Holley Inc. (HLLY): PESTLE Analysis [Nov-2025 Updated]

If you're invested in Holley Inc. (HLLY), you know the performance aftermarket is a tight, passionate space, but the macro forces-Political, Economic, Social, Technological, Legal, and Environmental-are creating real turbulence right now. The bottom line is that Holley's resilient enthusiast base is keeping the lights on, with 2025 Revenue projected around $700 million, but the clock is ticking on their transition to Electric Vehicle (EV) performance parts. We'll break down exactly how EPA enforcement, inflation, and the rise of digital commerce are shaping their future, because ignoring these external pressures would be a defintely mistake.

Holley Inc. (HLLY) - PESTLE Analysis: Political factors

EPA enforcement actions against emissions-defeating parts remain a major threat.

The regulatory environment, specifically the U.S. Environmental Protection Agency (EPA) enforcement of the Clean Air Act (CAA), poses a significant, ongoing risk to Holley Inc.'s (HLLY) business model. The EPA's National Enforcement and Compliance Initiative (NECI) against 'aftermarket defeat devices' is not slowing down; it's a top priority for the agency.

This is a clear, existential threat to any company that sells products that could be used to bypass a vehicle's emissions control systems, even if they are marketed for competition-only use. The financial consequences are substantial and immediate. For example, in January 2025, an automotive parts distributor, Meyer Distributing, agreed to pay $7.4 million in civil penalties for selling over 90,000 such devices between 2018 and 2020. That's a huge number.

From Fiscal Year 2020 through 2023, the EPA finalized 172 civil enforcement cases against companies in the aftermarket, collecting civil penalties totaling $55.5 million. This pressure forces Holley to invest heavily in obtaining California Air Resources Board (CARB) Executive Orders (EO) and EPA-compliant products, which adds to research and development (R&D) and compliance costs. The regulatory line is defintely getting tighter.

Here's the quick math on recent EPA enforcement actions against aftermarket sellers:

State-level 'Right to Repair' legislation could expand aftermarket opportunities.

While federal emissions rules tighten, a different political trend at the state level presents a major opportunity: the 'Right to Repair' movement. This legislation aims to force Original Equipment Manufacturers (OEMs) to provide vehicle owners and independent repair shops-like those who use Holley's products-with access to the same diagnostic tools, parts, and repair information as their authorized dealer networks.

As of early 2025, over 20 states had active Right to Repair legislation, showing significant momentum. This is a huge potential market expansion for Holley, especially in the performance and customization segments.

The key benefits for the aftermarket from this legislative push include:

• Prohibiting 'parts pairing,' which uses software to restrict non-OEM parts installation.
• Requiring OEMs to make repair tools and documentation available on fair terms.
• Leveling the playing field for independent shops against dealerships.

Oregon's law, for instance, took effect on January 1, 2025, and specifically prohibits manufacturers from using parts pairing to block consumers from installing replacement parts. Pennsylvania's House Bill 1512 also advanced in June 2025, proposing comprehensive right-to-repair requirements. This movement directly supports the consumer's right to modify and repair, which is the core of Holley's business.

Trade policies and tariffs on Chinese-manufactured goods impact supply chain costs.

Trade policy has become a major headwind for supply chain management in 2025. The imposition of new tariffs on automotive parts, particularly those sourced from China and other non-USMCA countries, directly increases Holley's cost of goods sold (COGS).

Effective April 3, 2025, a 25 percent tariff was levied on certain imported auto parts, including engines, transmissions, and electrical components, under Section 232 of the Trade Expansion Act. Separately, a 10% reciprocal tariff on Chinese imports remained in effect as of October 2025, adding another layer of cost and uncertainty. This kind of volatility makes long-term sourcing contracts a nightmare.

Still, this political risk has a strange upside: the tariffs are estimated to raise the average transaction price of a new vehicle by about $5,300. This widening price gap between new cars and the existing vehicle fleet makes the aftermarket-Holley's domain-more attractive to consumers looking to maintain or upgrade their current vehicles instead of buying new ones. The tariff cost is a pain, but it pushes customers toward the aftermarket.

SEMA lobbying efforts influence regulatory clarity for performance parts.

The Specialty Equipment Market Association (SEMA), which Holley Inc. is a major member of, plays a crucial role in mitigating regulatory risk and creating favorable market conditions. SEMA's 2025 Advocacy Agenda is focused on several high-stakes political battles.

