Ken Langhals will be the first tell you that when he founded K&M Tire Inc. in 1970, he never imagined the company would ultimately develop into one of North America’s largest independent tire distributors, with 31 centers throughout 27 states.
All-weather. All-terrain. All-season. And that’s not even all the options.
The CUV or SUV customer who saunters up to your sales counter in need of a replacement set has plenty of options. And guess what? Tire makers indicate it’s going to get — better.
Let’s be optimists here.
Will it evolve into more sizes, more tires and more price points? Yes. Does that mean you’ll have to know your product offerings inside and out, and know your way around your warehouse and storage racks? Yes.
Is this anything new? No. Can you handle this? Absolutely.
We broke down the CUV and SUV tire segments by asking three all-important questions covering the forecast for the next five years, product mix, and where there’s the greatest growth. Nineteen tire makers weighed in.
MTD: How will the CUV and SUV tire markets change in the next five years?
Michael Mathis, president of Atturo Tire Corp.: We expect the SUV/CUV market will continue its steady growth over the coming years. The new vehicle models are focused on this segment and the current fleet is heavily skewed toward these vehicles. Replacement tire sales will remain strong, and grow. The major change in the segment will be the adoption of aftermarket tires to these vehicles. We are seeing more SUVs and now CUVs installing high performance products, including tires, as well as a strong growth in the use of off-road-type tires for these vehicles.
Phil Watson, BFGoodrich public relations manager for Michelin North America Inc.: Consumers and dealers will see more product options and more sizes to stock. Along with good mileage performance, we see consumers gravitating to all-weather tires. All-weather tires are the next evolution of all-season tires in this category. Like all-season tires, they provide good performance in many conditions but are also severe snow rated. The growth in CUVs and SUVs will also fuel growth in tire sizes in the market. The popularity of 17-inch and 18-inch sizes will continue, but we will see a growth in 19-, 20-, 21- and 22-inch and larger sizes as more original equipment manufacturers offer more trim packages with larger wheel options.
Will Robbins, product manager for Bridgestone Americas Tire Operations LLC: We anticipate consumer preference for CUVs and SUVs will continue for the foreseeable future, driving growth for these vehicle segments that will stabilize as they begin representing a majority of the market in the U.S. and Canada. Similar to changes seen in the tire industry in the early 2000s, we expect to see size proliferation in the CUV and SUV segments to match new and expanded offerings of these vehicle types.
Drew Howlett, product manager for light truck and SUV tires at Falken Tire Corp.: Crossover sales continue to climb. 2017 was the first year that new crossover sales surpassed new car sales in North America — 7.6 million CUVs versus 7.1 million cars. The IHS Markit Automotive Light Vehicle Sales Forecast says in 2019 there will be approximately 8.6 million new CUVs sold and 5.7 million new cars sold. Five years from now, in 2024, over 9 million new CUVs are projected to be sold, while only 5 million new cars will be sold. As is always the case, the tire market will follow the new vehicle market. In these next five years, the replacement tire market will continue to see a shift in volume from traditional passenger car tire sizes to crossover tire sizes. We expect to see replacement crossover tire sales surpass replacement passenger car tire sales.
Barry Terzaken, product manager of light truck and SUV tires for Continental Tire the Americas LLC: The key point here is volume growth.
David Shelton, director of industry relations and communications for Giti Tire (USA) Ltd.: SUVs are not going away, and true SUV and pickup segments are still growing segments. However, the CUV segment is the one segment that is expanding faster than any other, diminishing the sedan and coupe markets. This is true for all price ranges from economy through full-sized luxury segments. Even Bentley and Tesla offer CUVs.
Daniel Gode, product marketing associate for Hankook Tire America Corp.: Industry reports indicate utility vehicles will continue to have stronger growth relative to other segments. The expectation is this trend will continue with favorable economic conditions.
