SEMA News—February 2014
By Steve Campbell
Tire and Wheel Trends Update
Keeping an Eye on the Evolving Marketplace
Dozens of companies displayed tire, wheel and related products at the 2013 SEMA Show, providing concrete proof that the tire and wheel segments are among the most prolific within the automotive specialty-equipment industry. As always, however, evolution is constant, so SEMA News once again canvassed wheel and tire professionals for their insights into design, construction, marketing and sales trends as we enter the new year.
“The tire market continues to increasingly splinter into more and more niche categories,” said Dave Zielasko, editor and vice president/publisher of the trade newspaper Tire Business. “One is the crossover-utility vehicle (CUV) market. It’s similar to the sport-utility market, but CUVs are getting their own versions of all-season, high-performance and all-terrain tires in larger sizes.”
Several manufacturers confirmed the increase in niches, with products designed for specific categories and intended to provide better mileage as well as improved performance. Ritche Tay, marketing specialist for Maxxis International, said that there are new designs afoot for not only crossover-specific products, but also for hybrid, diesel and electric vehicles. And Fardad Niknam, senior director of product planning and technical services for Toyo Tire U.S.A. Corp., said that consumers want it all in the tire market.
“They’re after performance, safety, long tire life and lower rolling resistance,” he said, “and we are working hard to develop new technology that improves the balance and reduces the trade-off between these attributes. For example, increased tread life with minimal effect on rolling resistance or wet braking.”
In the truck market, size is still king, according to 8-Lug HD Truck magazine editor Bob Carpenter.
“Large off-road-style tires were all over the SEMA Show,” he said. “Thirty-five-in. tires now seem small, and the trend seems to be 37- to 40-inchers. There is also a trend with large trucks to stuff the biggest, widest, fattest-lipped wheel and tire possible into the vehicle’s wheelwell.”
Another niche category that many retailers may not have considered but perhaps ought to is specialty tires—and especially tires for powersports vehicles.
“The powersports category—ATVs, quads, side-by-sides, UTVs and the like—requires specialty tires that match the terrain, application and specialty use,” said Richard Hogg, tire research and development manager for Carlisle Transportation Products. “More than ever before, side-by-sides are lifestyle vehicles that have replaced the family horse on farms and are used by hunters, fishermen, race teams and most other outdoorsmen across the country. By their very nature, powersports tire replacements are a continuing issue and thus an opportunity for dealers.”
Hogg said that powersports tires feature purpose-designed tread for the terrain conditions, such as hard pack, wet, sand, desert or other requirements.
“The days of offering all-condition tires rated for all surfaces are probably numbered,” he said. “For instance, Carlisle’s ITP brand has introduced an eight-ply-rated radial tire with a non-directional tread design, a rubber compound designed for exceptional wear, abrasion resistance and a design feature called ‘Sidewall Armor’ that protects vulnerable tire shoulder areas from penetration.”
The company also offers the LinkSport for electric-powered golf cars and a self-cleaning tire called Turf Smart for the lawn-and-garden arena, all of which offer greater options to tire retailers.
Even in the more mainstream markets, tread designs for different tire segments have became more cutting edge, said Maxxis specialist Tay. “Tire companies aren’t as afraid to be unique as they were maybe five years ago,” he said. “Consumers are also more welcoming of non-traditional tread patterns that provide more of a premium appearance.”
Ken Warner, vice president of marketing for Mickey Thompson Performance Tires & Wheels, added that tread design involves engineering that is focused on more than just tread. “It includes tread-block design, circumferential and lateral groove design and depth, lug and shoulder design,” he said. “It’s important that attention be given to every aspect of the tire design, depending upon the applications for the tire.”
Warner also pointed out that, for better or worse, manufacturing tires still requires oil, but the trends in materials and construction do include efforts to conserve oil in the manufacturing process, as well as use of alternative oils when possible and safe recycling of used tires at the end of their life span.
Toyo’s Niknam said that his company has focused on improving tire compounds to maintain performance yet extend life, including such offerings as the Open Country A/T II—which 8-Lug HD Truck editor Carpenter said “has taken the light-truck category by storm”—and the Proxes 4 Plus, which is now safer in the snow, stopping more than seven car lengths shorter. That emphasis on winter performance also goes hand in glove with another current trend: an industry emphasis on winter tires.