One major success was SEMA's effort to overturn certain Electric Vehicle (EV) mandates, which they argued would have put over 330,000 American jobs and $100 billion in annual economic impact at risk. This advocacy helps preserve the internal combustion engine (ICE) market, which is still the vast majority of Holley's revenue base.

SEMA is also actively pushing for the federal Right to Repair Act and continues to advocate for regulatory clarity on emissions, including Leno's Law in California. They also secured key tax relief for member companies in 2025, including making the Section 179 expensing cap permanent and expanding business interest deductions. This is a direct financial benefit to Holley's capital expenditure planning.

Action Item: Supply Chain Team: Model the Q4 2025 COGS increase from the 25% parts tariff and identify alternative non-tariff-impacted suppliers for 15% of high-volume parts by year-end.

Holley Inc. (HLLY) - PESTLE Analysis: Economic factors

Inflation and high interest rates pressure consumer discretionary spending on upgrades.

You are navigating a tough macro-environment where persistent inflation and high interest rates are squeezing the core enthusiast consumer. The Federal Reserve held the federal-funds rate steady at 4.5% as of March 2025, following a series of cuts, but this rate is still high enough to impact borrowing costs for both consumers and Holley Inc.. This elevated cost of capital directly hits big-ticket discretionary purchases, like performance vehicle upgrades, which are often financed.

The core Personal Consumption Expenditures (PCE) inflation rate, the Fed's preferred measure, was projected to be around 2.8% for 2025, still above the 2% target. This persistent price pressure, coupled with an unemployment rate that has edged up to 4.4% as of September 2025, means middle- and lower-income households are prioritizing essentials. This creates a 'K-shaped economy' dynamic where the high-income enthusiast remains resilient, but the broader customer base is pulling back on non-essential spending like performance parts.

Analyst consensus projects Holley's 2025 Revenue to be around $700 million.

While some earlier analyst models might have targeted a higher figure, the most recent company guidance reflects a more realistic view of the current economic headwinds. Holley Inc.'s updated full-year 2025 outlook for Net Sales is projected to be between $590 million and $605 million. This range, released in November 2025, reflects year-over-year growth of between 2.5% and 5.1%, showing a resilient core business despite the market pressure. The company is still growing, but the pace is moderate, not explosive.

Here's the quick math: achieving the midpoint of this guidance, $597.5 million, would require a strong finish to the year, building on the $138.4 million in Net Sales reported for the third quarter of 2025. The core business net sales growth of 6.4% in Q3 2025 shows that strategic initiatives, like expanding across the four consumer verticals (Domestic Muscle, Modern Truck & Off-Road, Euro & Import, and Safety & Racing), are working to offset the broader economic slowdown.

A strong US dollar makes imported raw materials more affordable.

To be fair, the US dollar's performance in 2025 has been counterintuitive. While a strong dollar should lower import costs, the dollar has actually weakened appreciably, down more than 7% since December 2024, which tends to make imports more expensive. This dollar weakness, combined with the impact of new tariffs, is putting upward pressure on import prices, especially for durable goods.

Holley is actively mitigating this cost pressure, which is critical since they use a flexible sourcing model with a diverse global supplier base. Their strategy is focused on reducing reliance on high-tariff regions and shifting sourcing to lower-cost countries that have a more stable long-term relationship with the US. This tariff mitigation effort is expected to prevent any adverse impact to free cash flow or margins in 2025.

• Sourcing shift is a key defense against currency and tariff volatility.
• Holley's gross margin was a robust 41.9% in Q1 2025, partly due to improved freight costs and operational efficiencies.
• The company is actively reducing inventory in raw materials to manage tariff and supply chain risks.

Fuel price volatility impacts the cost of enjoying performance vehicles.

Fuel price volatility remains a significant external risk. The average price of unleaded gasoline in the US was around $3.09 per gallon in November 2025, which is about 1% higher than the prior year. When gas prices spike, it hits the enthusiast's wallet in two ways: it increases the cost of using their performance vehicle, and it reduces the disposable income available for upgrading it.

The energy-driven price spikes are a key factor complicating the overall inflation outlook for the Federal Reserve. For Holley, which caters to the internal combustion engine (ICE) market, this volatility is a constant headwind. Sustained high fuel costs can dampen enthusiasm for gas-guzzling performance and off-road vehicles, potentially shifting consumer interest toward more fuel-efficient or electric vehicle (EV) platforms in the long term.

