Based on data from 3,000 points of sale in the U.S., tire dealers have just recorded their best week of 2020.
That’s the report from GfK, a market research firm that collects and analyzes the sales data of thousands of tire dealers all over the country. GfK partnered with the Tire Industry Association for a June 22 webinar to talk about what’s next for tire retailing.
Dave Stevens from GfK says the firm’s latest data, from the week ending June 13, shows dealers sold more tire units in that seven-day period than any other week so far in 2020. It’s also only the second time this year that sales for the week outpaced sales for the same week from the previous year.
Even in the surge, GfK data shows not all tire segments are selling at the same pace. And there is a clear winner.
Light truck tires. They remain a “bright spot,” Stevens says.
GfK has taken to calling them “essential tires,” because they’re often outfitted on the delivery vans and vehicles of other essential services that have kept rolling throughout the COVID-19 pandemic.
While overall tire sales are down 9.8% compared to a year ago, GfK says light truck units are down 5.5% (This is for data recorded through May 2020.) The company is also tracking prices, and says there’s evidence that light truck tire prices have actually increased slightly, as the money spent on those tires is down less than the units sold - just 2.1%. In all the other categories, the percent change in price is more drastic than the percent change in units sold.
|Units % change vs a year ago||Dollars % change vs a year ago|
|18 inches and above||-6.1%||-7.7%|
Those changes in price also show the demand for lower-tier tires. GfK says traditionally, the first quarter of each year is the strongest period for tier four sales. In the first quarter of 2020, tier four accounted for 18.3% of overall sales – on par with the 18.2% in the first quarter of 2019.
But so far in 2020, unlike the past four years, the demand for tier four products has remained just as strong, and even grown at times. In the week ending April 18, tier four tire sales accounted for 21.4% of all tires sold by the dealers GfK tracks. And through June 13, tier four has maintained 18% of the overall share of sales.
Stevens says this might be the start of a permanent shift toward the lower tiers.
Craig Tate, president of Tate Boys Tire & Service LLC in Oklahoma, was part of the three-dealer panel to participate in the webinar. He said he’s seen that same shift.
“People are a lot more (price) conscious. If they were tier one customers last year, after we give them the price, they say ‘I need something less expensive.’ We heard that a lot in April and May, and have had more sellout in tier three and tier four.”
Greg Mynaugh, president of United Tire & Service LLC, said they noticed that team members at the front counter were making initial recommendations thinking they needed to protect the customer’s wallet. “We had to say we have to give the best recommendation. We had to have our teams learn that a bit.” He expects the trend for tier four tires will get back to normal.
In the northwest, where light truck tires are a common fitment not just for work trucks but for consumers' daily drivers, Adrian Rodriguez, director of retail sales and marketing from Commercial Tire, said he hasn’t seen that move to a lower tier product. He also said the dealership doesn't have a tier four offering.
“We’ve seen the most growth in tier two.” He did note that when stimulus checks arrived in consumers’ bank accounts, “we saw people bump from tier three to tier two, or even tier one,” Rodriguez said. “We also sell wheels, and we saw a lot more money spent on wheels and a nicer tire because of that check.”