby's name.  With AEV providing components for the GM Bison model, FOX could deliver the components for an OEM-offered Shelby package model for both Ford and RAM, as the Shelby name has a history with both OEMs. Even if FOX books $20M in profit per year from the SCA Group, it will take 15 years to recoup the original purchase price.  A time frame Wall Street doesn't have patience for.







  

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