Holley Inc. (HLLY) - PESTLE Analysis: Social factors

The enduring 'car enthusiast' and DIY (Do-It-Yourself) culture provides a stable customer base.

The foundation of Holley Inc.'s business is the deeply ingrained US automotive enthusiast and Do-It-Yourself (DIY) culture. This isn't a fleeting trend; it's a stable, multi-generational lifestyle. The overall U.S. light vehicle automotive aftermarket is a massive market, projected to reach $435 billion in 2025, demonstrating the sheer size of the consumer base dedicated to vehicle maintenance and enhancement.

The DIY segment, which is Holley Inc.'s core customer, is expected to register the fastest growth rate within the aftermarket. This is a technologically competent customer who is comfortable researching and buying performance parts online. For Holley Inc., this translates directly into strong Direct-to-Consumer (DTC) performance, which saw a 10%+ increase in Q1 2025, with third-party marketplace sales growing over 50%. This is a defintely strong tailwind.

The average age of vehicles on US roads remains high, supporting the repair and upgrade market.

The aging US vehicle fleet provides a structural, long-term opportunity for the aftermarket parts industry. When new and used vehicle prices remain high, consumers prioritize maintenance and upgrades over replacement. The average age of U.S. light vehicles reached 12.8 years in 2025. This means a significant portion of the car fleet is out of its original warranty period and is ripe for both necessary repairs and performance modifications.

For Holley Inc., this aging fleet is crucial because older vehicles require more replacement components and are often the target for classic performance upgrades. Passenger cars, which include many classic muscle platforms, now average 14.5 years in service. This extended lifespan directly boosts demand for Holley Inc.'s specialized components. Here's the quick math on the market structure:

Shifting demographics show younger buyers are increasingly focused on vehicle personalization.

The emerging purchasing power of Millennials and Generation Z (Gen Z) is driving a significant shift from simple ownership to deep personalization. For these younger buyers, a vehicle is an extension of their personal brand, not just transportation. This cohort is actively engaged in customizing their cars with unique paint, decals, and performance modifications.

Millennials are now the dominant force in new car purchases, accounting for 35% of all new car purchases in Q1 2025. This group, along with Gen Z, is digitally native and expects a high degree of customization, which aligns perfectly with Holley Inc.'s diverse portfolio of performance brands across Domestic Muscle, Modern Truck & Off-Road, and Euro & Import verticals.

Social media and influencer culture drive demand for specific, high-visibility performance products.

Social media platforms have fundamentally changed how performance parts are discovered, evaluated, and purchased. For Gen Z, platforms like Instagram, YouTube, and TikTok are essential in shaping purchasing decisions and brand loyalty. This is a massive opportunity for Holley Inc. because their products are inherently visual and performance-oriented.

The industry is seeing social commerce-the ability to buy directly within the platform-become the dominant channel for the automotive purchase journey by 2025. Holley Inc. is already capitalizing on this, using social media and influencer partnerships to generate significant media value. The content that drives this demand is highly authentic and often short-form, showcasing the build process and the final performance. Actions driven by this trend include:

• Influencers sharing their car customization journeys, inspiring followers to modify their vehicles.
• Short-form video content (Reels, TikToks) making car modding trends go viral.
• Digital influence impacting an estimated 90% of DIY and enthusiast consumer purchases.
• Holley Inc. expanding its digital strategy to include content marketing and SEO to capture this online research and purchase behavior.

Holley Inc. (HLLY) - PESTLE Analysis: Technological factors

The transition to EVs requires a rapid shift in product development from combustion to electric performance.

You need to see a clear pivot toward Electric Vehicle (EV) performance, but Holley Inc.'s 2025 product innovation remains overwhelmingly focused on its core Internal Combustion Engine (ICE) enthusiast base. The company's strategic focus is still segmented into Domestic Muscle, Modern Truck & Off-Road, Euro & Import, and Safety & Racing, all categories heavily reliant on traditional powertrains. Product innovation and strategic pricing initiatives did contribute a strong $30.1 million in revenue year-to-date through Q3 2025, but the launches highlighted at SEMA 2025-like the expanded EFI (Electronic Fuel Injection) ecosystem-are purely combustion-based. This is a near-term revenue strength, but a long-term technological risk.

The core challenge is that the existing enthusiast market is slow to adopt EVs, so Holley must manage the dual mandate of serving a profitable ICE base while building an entirely new EV product portfolio. This requires a significant capital allocation shift that isn't yet explicit in the financials. What this estimate hides is the potential for a disruptive EV product launch to rapidly change the revenue mix, but as of late 2025, that pivot is not defintely visible.