“A lot of industry groups are trying to get consumers in the snow-belt areas to embrace winter tires,” said Zielasko. “All-season tires are good, but they aren’t as good as a purpose-built winter tire, so the manufacturers and the various tire-industry associations are ramping up their efforts to educate consumers on the safety benefits of the latest generation of winter tires—even in dry conditions.”
When the weather gets colder, he explained, traction can be enhanced with a winter tire because the compounding stays more pliable. Even absent the presence of ice or snow, when temperatures drop below 45°F, grip can become problematic. A recent Tire Business story by special projects reporter Bruce Davis noted that the number of road accident victims during winter decreased by 5% where winter tire use was mandated by law. Even so, consumers have been hard to convince, mainly because of cost.
On the other hand, Modern Tire Dealer magazine editor Bob Ulrich said that tire manufacturers are introducing all-season performance touring tires, which means that broad-line tires are back in the limelight. “These tires aren’t summer ultra-high performance or winter tires,” Ulrich said, “but they are the best all-season tires ever, and evolving technology made that possible.”
Ulrich also pointed out that tires are more fuel-efficient than ever before.
“Because of corporate average fuel economy (CAFE) regulations, the automakers are demanding tires with less rolling resistance from their tire suppliers,” he said. “Lower rolling resistance directly equates to fuel efficiency. And consumers will soon be able to compare tires based on fuel
efficiency when the new government labeling standards become law, so tire manufacturers are developing the next generation of tires accordingly. But the average vehicle owner still considers buying a tire a necessary and, as such, unexciting purchase. Fuel-efficient tires and run-flats do not intrigue them yet. Fuel efficiency is a selling point only if it doesn’t add cost.”
But tires costs are up, said Zielasko, and that combined with other factors has created a period of rather flat sales in the tire segment.
“People are driving less, possibly because of higher gas prices, and the used-tire business is thriving, which is also holding down new-tire sales,” he said. “New-car sales are also rising rapidly, so people who might have purchased a new set of tires for their current car are now buying a new car instead. The combination of all those things takes sets of tires out of the replacement cycle for probably two or three years. Tire shipments have sort of stalled, so we’re seeing a lot of incentives and rebates going on. For example, you might buy a set of four tires and get a $70 Visa card.”
Interestingly, Zielasko said that import tire shipments were up 16% through September of 2013, and there had been a gain of 77% in shipments of tires from China, mostly in passenger-car tires.
“If you took note at the SEMA Show, there were a lot of tire exhibitors from China,” he said. “There is also a lot of competition in the market. Car dealers are getting stronger in terms of selling replacement tires. With the stagnation in domestic sales, a lot of new-tire retailers are adding other profit centers, such as doing more in automotive service and some other areas.”
Warner said that the industry is also seeing more and more people researching tire purchases and shopping online to find the best products at the best prices, and consumers are using social media, video and mobile apps to conduct research in making buying decisions.
“Many consumers are even creating their own video content on behalf of brands,” he said. “That can be a good or bad thing, depending upon the intentions of the individual, but it has become a more frequent and more widely accepted trend in consumer-driven marketing.”
Amy Coleman, senior director of marketing for Toyo Tire U.S.A. Corp., said that online advertising is an extremely important part of everyone’s advertising mix, but tire marketers are also looking outside of the traditional motorsports and the automotive industry to market their brands and sell tires.
“Our sponsorship with the Ultimate Fighting Championship, for example, provides us with a platform to increase brand awareness among loyal, passionate fans both at the events and on television,” she said. “We have aligned our brand through logo integration, promotions, athlete appearances and athletes in our advertising and marketing.”
Michelle Schact, powersports marketing manager for Carlisle Transportation Products, reiterated her company’s push for sales growth in outdoor tire markets and the possible boost it provides to retailers.
“As the economy improves, trailer tire increases are on the rise, with confident consumers using their boats and travel trailers instead of storing them,” she said. “Retailers should be aware of the growth in side-by-side markets, educate counter employees regarding brands and fitments, sell with confidence and source from suppliers that can not only supply the correct tires, but also provide advice and product knowledge.”
Randy Gaetz, vice president of sales for Toyo Tire U.S.A. Corp., said that size proliferation, price compression and slow growth are all hurdles the industry will have to overcome.
“Tire distributors must use the various manufacturers’ associate dealer programs to continue to grow,” he advised. “Retailers must continue to focus on bringing value to their customers. That’s why employee training is so important. It helps retailers add value for customers—helping them to select the appropriate tires for their vehicles and their lifestyles.”
