The first in this two-part series on the high performance tire market focuses on domestic tire manufacturers.
Just when you thought you had the performance tire market all figured out, bam, you're nowhere. Take the docile Ford Crown Victoria, a quiet, comfortable car for the older crowd. With its OE P225/60R16 S-rated tires, the Crown Vic doesn't show up on the high performance tire radar screen.
Now, enter the Ford Crown Victoria Blackhawk concept car that squeezes 225 horsepower out of a 4.6L SOHC V8, is equipped with disc brakes all the way around and has P255/45ZR18 tires mounted on alloy wheels. The Blackhawk also has been lowered one inch and, as its name implies, is all black.
In just two paragraphs, a couple of trends seem apparent. Today, any car can be a performance vehicle, in part because of the tires. Also, the high performance market, defined as H-rated and higher, 70-series and lower, is no longer a niche segment.
Size proliferation
At Goodyear Tire & Rubber Co., Bob Toth, marketing manager, high performance tires, is a strong believer in the tried and true formula of wheel position ownership. "By maintaining our strong OE wheel position presence with carmakers around the globe, we have an advantage going into the replacement market," he says.
That is precisely what Goodyear has been doing with its Eagle performance line since its introduction in 1981. "The Eagle name is our 'halo' brand, a subset of the Goodyear name that ties us to the track and the street.
"Have you seen the new Ford F-150 Harley Davidson treatment?" he asks. "That package comes OE with the 275/45HR20 Eagle GT, our most popular entry-level performance tire. The Harley Davidson Ford is an appearance package with H-rated tires that appeals to the cosmetic market, and we're there." Also, Ford F-150 SVT Lightning, a true high performance vehicle, comes OE with 295/45ZR18 Eagle F1 GS tires. Which pickup has the largest market potential? Toth says the Harley Davidson version, because of its lower cost to the consumer along with its good looks. "When Ford came out with the Harley F-150, I was suddenly 16,000 units on back-order.
"Some people call this the tuner market, others the cosmetic market. Either way, it is trendy, it is constantly changing and it is huge. With the F-150 Harley, Ford hit a home run and so did we."
Looking at performance tire growth numbers, even Toth is amazed. "I cannot believe how this market has grown and continues to grow. Staying on top of what is going on at OE and in the replacement channel is just about an around-the-clock job."
Goodyear's Eagle Express Program allows tire dealers to connect with the company's customer service and salespeople, via the Internet, and order performance tire needs electronically. "The purpose of such a program is to help dealers manage the number of SKUs in their inventories."
It helps to understand that Toth is as immersed in the performance tire market as a deep-water Baptist is in the church. He can recite numbers, sizes and market segments chapter and verse. Did you know that in 1985 there were 65 radial passenger tire sizes compared to 201 in 1999? That's a jump of 309%. What about aspect ratios? The first 45-series aspect ratio radial passenger tire showed up in 1990, growing to 10 sizes by 1999. Interestingly, the first 40-series and 35-series tires debuted in 1988. There are now 13 40-series tires and seven 35-series tires. The 30-series tire came later, in 1995.
According to Toth, the first 18-inch passenger radial was rolled out in 1995, the first 20-incher in 1996. Although 15- and 16-inch sizes remain dominant (16-inch tires are up 167% since 1995), the big growth numbers based on percentages belong to the larger diameters. For the record, 17-inch sizes are up 275% since 1995, with 18-inch sizes up 375% during the same period.
The numbers bear out growth in the overall performance tire market right down to growth in specific size and aspect ratios for tires that fit the performance tire profile. "A performance tire is one that has been designed, constructed and styled to complement the maneuverability and styling of a vehicle positioned in the marketplace as a sporty vehicle," says Toth. "That's broad enough to provide a very large platform to fill, and it's why we are working in every performance tire segment, from the ultra-high performance segment comprised of tires with a 55 aspect ratio or lower with speed ratings of no less than a VR or ZR, to the maximum performance segment which is borderline competition. Those seeking better fuel efficiency, greater tread life or deep-water traction do not purchase tires in the latter category. This buyer wants all-out performance.
"At the same time we are attacking the performance appearance market segment, which includes the tuner or nostalgic performance segment. When talking about this segment, I don't like the word 'tuner.' I prefer the word 'individualizing' or 'personalizing' because that's what this segment is all about. This is not a market for an Alfa Romeo purist, this is a market for individuals who want their Honda Civic to look different."
Toth says a newer, more sophisticated Aquatred 3 soon will be available in a 55-series size.
Waving the flag brand
Bridgestone/Firestone Inc. (BFS) has a slightly different take on how to take on the performance market. "Most tire dealers carry several flag brands and a private brand or two to cover their market needs," says Bill Vandewater, consumer manager for sales engineering at BFS. "That's because the private and associate brand buyer is not typically going to pay serious money for a private brand ZR product. The ZR tire buyer is a flag brand buyer."
Vandewater says 25% of all consumers will buy tires based on brand, 25% will buy what the dealer recommends, 25% will buy based on value and 25% will buy on price alone. "That's why the private and associate brand sector is participating in the performance tire market to a much lesser extent than the flag brands." He says the company's only true high performance associate brand tire is the Z-rated Daytona. "Other brands such as Road King and Gillette offer only entry level, H-rated performance tires."
The Z-rated Bridgestone Potenza S-02 Pole Position directional tire, in 16- through 20-inch sizes, is the company's flagship ultra-high performance tire -- for now. But the new S-03 Pole Position, introduced this month in Phoenix, Ariz., will replace the S-02 over time, says Vandewater.