Steven Liu, senior director of proprietary brands at American Tire Distributors Inc., which owns Hercules Tire & Rubber Co.: Hercules has seen continued growth in both vehicle segments as auto manufacturers plan to introduce more CUVs and SUVs in their lineups. CUV sales have overtaken cars as the most popular light-duty vehicle type for the first time in 2018. From our research, sales of traditional cars plunged, the fewest sold since 1958! There is definitely further growth ahead in pickups, SUVs and CUVs; some studies suggest they could account for 75% to 80% of U.S. light-vehicle sales by 2025.
With the emergence of the crossover vehicles, the lines between passenger, light truck and CUV are blurred. From the replacement tire market perspective we have seen overlapping tire sizes in both conventional passenger touring and highway SUV/LT products. More recently many of the CUV/SUV sizes are now available in ultra-high performance and all-terrain designs as a derivative of OEM vehicle design specs. The technological advancements in auto engineering, and elevated vehicle design specs, are pushing the original equipment tire manufacturers to develop adequate products to meet these requirements by understanding the operational parameters of these vehicles.
The evolution in the CUV really started more than a decade ago, however we have seen a rapid rate of growth and consumer adaptation in recent years, and sales will continue to ramp up in the next few years. As the CUV continues to reshape the landscape, the challenge, and opportunity, for the replacement tire market is to keep up with the size proliferation (larger rim diameters and smaller aspect ratios are here to stay) and heightened emphasis in tire performance attributes geared towards fuel efficiency, ride comfort and functionality, all while making sure that’s synced up to what the consumer demands.
Brandon Stotsenburg, vice president of automotive for Kenda Tires USA: The CUV segment will continue to be strong, with growing 18-inch+ diameters over-indexing moving forward. Within the U.S. and North American markets, the vehicle manufacturers are betting on continuing consumer demand for CUV. There will be an expansion of options with smaller, entry-level models growing, in addition to mid-level and premium platforms. For tires, Kenda anticipates a growing trend for the all-weather tires, which have reasonable mileage expectations and are snowflake certified. In the near term, more H-, V-, and some W-rated tires will expand as the automotive platforms that CUVs utilize need the optimal performance associated with premium, grand touring-type tires offering strong performance, higher speed ratings and good mileage warranties.
The SUV segment will also grow, with 18-inch and larger tire applications. These vehicles are primarily defined with an SUV body on a light truck platform. As they are heavier and larger than CUVs, the market demand will depend on economic drivers, including gas pricing. For tires, most of these vehicles will utilize P-metric/metric tires with an increase in H and higher speed ratings to accommodate the platform modifications. Again, there will be growing demand for improved mileage and a push to all-weather tires. For larger SUVs, there will be continued crossover for LT tires when load and towing are necessary; those tires will primarily be H/T or A/T, but a growing demand for R/T is likely, too.
Kenda anticipates both segments will see growth in hybrid and electric options globally. As this increases, the demand for good rolling resistance to improve fuel economy and extended mileage will continue to expand. There are also some niche markets developing for “UHP-like” tread designs to match unique wheel styles.
Jay Lee, director of product planning for Nexen Tire America Inc.: The CUV/SUV tire market is the fastest growing segment in the U.S. at this time and we project this will continue for many years to come.
Enrico Ongis, vice president of supply chain and product marketing for Pirelli Tire North America Inc.: We expect the CUV/SUV segment to continue to outperform the market as a whole in terms of growth. We especially see growth in the premium segment of the market, with recent and upcoming premium vehicle launches trending toward larger rim sizes.
Nick Gutierrez, sales director for Sentury Tire Americas: We continue to see growth not only in tire replacement but also in new vehicle offerings yearly in this segment. Ford, GM, Toyota, Nissan, Honda, Subaru and Jeep, just to name a few, are making compact SUVs one of the largest segments in the U.S. It makes it a bit challenging for retailers to stock all the fitments and supplier offerings. We are prepared, and we offer the majority of options for the compact SUV segment.
Conrad Galamgam, senior director of product planning and technical services for Toyo Tire U.S.A. Corp.: Tire demand for CUV and SUV fitments will continue to grow, aligned with new vehicle sales trends. As the diversification of these vehicles has continued to evolve, Toyo has expanded our product offerings, from rugged to refined, to complement the wide variety of vehicles.