Digital commerce and direct-to-consumer (DTC) sales platforms are key growth drivers.

Digital technology is Holley Inc.'s clear technological strength and primary growth engine. The Direct-to-Consumer (DTC) model, which bypasses traditional wholesale distributors, allows for higher margins and direct customer data capture, which is invaluable for product development. This digital channel is demonstrating consistent, measurable momentum in 2025.

The numbers show this channel is working hard for the company:

• DTC orders grew 4.2% in the third quarter of 2025, marking the seventh consecutive quarter of growth.
• In the second quarter of 2025, DTC orders grew over 8.6% year-over-year.
• Sales through third-party platforms (like Amazon and eBay) increased by more than 28% in Q2 2025.

This omnichannel approach, which includes the B2B channel growing at approximately 7.3% in Q3 2025, is central to the strategic framework that drove approximately $27.8 million in revenue on key initiatives for Q3 2025. That's a solid return on digital investment.

Advanced manufacturing (e.g., 3D printing) allows for faster prototyping and custom parts.

The shift to advanced manufacturing (AM), particularly 3D printing (Additive Manufacturing), is a critical technological opportunity for a custom parts business like Holley Inc. While the automotive and racing sectors are scaling AM for end-use, high-performance components by 2025, the company has not publicly quantified its internal adoption. You need to assume that Holley is investing here, given the industry trend toward using AM for lightweight, high-strength parts in the automotive sector.

Here's the quick math on the investment capacity: Holley's full-year 2025 Capital Expenditure (CapEx) guidance is between $10 million and $14 million. A significant portion of this CapEx is likely funding the industrialization of manufacturing processes, including the integration of AM for faster new product introduction (NPI) and localized, on-demand production. This technology is essential for reducing lead times and creating complex parts that traditional casting or machining cannot easily replicate.

Integration of software and diagnostics into performance parts is becoming essential.

The performance aftermarket is now a software game, and Holley Inc. is actively integrating digital diagnostics and tuning into its product lines. Modern performance parts are essentially hardware platforms controlled by sophisticated software, and this integration is key to the enthusiast experience.

Key 2025 product launches demonstrate this focus:

• The expanded EFI ecosystem (Electronic Fuel Injection) is bundled with the HyperSpark ignition system, offering a complete, software-controlled engine management solution for older vehicles.
• The launch of Modern Truck & Off-Road Performance Packages includes 'Trusted Tuning' options from brands like DiabloSport and Superchips, which provide on-the-go performance calibration and optimization via handheld or in-cabin tuners.
• The APR Ultralink expansion focuses on simple, at-home tuning for the Euro & Import market, translating complex engine control unit (ECU) recalibration into an accessible digital product.

This strategy of bundling hardware with proprietary software and diagnostics creates a high barrier to entry for competitors and locks the enthusiast into the Holley ecosystem. It turns a one-time hardware sale into a potential recurring software relationship.

Holley Inc. (HLLY) - PESTLE Analysis: Legal factors

Product liability and safety standards for high-performance automotive parts are strict.

The core risk for Holley Inc. is the potential for product liability claims, especially since its products modify vehicle performance, which inherently carries safety implications. This is not an abstract risk; it requires continuous, expensive compliance and quality control. For example, Holley's Safety & Racing vertical, which includes brands like Simpson, Stilo, and RaceQuip, is directly impacted by the rigorous standards set by organizations like the Snell Memorial Foundation.

In a clear move to mitigate this liability and maintain market leadership, Holley debuted its next-generation helmet line in October 2025, which complies with the new Snell SA2025 safety standards. Still, even with high internal standards, supply chain risks remain. A real-world example from 2025 is the NHTSA Safety Recall Report 25E036 issued in May 2025, which involved certain bypass fuel pressure regulators manufactured by a third-party supplier and imported by Holley. The recalled population was identified by date codes from 140'24 through 049'25 stamped on the box. This single incident shows that product liability risk extends deep into the supply chain, and managing it is a constant operational cost.

Holley has been focused on quality enhancements, which is reflected in their Q1 2025 earnings call, where they noted improved operational efficiencies and a reduction in warranty costs. This suggests that proactive quality control is having a tangible financial benefit, helping to protect the 41.9% gross margin achieved in Q1 2025.

