Light Truck Tires: Dealers Adapt as Consumers Steer Away From Sedans
In the first six months of 2018, light truck tires were 25% of unit sales at Lenhart’s Service Center Tire Pros. Owner Nick Lenhart is waiting to see “how that washes out” by the end of 2018, but for now his LT tire sales are trending up as consumers gravitate toward pickup trucks and sport utility and crossover vehicles. For comparison, in all of 2017, 18% of sales at the Irwin, Pa., dealership were LT tires.
Auto Care Association data confirm what is playing out at Lenhart’s sales counter. Demand for light trucks was higher than passenger cars in 2017. Sales of light trucks grew 3.6% in 2017 and were 64.4% of total vehicle sales. The percentage has been going up steadily since 2012, when light truck sales were 50.4% of all vehicle sales.
The Auto Care Association reports the total U.S. motor vehicle population to be 280.6 million in 2018 versus 278.6 million in 2017, a 0.7% increase. There are 272.3 million cars and light trucks on the road today, up from 270.4 million in 2017. Light trucks represent 152.5 million vehicles or 56% of theU.S. motor vehicle population in 2018. In 2017, light trucks were 54.7% of the vehicle population.
Automakers such as Ford Motor Co. expect the trend to continue and are boosting production of light trucks, SUVs and CUVs. In its first-quarter 2018 earnings release, Ford said it would not invest in new generations of traditional Ford sedans for North America “given declining consumer demand and product profitability.” By 2020, almost 90% of the Ford portfolio in North America will be trucks, utilities and commercial vehicles, according to the company.
In the same earnings report, Ford announced its intention to drop all but two passenger cars, the Mustang and the soon-to-be-launched Focus Active, from its North American lineup.
There are multiple reasons for the resurgence of light trucks and SUVs following the economic recession a decade ago. “In general, trucks and SUVs, especially on the higher end of the scale, tend to grow as the economy grows,” says Will Robbins, product manager, consumer replacement group for Bridgestone Americas Inc.
The relatively low cost of gasoline contributes to the popularity of the bigger vehicles, along with improved fuel economy and better overall vehicle quality, even compared to new sedans a decade ago. Another factor is longer auto loan terms, which make a light truck or SUV more affordable for consumers. “A fully loaded F-150 is in the mid-fifties to sixty thousand dollar range,” says Robbins. “Now that credit has gotten back to the point where it is a little bit more relaxed, lenders are offering 84-month auto loans, so it makes those vehicles a lot more accessible to people.”
CONSUMERS WANT A TRUCK-LIKE AESTHETIC
American consumers are turning away from sedans. Yet many of the light truck owners who come to Lenhart’s Tire Pros are not entirely satisfied with their purchases either.
In their estimation, their new vehicles do not quite look like trucks, and they want Lenhart to fix it. “The first thing they say when they come in for their replacement set of tires is, ‘I want something more aggressive, I want to make it look more like a truck.’ We hear that all the time; they want their truck to look like a truck. So it is coming from the factory with a tire that’s not very aggressive,” says Lenhart.
Although customers are demanding a more aggressive-looking tire, they tend to keep their vehicles on the pavement.
“We have clients who have a $70,000 pickup truck and don’t even have a hitch on it. They want the sidewall to look aggressive even though they are not taking it off road,” says Lenhart.
“For a long time it used to be enthusiasts who wanted that aggressive-looking tire, but now we have a lot of guys who want to be able to get up that dirt road the two times a year they go to their hunting camp.”
Many customers ask Lenhart for aggressive-looking tires that are quiet on the road.
“They want the aggressive sidewall but not an aggressive tread because they want it to look like a truck. They don’t need a mud tire but they want it to look like one.”
Lenhart has the tires his customers want. “For us, General and Continental have done a good job of expanding their product lines in the LT range to meet that need in the last couple years.” Lenhart, who participates in Continental’s Gold Dealer program, says the Grabber ATX, Grabber X3 and the Continental Terrain Contact have been great products for consumers who don’t need an MT tire but want something that’s more aggressive than their truck’s original highway terrain tire.
Bridgestone’s Robbins say that in general the industry is moving towards providing a truck-like aesthetic without the compromises historically present in an all-terrain or max traction tire.
“I think as people research this segment they say, ‘If I can have this really aggressive-looking Bridgestone Dueler A/T Revo 3 tire without having to sacrifice anything for it, why wouldn’t I do that?’ That’s a trend we’ve seen continue to grow significantly the last several years. We’ve had individuals who want the performance of a highway tire but they want it to look even more aggressive. We expect that trend to continue in the truck and SUV segment and even into the highway segment where there’s a prioritization of the aesthetics of that truck-like appearance even on non-all-terrain products.”
Lenhart attributes increased sales of custom wheel packages over the last two years, the most ever for his dealership,
to the growth of the LT market. He fits three-quarter and one-ton trucks with 22-inch and larger wheels with Nitto and Toyo brand tires. He handles most wheel sales himself because of the amount of time, even stretching over days, for a customer to decide on a wheel package. “When they are spending four of five thousand dollars for just the wheels, they want to make sure it’s exactly right.”
Lenhart is a fourth-generation tire dealer. The store has been in the same location since his great-grandfather opened it in 1930. Today he and his father, Ken, are partners and his mother, Anna, keeps the company’s books. About 30% of revenue comes from tire sales; the majority of the store’s business is mechanical work. He has 10 employees.
SEDANS ARE NOT GOING AWAY
David Little expects to see more larger vehicles in his three stores, which are located within a six-mile radius in Fredericksburg, Va. He is ready for an increased demand for LT tires. “We’re strong in the Michelin, BFGoodrich, Continental and General brands. They already have a large footprint in the light truck segment, so I don’t anticipate making any changes there,” says Little.