Brian Fjeldsted, vice president of marketing for Vogue Tyre and Rubber Co.: The CUV and SUV tire market is going to grow tremendously following the new vehicle industry trends. Similar to the dynamic crossover market, which is adding sub-segments, tire manufacturers will also add new CUV and SUV tires with distinctive product differentiation within the same size segments to try to attract consumers to their unique offerings.
Bob Abram, senior manager of product planning for Yokohama Tire Corp.: Traditional body-on-frame SUVs have remained relatively stagnant. By contrast, auto manufacturers have introduced enough new CUVs that the range now approaches or surpasses passenger car segmentation. There are compact and subcompact CUVs, sporty and high-performance CUVs, luxury CUVs, mainstream CUVs and three-row CUVs.
Richard Li, marketing director for Zhongce Rubber Group Co. Ltd. (ZC Rubber): The CUV market is growing around the world. We will keep an eye on the segment. However, at the moment, we are still working on the SUV line and remain devoted to develop our SUV tires without introducing any CUV products. In the future, if our customers have increasing demands for CUV products, we might change our product strategy and add a CUV line.
MTD: How has the growing popularity of CUVs and SUVs affected your product mix?
Mathis, Atturo: Atturo has been exclusively focused on the LT and SUV/CUV market since we started 10 years ago. As the only brand in the market with this as our sole market segment, our product mix is growing to embrace the aftermarket applications vehicle owners want and dealers love to sell for the higher profit margin.
Watson, BFGoodrich: Many consumers choose CUVs and SUVs because of their versatility — ability to haul people and things — and their ability to handle inclement weather with all-wheel drive and four-wheel drive options. The inclement weather benefit really made us think about what consumers were looking for in their tires. They want tires that perform well in heavy rain and in snow. That’s why we brought to market the all-weather Advantage T/A Sport LT. Hydroplaning and driving on snow give most consumers anxiety, and tires like the Advantage T/A Sport LT help consumers feel less anxious.
Robbins, Bridgestone: As CUVs and SUVs become increasingly diverse, OEMs are looking for tire manufacturers to deliver differentiated offerings to meet consumer expectations. These offerings are being driven by consumer preferences for high-rim diameter and high-value-added tires, and tires with higher speed ratings. We have also seen a strong increase in demand for all-terrain products that offer both an aggressive appearance and a balanced on/off road capability. The recently launched Bridgestone Dueler A/T Revo 3 tire is a great example. This is in line with the increase in all-terrain vehicle sales and the perception of overall SUV capabilities.
Jain, Cooper: Cooper has and will continue to produce high quality products that meet consumer demand. This includes focusing on all segments of the increasingly popular CUV/SUV market.
Howlett, Falken: At Falken, we continuously evolve our product mix. CUVs demand different tire performance than passenger cars and SUVs. For this reason, we’re in the process of dividing our performance all-season product line, the Ziex ZE950 A/S, into two product lines: the Falken Ziex CT60 A/S, and the Falken Ziex ZE960 A/S, which will launch in the fourth quarter. This product line transition is difficult for our customers, namely our distributors, but we feel it’s the right thing to do for our independent tire dealers and most importantly the end consumer.
Crossover-specific tires have been a major focus for Falken of late. By utilizing popular crossover platforms such as the Toyota RAV4, we’re gaining the expertise necessary to help with new tire development and testing. Plus, crossover vehicles like these provide valuable insight during our customer demonstrations and comparison exercises at Falken Academy training sessions.
The new WildPeak A/T Trail, the first all-terrain tire developed specifically for crossover platforms — also launching in the final quarter of 2019 — is another example of the evolution of our product offering. Our entire company is putting tons of effort into the crossover tire market, and we want our customers to understand why, and truly feel the difference in the new Falken products.
Shelton, Giti: GT Radial has developed product lines which target and cater specifically to CUV owners. And we continue to expand size ranges in the product lines designed specifically to meet and exceed the expectations of CUV owners, as well as those of SUV and light truck owners.