Intellectual property (IP) protection for proprietary designs against counterfeiters is critical.

Protecting proprietary designs-the lifeblood of a performance parts company-is a constant legal battle against counterfeiters, especially in the e-commerce space. Holley's portfolio of iconic brands and patented designs, while not dependent on any single patent, requires ongoing legal investment to maintain its competitive edge.

The company's 2025 Form 10-K filing acknowledges the risk of becoming involved in legal or regulatory proceedings, including intellectual property claims or lawsuits that could cause them to incur significant costs. The threat of unauthorized sales of Holley products is a direct risk to brand reputation and revenue. Here's the quick math: if counterfeits erode just 1% of the core business net sales, that's a loss of approximately $1.53 million based on the Q1 2025 core net sales of $153 million.

The broader legal environment in 2025 shows a shift toward stronger IP enforcement, which is a tailwind for Holley:

• The increasing use of the U.S. Defend Trade Secrets Act (DTSA), which saw trade secret litigation increase exponentially since 2016, offers a powerful tool for protecting proprietary engine tuning and performance formulas.
• State Attorneys General are escalating anticounterfeiting enforcement against e-commerce platforms, providing brand owners like Holley with new avenues to fight unauthorized sellers.

Holley must defintely continue to invest in monitoring and enforcement, treating their IP portfolio as a strategic asset, not just a legal compliance issue.

Compliance with CARB (California Air Resources Board) emissions standards is mandatory for sales in key markets.

For any performance aftermarket company, compliance with the California Air Resources Board (CARB) is the biggest regulatory hurdle, as non-compliance means being shut out of the largest U.S. automotive market and a growing number of other states. Compliance is achieved by obtaining a specific CARB Executive Order (EO) number for each product that affects emissions, like a carburetor or header.

The regulatory landscape is getting tougher in 2025, and this is a major near-term risk/opportunity:

• CARB Expansion: In 2025, the CARB's influence is expanding beyond California, with states like Oregon, Washington, New York, New Jersey, and Massachusetts adopting CARB laws. This means Holley's compliance efforts now need to cover a significantly larger portion of the U.S. market.
• Focus on Fleets: New regulations like the Clean Truck Check Program, which began in January 2025, require periodic emissions testing and reporting for heavy-duty vehicles, indirectly increasing the demand for compliant parts across the industry.

For Holley, a non-compliant product is a dead product in these key markets. The process is slow, but the payoff is access to a massive customer base. Holley's ability to successfully launch new products with immediate CARB EO certification is a critical competitive advantage.

Data privacy regulations affect how customer purchase and preference data is used.

As a direct-to-consumer (DTC) and e-commerce business, Holley collects a vast amount of customer data, from transaction history to vehicle details (Vehicle Data, including VIN/registration, year/make/model). This data is vital for targeted marketing and product development, but it is now heavily regulated.

The year 2025 brought a significant wave of new U.S. state privacy laws, dramatically increasing the compliance complexity. This is not just a California problem (CCPA) anymore. New comprehensive state privacy laws became effective in 2025 in:

• Delaware (Jan 1, 2025)
• Iowa (Jan 1, 2025)
• Nebraska (Jan 1, 2025)
• New Hampshire (Jan 1, 2025)
• New Jersey (Jan 15, 2025)
• Tennessee (July 1, 2025)
• Minnesota (July 31, 2025)
• Maryland (Oct 1, 2025)

Holley's Privacy Policy, updated in early 2025, confirms they process a wide range of personal data and must honor consumer rights like the right to access, correct, and opt-out of sharing. The cost of compliance with this fragmented legal landscape-including data mapping, updating privacy notices, and implementing procedures to handle consumer requests within the typical 45-day statutory timeframe-is a non-value-added operational expense that must be budgeted for in the 2025 fiscal year.

Here is a summary of the data types Holley collects, which fall under the scope of these new laws:

The biggest risk here is a data breach, which could result in massive fines and a significant loss of customer trust, directly impacting the DTC channel which is a key growth area for Holley.

Holley Inc. (HLLY) - PESTLE Analysis: Environmental factors

The environmental landscape for Holley Inc. is rapidly shifting from a distant threat to a near-term operational and market challenge. The core risk is the long-term erosion of the internal combustion engine (ICE) aftermarket, but the immediate pressure comes from stricter manufacturing and disposal regulations that increase the cost of doing business today.