Warner advised that tire retailers focus on value rather than just price, packaging sales with options such as tires and wheels, tires and alignment service, tires with a free 5,000-mile tire rotation service or other options that keep customers coming back.
“Today’s younger, more savvy buyers are looking for the best deal, and they know how to do the research online,” he said. “We feel that we need to make our brand and our products very easy to find in the places people typically search for products. Some of the things we’ll be focusing on in the coming year are social-media channels, video, search-engine optimization and dealer-enhanced programs that support the sale, such as the Mickey Thompson Marketing Alliance Program.”
Younger people, online marketing and niche sales are also major focuses for the wheel industry.
“People 18 to 50 years old are very strong in this business,” said Joe Jimenez, general manager of Velocity Wheels. “That’s where the greatest percentage of business is and the people that the industry should target. But you also have to look at the demographics of the vehicle industry. For example, younger people like small cars and Japanese cars, and I don’t see a lot of manufacturers taking advantage of that segment. The truck market is also very strong in the United States, so retailers and wholesalers should concentrate on those two segments in the coming year.”
Carpenter said that his magazine, with its concentration on larger trucks, found an abundance of offerings at the SEMA Show, including colorful products that provided variety through switchable parts.
“American Force had several examples that you could mix and match,” he said. “While 20- to 22-in. wheels are now the norm in the half-ton and one-ton truck market, 24s are coming on strong for the ‘show only’ crowd. From a hardcore off-road perspective, 18- to 20-in. wheels are more the norm. But can you believe that? Twenty-in. wheels are normal on off-road trucks!”
Priscilla Brewer, general manager of Red Dirt Road Off Road Wheels, said that the concave look is another obvious trend from the 2013 SEMA Show, and that two-color wheels were everywhere.
“Who knew even three years ago that off-road would blow up the way it has?” she asked. “And how about two-colored anodized wheels? They’re coming!”
Jimenez said that concave wheels also offer another sales opportunity because of the way they can be provided for end users.
“They have staggered fitments—smaller sized wheels in the front and larger wheels in the rear,” he said. “That changes the appearance of the vehicle, giving it a more sporty look. But the big trend on the market is black or painted wheels. They’re taking over a little from chrome. For the past 10 years, wheels were almost 100% chrome. Now it’s more like 50–50.”
Carl Robinson, wheel products manager for Mickey Thompson Performance Tires & Wheels, said that three elements drive wheel products for the consumer: style, fitment and price.
“First, the style or ‘look’ of a wheel draws the prospective customer to your brand,” he said. “Being trendy in the aftermarket wheel business has some risk, but those who venture away from the norm often capitalize by inviting people to want something they didn’t know they could have. Then fitment—the key to vehicle stance and presentation—has a dramatic impact on the overall ride and performance of the car or truck, and the range is immense, going from the slammed ‘Hellaflush’ to a 14-in. lift. And there is virtually no limit to the third element, pricing—going from a $60 aftermarket steel wheel up through 28- and 30-in. Hi-Riser wheels that sell at $12,000 per set, even though the majority of wheel products sold in the aftermarket are priced in the $200–$400 range and will fulfill most expectations.”
Most industry professionals also said that large wheel sizes were becoming trendy for both cars and trucks.
“The Porsche 911 offers 20-in. wheels as a factory option, and even basic family cars offer 18-in. wheel options from the factory,” said Mike Forsythe, marketing director for Vossen Wheels. “That allows wheel manufacturers to offer an even greater variety of wheels for consumers who want to upgrade to larger sizes or want more stylish and durable wheels. Just a few years ago, a 20-in. wheel was a big deal, but they’re common today. Vossen doesn’t even offer a wheel smaller than 19 in. in diameter, because we cater to the luxury and sport market that desires larger wheels. We’ve also noticed people choosing to go with a dual concave look, where the front wheels are as wide as the rears.”
The variety in wheel designs comes at least in part by advances in manufacturing processes, according to Robinson. He said that the abundance of CNC lathe and mill operations have provided the industry with a pallet of options, including painted, plated, machined and clear-coated products in high volumes with low and mid-range price points acceptable to the masses.
“Steel and aluminum-alloy wheels dominate the aftermarket wheel business,” he said. “The reasons are driven by practicality, cost and process complexity. There are other materials used in limited segments, including carbon fiber, magnesium and other hybrids, but they are not common in the market due to low volumes, high cost, casting, machining and welding complications.”
Forsythe said that there is also a continued focus on making aftermarket wheels as lightweight as possible by cutting excessive mass without damaging structural integrity. He agreed that carbon fiber and magnesium offerings are still a miniscule percentage of wheel sales but said there is a small yet growing market of “center lock” wheels.
“With the upcoming lightweight forged Vossen Precision Series, we devised different formulas and methods to shave excessive weight from spokes,” he said. “With it being a 100% in-house effort, we can offer an almost limitless amount of materials, including textured wheels. There are also some brands offering ‘flow form’ wheels that add additional strength and flexibility in widths even though they’re cast wheels. Vossen will offer our first flow-form wheels in early 2014.”
As with nearly every form or commerce, getting the word out about new wheel offerings now relies heavily on an Internet presence and social-media marketing. Robinson said that the explosion in the number of Internet-based sellers with low overhead, competitive pricing and web-based super tools that allow the end user to see a picture of a car or truck with the tires and wheels of choice online any time has pressured brick-and-mortar retailers, but installation still gives them an edge.
“The NHTSA has thrown some complexity into the picture with technologies such as tire-pressure monitoring systems (TPMS) that were mandated on all cars and light trucks as of 2010,” he said. “TPMS regulations make it illegal for any manufacturer, distributor, dealer or motor-vehicle repair business to make the system inoperable. The regulations also mandated that wheel designs become fully compatible with these systems. Brick-and-mortar dealers thus have their own advantages and should work diligently to retain their market share by staying connected with local consumers.”
Still, there is no question that online engagement and social media offer huge growth potential. A wheel manufacturer can’t just place its products on a stand at a dealer or go to car shows, Forsythe said.
“You have to be actively engaged with multiple social-media platforms,” he explained. “Vossen has more than 800,000 Facebook fans and more than 530,000 Instagram followers. And we have developed cross-branding opportunities, working with everyone from vehicle manufacturers such as Lexus to wheel detailers such as Eagle One.
“There are also opportunities to market your brand beyond wheels. The industry norm is branded T-shirts, for example, but Vossen has expanded to offering skateboards, camera straps and bicycles that align with the lifestyle of many of our owners. There is also a growing number of female automotive enthusiasts who purchase aftermarket wheels. They are fashionable, knowledgeable and want to separate themselves from their peers.”
Sales can also be spurred by offering tire-and-wheel packages, Robinson said. He pointed out that sellers also target specific applications, whether they’re stock, lowered, leveled or raised, and offer mounted and balanced sets ready to bolt on. The packages may include TPMS sensors and can be installed at home in the driveway. But TPMS and electronic stability control (ESC) systems must be carefully considered.
“Laws, regulations and technology implementation continually evolve and directly affect the liabilities of wheel manufacturers, resellers and installers worldwide,” Robinson said. “These emerging TPMS and ESC systems can be affected by changes in size and weight of larger tires and wheels. It is most important to have a complete understanding of laws and regulations as they pertain to what dealers are selling and, more importantly, what they install. Having certified tech personnel executing premium service to ensure that the customer is fully satisfied with his or her purchase is paramount to future success and repeat business.”
Forsythe also pointed to the influx of illegal knock-off copies as a major challenge for the industry.
“There are no more than 10 to 15 wheel companies actually investing in research and development and pushing the industry to the forefront,” he said. “Then you have dozens of companies copying and trying to sell similar designs at lower price points. It is important for reputable wheel companies to stand together to fight these fakes as well as informing consumers about knockoffs, because they are many times fooled into thinking they are buying the real product. We have successfully won recent cases and continue to aggressively protect our brand.”
Nonetheless, Forsythe and the other industry professionals we spoke with were confident about prospects in the coming year.
“We feel that sales are growing not just domestically but internationally, with many untapped markets and vehicle platforms,” he said. “There is a growing number of customers who feel loyalty to a particular wheel company and modify all their vehicles with the same wheel brand because they are happy with the quality, design and customer service.”
The common thread through it all—for each of those dozens of tire and wheel exhibitors at the 2013 SEMA Show as well as the thousands of retailers around the country and the world—is keeping abreast of the evolving marketplace.
“This business is not a necessity; it’s a luxury type of thing,” Jimenez said, “You have to keep up with the trends. If you have new designs, if you keep up, you succeed.”