Gode, Hankook: According to IHS Markit data analysis, global SUV sales have shown a steady increase compared to other types of vehicles. In 2017, SUVs were 39.2% of sales, and IHS predicts that by 2021 it will hit 43.4% when other car portions are 43%. Hankook is also very aware of this trend and has been developing product mix to go with the SUV and CUV sales. There has been much growth in the CUV and SUV market and we expect this to continue over the next five years. Hankook is proactive and responsive towards market trends and we continue to be competitive with a wide range of fitments from our Ventus, Kinergy and Dynapro product lines.
Liu, Hercules: Hercules Tires has seen very nice sales growth in the CUV and SUV sizes we offer in various product lines. Hercules continues to strive to give the most options at a great value. Even several years ago, in 2014, we saw the trend emerging in the CUV and SUV market and introduced our premium all-season SUV/CUV/LT product the Hercules Terra Trac Cross-V. We then took it a step further and with more size coverage from small CUVs to large SUVs. Based on our findings we created a best-better-good distinction through differentiated product designs and performance attributes suitable for the intended vehicle, and targeted consumer segmentations.
Stotsenburg, Kenda: Kenda has new products thriving in these segments, which offer premium performance at a value price, with continued new sizing. For CUVs, our primary premium product is the Klever S/T KR52 with 35 sizes from 16 inches to 22 inches. The KR52 is asymmetric and designed specifically for the CUV applications. With market coverage approaching 85% of vehicle applications, this pattern has very strong demand as we recently added three new 19-inch and 20-inch sizes to the lineup. For SUVs, our primary product is our Klever H/T2 KR600, a product specifically designed to meet the needs of a light truck platform. Kenda currently offers 28 sizes with two new sizes coming this fall.
Lee, Nexen: The growing popularity of CUVs and SUVs has affected our product mix in a very positive way. The CUV/SUV segment varies quite a bit, depending on the owners’ preferences. To meet these varying priorities and the growing market need, we offer a variety of features including mileage, grip and price point, and are consistently exploring expansion in this segment.
Bourassa, Nokian: On top of launching a tire specific for CUVs, the Nokian eNtyre C/S, the portion of CUV/SUV sizes included with each new product launch is growing.
Ongis, Pirelli: Pirelli is currently well positioned to capitalize on this market trend as we continue to prioritize investments in development and testing for the growing CUV/SUV segment.
Gutierrez, Sentury: It may cross our mind once the new vehicle information is received as “another new size.” Sentury has a reputation of staying ahead and being prepared for these newer applications thanks to our active research teams. Adding new fitments to our product line continues to complement our programs.
Galamgam, Toyo: Toyo offers a full range of products designed for the growing CUV and SUV trend: the Celsius CUV, Q/T, S/T III and H/T II, along with popular Open Country off-road patterns.
Abram, Yokohama: It has had an enormous impact on Yokohama. Since 2014, we have released at least one new Geolandar product per year to build one of the most comprehensive offerings for trucks, SUVs and CUVs in the industry. With regard to CUVs, we have a dedicated Geolandar product for mainstream (G055), performance and luxury (X-CV), and we are also one of the few manufacturers that embrace all-terrain options with 15- to 20-inch tires to fit Subarus, Jeeps and Land/Range Rovers, as well as many other compact CUVs with our Geolandar A/T G015. With regard to SUVs, in addition to our Geolandar H/T G056 and A/T G015, Yokohama just launched the Geolandar X-AT as an aggressive off-road option for traditional body-on-frame SUVs, Wranglers and more.
MTD: Which tier in the CUV and SUV tire markets is experiencing the greatest growth? What does that mean for independent tire dealers?
Mathis, Atturo: With the increasing age of the vehicle fleet, we believe the growth in this segment is skewed in favor of high quality, mid-range brands like Atturo. The OE and Tier 1 brands are struggling to capture even the first replacement sale, let alone the second and onward. With more innovative sizes and patterns to complement our touring type replacement products, Atturo is continually gaining market share. There is little difference among the CUV and SUV segment here.
Robbins, Bridgestone: We anticipate independent tire dealers will need to ensure high-value offerings are available in CUV sizes, while also educating their customers on CUV tire performance characteristics to ensure customer expectations are met and they are satisfied with their tire purchase.
Premium SUV models have seen significant growth as economic conditions have remained strong and financing options have adapted to increased vehicle prices. In addition, this segment has seen the most proliferation of new tire sizes in recent years. Dealers will need to work closely with their manufacturer and distributor partners to ensure they have access to a complete portfolio of consumer-preferred products for premium SUVs.
Jain, Cooper: Small CUVs/SUVs are growing faster than midsize and large segments. For tire dealers, this presents an opportunity to provide tires that are both high quality and a good value offering, as these consumers may be more price conscious than those purchasing larger vehicles.
Following small CUVs/SUVs, midsize vehicles are growing at the next fastest rate. Consumers making these purchases are often focused on the vehicle’s safety features and towing capacity, as well as handling, vehicle aesthetics and accessories. Independent tire dealers can appeal to this audience by showcasing a tire’s safety and performance capability, as well as durability. Because this buyer typically values reliability, tire dealers have an opportunity to showcase their knowledge of product reliability to recommend the right tire.
Howlett, Falken: We can confidently say that Falken is experiencing tremendous growth in the crossover market, especially in OE. Falken has worked closely with OE vehicle manufacturers over the past few years to develop OE tires specifically for the growing crossover segment. Examples of Falken original crossover fitments include but are not limited to the Jeep Renegade and Compass TrailHawk, Mazda CX-9, Mitsubishi Eclipse Cross, Nissan Rogue and Rogue Sport, Subaru Crosstrek, Forester and Ascent, Porsche Macan, as well as the upcoming 2020 Toyota RAV4 TRD. Many of these vehicles debuted with Falken OE tires within the past year, so tire dealers can expect to see more consumers searching for Falken replacement tires in the future.
Terzaken, General: Tier 1s will experience the most growth, closely followed by Tier 2 due to the growth of the CUV/SUV vehicle segments.
Shelton, Giti: An independent dealer must satisfy a consumer’s needs, but also meet or exceed their expectations. To do this the dealer needs to have the right product that fits the consumer’s vehicle, and a product which meets or exceeds the consumer’s expectations for ride comfort, quiet and grip/performance in all the different weather and road conditions. And the retailer must be able to deliver on these expectations on several price/value levels. As an independent retailer, one wishes to capture repeat customers, provide products which generate enough money to pay the bills, and have a sufficient margin or return on the dealer’s efforts.
Some consumers will come into the store asking for a specific brand name and not buy anything else. Others will gulp and ask if you have anything a little lower in price. Of course, there are a few — too many — that will ask for the cheapest thing you have in stock. The largest group of consumers falls into the middle group of value seekers. They range from those with extremely tight budgets to the millionaire.
The strongest growth is in the value seeker segment. GT Radial is a brand with product lines which fit these value seekers very well. The GT Radial products perform better than expected — better than they have to! — for the dollars paid, which is exactly what the value seeker wants and needs.
Gode, Hankook: Entry level or non-luxury compact CUVs have had more vehicle registrations than mid-level or premium CUVs; however, some premium or luxury compact CUV registration data shows recent higher year-over-year growth. The tire segments experiencing the greatest growth for CUV would be grand touring and highway terrain, which is indicated by the demand for higher diameters and speed ratings.
What this means for independent dealers is they should expect consumers will continue to seek out and choose high value products, which means they should have more options for selling. The independent dealers also need to be aware of the unique competitive advantages each product offers so they can communicate lowest cost does not necessarily convey best value.
Data and reports indicate lower mid-range or non-luxury mid-size SUVs represent the largest portion of vehicle registrations, but luxury full size registrations have recently experienced higher year over year growth. The tire segments experiencing the greatest growth for SUVs would be premium performance all-season highway tread, although some SUV owners are also choosing to purchase all-terrain tires that have better on-road manners, such as our Dynapro AT2.