Here's the quick math: Holley's updated full-year 2025 net sales guidance is between $590 million and $605 million. This range reflects a solid core business-with Q3 2025 core business net sales growth at 6.4%-but it still shows the enthusiast market is sensitive to broader economic and environmental shifts. Finance: track Q4 2025 consumer discretionary spending reports by Friday.

Increasing pressure for sustainable manufacturing and reduced carbon footprint in operations.

The push for a reduced carbon footprint is no longer voluntary; it is becoming a cost of entry, especially for a public company. While Holley's primary business is performance parts, the manufacturing processes for aluminum, plastics, and electronics are under increasing scrutiny. Major European automotive aftermarket companies are already setting science-based climate targets (SBT) and aiming for 100% renewable purchased electricity by 2025, establishing a new global benchmark. This means Holley must invest in energy-efficient reactors for foam-based products or adopt closed-loop recycling systems for materials like polyurethane foam, as competitors are doing in the broader industrial market.

New regulations, such as the Corporate Sustainability Reporting Directive (CSRD) in Europe, are also increasing demands for detailed data collection and extended reporting on environmental impact starting in 2025. Even without a direct US mandate of that scale, the expectation from institutional investors, like BlackRock, for environmental, social, and governance (ESG) transparency is high. This requires a capital expenditure plan to modernize manufacturing to keep the Adjusted EBITDA guidance of $120 million to $127 million for FY 2025 stable while absorbing these new compliance costs.

Stricter disposal regulations for automotive fluids and materials impact shop and DIY customers.

The regulatory environment for hazardous waste is tightening, directly impacting both the professional repair shops and the Do-It-Yourself (DIY) enthusiast who buys Holley's fluids and materials. New regulations regarding the reporting of Per- and Polyfluoroalkyl Substances (PFAS) under the Toxic Substances Control Act (TSCA) are set to take effect on July 11, 2025. PFAS are synthetic compounds found in various industrial applications, and their new reporting requirements will add complexity and cost to the supply chain for any product using them. Plus, a change in Resource Conservation and Recovery Act (RCRA) compliance, encouraging electronic manifests for hazardous waste, takes effect on December 1, 2025. This affects all generators of hazardous waste, including smaller repair shops and even the logistics for returning certain materials, adding friction to the customer experience for DIYers.

The immediate actions needed are clear:

• Identify all products containing PFAS to ensure compliance with the July 11, 2025 TSCA reporting rule.
• Update waste management protocols for manufacturing and logistics to align with the December 1, 2025 RCRA e-manifest changes.
• Communicate clearly with B2B partners, who saw a 7.3% growth in Q3 2025, about new waste handling requirements.

The long-term push toward zero-emission vehicles shrinks the addressable market for traditional products.

The shift to zero-emission vehicles (ZEVs) is the single largest long-term threat to the traditional performance aftermarket. The US market is moving quickly; in the third quarter of 2025, EV sales reached a record 438,487 units, capturing a 10.5% market share. This is not a distant future; it's a measurable, accelerating trend.

The financial impact is twofold:

1. Fewer parts: An electric motor has dramatically fewer moving parts (a Chevrolet Bolt motor has just three) compared to a traditional four-cylinder engine (about 113).
2. Less service revenue: The cost of routine service maintenance and parts repair for EVs is projected to fall by about 60% compared to ICE vehicles.

This means the core addressable market for Holley's iconic ICE performance brands will inevitably shrink. While the global number of EVs on the road is projected to grow from 21 million in 2025 to 40 million by 2030, Holley's current revenue growth is primarily driven by its core business and strategic initiatives that contributed $30.1 million in revenue year-to-date through Q3 2025, not yet by a massive EV product volume shift.

Consumer preference is slowly moving toward eco-friendly vehicle maintenance and upgrades.

Consumer values are changing, especially among younger enthusiasts. They are increasingly seeking eco-friendly vehicle maintenance and upgrades. This is reflected in the broader market's move toward sustainable materials and the demand for products that reduce a vehicle's environmental footprint. For Holley, this means the opportunity is in 'performance electrification' and products that enhance the efficiency and longevity of existing ICE vehicles, not just raw power.

The company must accelerate its product innovation into areas that appeal to this new eco-conscious enthusiast. While Holley is showcasing new products at SEMA 2025 and seeing strong direct-to-consumer (DTC) order growth of 4.2% in Q3 2025, the market needs to see a clear, quantifiable commitment to EV performance parts to offset the long-term ICE decline. A table illustrating the market shift shows the urgency: