Retail

2018 Facts Issue: Pricing and Sizing

Tire manufacturers continue to see high-value-added (HVA) tires as the way to increased profitability. They are generally defined as 17-inch and larger tires (Michelin North America Inc. says 18-inch and larger), which takes them out of broad-line sizing. But they are more than just a tire size. They are, as Pirelli Tire North America Inc. executives have said for years, premium and prestige tires because they fit on higher-end vehicles. They may cost more, but their return on investment is greater, a win-win for manufacturers and the dealers who sell their brands.

When Goodyear Tire & Rubber Co. introduced its Assurance WeatherReady last year, it described it as a premium all-season HVA tire. Chairman, CEO and President Rich Kramer said the trend has been driven by OEM demands.

The chart on page 40, “Available sizes by rim diameter,” shows how popular larger sizes have become. According to the Tire & Rim Association, there are 65 18-inch sizes, more than any other rim diameter.

A year ago, tire industry analyst Nick Mitchell estimated the U.S. market would require “approximately four new tire plants” to meet the need for an additional 19.1 million HVA tires. That is happening.

Read the January Facts Issue here.

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