Liu, Hercules: We believe the Tier 2 tire brands are benefitting greatly from the CUV sales growth. Many of the Tier 2 brands are now OE on new CUV models, from economy to premium models, which allows them to build brand name recognition and attract replacement business as the first option. We are also seeing an increase with Tier 3 fitments as well. For independent tire dealers, the growth in the CUV market means dealers will need to change product mix. Simply having the size available for the vehicle that pulls into a bay isn’t enough. In our opinion, the challenge, and opportunity, is for further product education to successfully create product performance distinction, and attempting to make the proper product recommendation based on consumer desires and actual needs.
As with the CUV tire market Hercules believes the Tier 2 tire brands are experiencing the greatest growth in the SUV market. Again, the opportunity exists to create product performance distinctions so the proper recommendation can be made with the true needs and wants of the end consumer in mind.
Stotsenburg, Kenda: Even the entry-level CUV platforms require a speed-rated, higher diameter tire (17-inch and larger), with premium vehicles often requiring V-rated tires on 18-inch or larger wheels. Tire dealers will continue to be challenged to find the best fitments to match the vehicle platform. The drivers are often younger, working-class individuals who are surprised by tire replacements that cost $1,000 or more for four tires. Kenda provides a bridge for the retailer to maintain margins while offering a premium performing tire at a value price with our KR52, so the retailer can truly meet the expected performance with less stress on the consumer.
Similar to CUV, the SUV market is experiencing strong growth across the board, but with entry/mid-level volumes growing faster. Vehicles like the new Chevy Blazer are attracting a growing audience with the vehicle application flexibility. With almost all new platforms requiring 17-inch or larger fitments, the retailer needs to understand the end-user’s driving style and application needs. Do they need to have an LT tire for towing? Will they want an H/T or A/T tire for primary use? How do they prioritize price versus performance?
Kenda offers its Klever H/T KR600 with premium performance at a value price to allow the retailer to choose a product fitment to meet those needs as well as the speed rating required for the vehicle without sacrificing the handling and ride. If the consumer is interested in the benefits associated with an R/T tire, the dealer might consider offering that as an alternative to a traditional H/T or A/T tire due to improved off-road handling.
Lee, Nexen: Tier 2 is experiencing the greatest growth in the CUV tire market, which gives dealers the best value. That is why Nexen is seeing incredible, double-digit growth in this segment.
Bourassa, Nokian: The small CUV segment seems to be taking the interest of consumers that were previously driving small or mid-size sedans. Vehicles like RAV4 and CR-V have become some of the highest selling vehicles in North America. New entries to the market, like the Hyundai Kona and Nissan Kicks, are generating additional interest in this vehicle segment. For Nokian, the luxury small CUV segment is of particular interest. These vehicles share similar brand traits blending performance with premium quality
Large, luxury SUVs have seen strong growth over the last several years, although total sales numbers remain relatively low. Over the past few years, vehicle manufacturers have focused their efforts towards renewing vehicles in this tier to attract new customers. Cadillac Escalade, Lincoln Navigator and Mercedes-Benz G-Class have been leading the renewal of this tier with added luxury and comfort.
Ongis, Pirelli: For both CUVs and SUVs, we believe the premium segment is experiencing the greatest growth, with an increasing diversification of OE product sizes given recent and upcoming product launches. We believe independent tire dealers know how to manage the increasing complexity of fitments and provide consumers with the right tire for their vehicles.
Gutierrez, Sentury: We’ve noticed many brands have halted business and importing into the U.S. market. It’s hard to pin point which tier is actually having the greatest growth. As for Sentury, manufacturing in Thailand and having offerings from the beginning of the compact SUV segment, we are noticing a consistent growth.
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Fjeldsted, Vogue: Our products are targeted to the luxury and premium tire market, and we forecast continued growth as demand and volume continues to grow in the premium SUV and crossover vehicle car parc. We counsel our independent tire dealer partners to make sure they are providing exceptional, convenient and speedy service to these premium customers to earn their business for life. Our findings show that once you earn the trust of these customers, they are more loyal and can provide well above average lifetime vehicle care revenue and profits. ■
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