He and his brother Mike are equal partners in Little Tire Co. Inc., which does business as Little Tire Co. Tire Pros.
The shift toward SUVs and light trucks is not as dramatic among Little’s customers. “Over the last 10 years it’s been moving more to the light truck side; but we still sell passenger tires,” says Little. “We have a lot of commuters, and commuters want sedans because they get better gas mileage.”
Little considers tires for SUVs and CUVs as light truck tires. “In my mind I include a lot of SUV and CUV tires as LT tires even though they may be a P metric,” he says, citing the Michelin Defender LTX line as an example. “In that line, they make both P metric and LTs. I count all of those in my system as LT. I know the way I look at LTs and P metric is different from other dealers.”
‘MUD GRIP USED TO BE A NECESSITY’
The bulk of Todd Schindler’s business has been SUV and light truck tires since he opened Texas Tire and Accessory LP in Hallettsville, Texas, in 2000. But he has seen an uptick over the last three years. “We’ve always been mainly SUV and light truck; it’s gone from 65% those types of sales to maybe 75% those types of sales.”
He says customers who typically drove sedans switched to small SUVs for the extra room and the height off the road compared to their cars. In addition, about half of Schindler’s customers are driving their trucks off the road to work in oil fields, on ranches and farms and to hunt. “A lot of them want to look good, but a lot do actually use them,” says Schindler.
Although Schindler’s light truck tire business is up, his wheel sales have dropped about 75% over a five-year period. “We have seen a decrease in that because it appears the OE wheel has the look the customers are satisfied with.”
Within his light truck tire line, mud-terrain tires have fallen out of favor with his customers. “The mud grip tire was a large sector. Probably 25% of the tires in the light truck line that we sold were mud grips.” Schindler says the movement to all-terrain vehicles (ATVs) and utility-terrain vehicles (UTVs) is responsible for reducing the demand for mud-terrain tires.
“Farmers, ranchers and hunters are now using ATVs and UTVs to go into the field, dry or wet. Our mud grip tire sales are probably down 50% or more. The mud grip buyers are moving to the all-terrain and the all-terrain buyers are moving toward the highway tires. Mud grip used to be a necessity. People bought them for looks, but a lot of people had to have them because their responsibilities to their farms and ranches required them.”
He expects the ATV and UTV market will continue to grow, but stocking the tires is a challenge. “There are so many sizes that you really can’t stock them. I did an analysis last December because I wanted to see about stocking the tires I need. I only found a couple of sizes that I would have sold maybe fifteen or twenty of them a year.”
His shop mounts ATV and UTV tires for customers who buy them online, adding 50% to the normal mounting charge. Services offered in his three-bay store include oil changes, lube, tire balancing and flat repair. His accessory offerings include grille guards, steps, bumpers, tool boxes and spray-on bed liners.
The evolution of the LT market is visible on Schindler’s tire racks, which he built himself. “When we started our business 18 years ago, I built tire racks. The sizes have changed on those racks. We had 14s and we had two racks for 15s and a whole lot of 16-inch tires and none of the other stuff. Our racks were probably 40% P-metric tires. If you look at my tire racks today, only seven of my 62 SKUs are for cars.”
SIZE PROLIFERATION IS EXPECTED
Consumer preference for SUVs, CUVs and light trucks is creating profit opportunities for dealers.
“The fact that light truck and SUV/CUV-focused sizes tend to make dealers more money is going to be a benefit to them,” says Robbins. But he expects the size proliferation that took place in the sedan market over the last 10 or 15 years to occur in the CUV, SUV and truck market, too.
“I think we’re at the very, very early stages, and we’re going to see that same proliferation into the CUV, SUV and truck space to where the size complexity and product complexity as people get more interested in that part of the market is going to grow,” says Robbins.
“The dealers are going to have to be a little bit careful. From our perspective, we created the TireHub business in partnership with Goodyear to allow more options for distribution and a wider range of products in preparation for the changing market.”
DELIVERY VANS NEED C TIRES
Supplying commercial C tires for an increasingly popular type of compact delivery van may prove to be a profitable source of revenue, especially in urban areas.
The smaller delivery vans, which are built on European platforms, are more
something we really like to make clear to tire dealers,” says Terzaken. While a Load Range E tire may be a bigger than the C tire, it may not have the load-carrying capability. “The C tire is designed specifically for these commercial vehicle applications. It has a very high load carrying capability in a rather small package. They are very different from a light truck tire.”
When pickup truck and van platforms were shared, the same LT tire that was on a pickup truck could have very well shown up on a larger delivery van, according to Terzaken. Those days are gone.
“You don’t see C tires on passenger cars or pickup trucks. But you do see them on these compact vans, and it is a direct result of these European vehicle platforms coming to the United States.”
On larger delivery vans with LT metric tires, the axle and the loading deck had to be higher. “With a bigger tire, you have a much larger turning radius for the vehicle,” says Terzaken. “With these smaller, more compact tires, the vehicle is lower to the ground so it is more stable and has a better turning radius.”
Over the last several years, Continental has refreshed and expanded its Continental and Grabber lines for CUVs, SUVs and light trucks. Continental Vanco lines continue to support many original equipment van fitments. The Grabber HD tire is targeted at smaller commercial delivery vans and trucks.
There are five C sizes and 11 LT-metric sizes in the Grabber HD line. “There are not a lot of sizes so there’s not a lot of complexity,” says Terzaken. “Dealers can cover many delivery vans with just a few sizes. Most important, they are putting the right tire on the vehicle.” ■