To help dealers with inventory control, BFS is completing work on its Entirenet extranet service. This 24-hour, seven-day-a-week operation will allow dealers to communicate their tire needs online instantly. "Another way our dealers can obtain the performance sizes they need is by working through our 1,500 company-owned chain of stores, which often carry extra performance sizes as part of their inventory to assist dealers."
Vandewater says BFS works very hard with dealers to help them establish an inventory and merchandising plan tailored to their sales area. "We literally sit down with each dealer and recommend SKUs, even going so far as to suggest that one of the dealer's locations be set up as a high performance outlet. It's a very personal touch."
As for trends in the high performance segment, Vandewater says 30-series tire sizes are beginning to stall out. "Interestingly, after leapfrogging all the way down to a 30-aspect ratio tire, we are now going back and filling in some of the things we missed along the way," such as 40- and 45- series tires in popular 17- and 18-inch sizes. He believes ultimately tires with aspect ratios lower than 50 will become run-flat tires and directional by design. "You can't drive around with four spares, so this will be an interesting segment to watch."
OE influence
Continental Tire North America Inc. (CG) plans to take advantage of the strong original equipment presence the Continental brand has in Europe on such vehicles as Porsche, Mercedes Benz, Audi, BMW, Jaguar and Renault. "We know that although vehicle operators in the U.S. cannot drive at the maximum speed of the vehicle, we also know that the tires we build must be suited to the maximum performance of the vehicle," says Eric LeBoucher, manager of market planning for CG.
The domestic ultra-high performance market will grow at least 30% this year, he says, while the high performance segment will grow 13%. "We also see a continuing emergence in 17- and 18-inch UHP and HP sizes."
"In many ways, the high performance tire market is reinventing itself," says Jim Mayfield, CG national director of mass retail sales and product marketing. "More and more tires in the various performance tire categories are being built, not less. Even better, the demand for such tires is growing wildly among street tuners and the fashion market for tires and wheels. We are studying these markets right now and expect to develop product to meet demand."
Taking a tour
John Pecoraro, manager of product marketing for Cooper Tire & Rubber Co., is quick to acknowledge that while the performance tire market is growing, the touring performance segment of the larger market is growing faster.
"I'm talking about the Honda Accords, Toyota Camrys, Nissan Maximas and Toyota Avalons that typically are fitted at OE with H-rated tires like the 205/60HR16," he says. "To that list add the Oldsmobile Aurora, Pontiac Bonneville SLE and SSEi along with the Cadillac Seville and Catera."
So serious is Cooper about this market segment that it will unveil a new line of sport luxury touring tires in April 2001. "We will move into the T-, H- and V-rated touring tire market with 14-, 15-, 16- and 17-inch sizes," says Pecoraro.
The Cooper manager also plays down the plus fitment game a bit. "If you are plus sizing for cosmetics that's one thing. But if you're doing it for performance, the numbers just don't prove out.
"We will continue to see a growth in performance tire types and sizes along with new markets and sub markets. Cooper's future rests with our own technology and sense of the marketplace along with the global extension provided by Pirelli and Avon. It's a good union that will benefit each member."
Inventory management
Michelin North America Inc. is working to keep size proliferation manageable.
"We have to look at the performance market from a marketing and manufacturing perspective," says Mikala Yasin, marketing manager, performance tires for Michelin. "In that sense, we look at what makes sense. What can we build that won't hurt fill rates, won't sacrifice manufacturing volume and won't alienate our customers?"
To address new consumer demands, the company recently introduced a summer tire, the Pilot Sport, in 56 sizes from a 205/50ZR16 to a 275/35ZR20. Some sizes carry a "W" speed rating, others a "Y" rating.
Three other Michelin high performance tires soon will be introduced into the marketplace.
The Pilot Exalto, another summer high performance tire, will replace the Pilot SX-GT. The Pilot Primacy, an ultra-premium touring summer tire for European luxury vehicles, will be available in V- and Z-rated sizes. The Pilot Sport A/S eventually will replace the Pilot XGTZ4.
In the fashion performance segment, where Michelin says Asian sport coupes represent about 46% of the market, Michelin sees growth for not only its Michelin and BFGoodrich brands, but for its associate brands as well.
The company's private and associate brand offerings have H- and Z-rated tires in their lines.
Michelin is not forgetting about the tuner market. Yasin cites the 205/40ZR17 as one of the most popular fitments among dealers working with Honda Civic tuners. "The 205/40HR17 grew 101% in 1999," says Tom Peebles, marketing manager for associate and private brands. "This is in the fashion market alone, with about 86,000 units reported to RMA. Meanwhile, the 205/40ZR17 grew by 139% in 1999 with about 68,000 units reported."
In terms of where the sizing trend is headed, Yasin says the 335/30ZR20 is the largest, lowest profile tire Michelin is producing at the moment. Michelin has made 21- and 22-inch tires for concept and show cars.
To handle the size proliferation problem, Yasin says, "All Michelin dealers are invited to log onto our BIBNET extranet.
"We also offer a program called Ultra Ship that allows dealers to order up to four V- or Z-speed rated tires and have them shipped anywhere in the country within 24 hours."
Watch for our article from the March issue, part two of "Performance tire sizes run wild!" It will focus on other high performance tire brands, including Falken, Yokohama, Toyo, Hankook, Kumho, Sumitomo, Maxxis, Vredestein, Hoosier and Fulda.
