HP/UHP market snapshot
The high performance/ultra-high performance replacement tire market remains in growth mode, and we’re not just talking shipments, which increased from 45.1 million units in 2006 to 49.1 million units in 2007.
Several HP/UHP tire manufacturers and marketers also expect “growth” to be the operative word when it comes to performance tire sizes. Last year, the segment witnessed “strong growth in 17- and 18-inch due to the increase of (their) use at original equipment,” says Richard Smallwood, president and COO of Falken Tire Corp.
In fact, Don Mathis, general manager of ZT Wholesale, says 17- and 18-inch sizes are reaching “near commodity status.” He predicts shipments of 19-inch HP/UHP tires will increase this year.
“There is still healthy demand for plus sizing because tires and wheels are one of the easiest ways someone can customize their vehicle.” says Phil Pacsi, vice president, North American consumer tire marketing, Bridgestone Firestone North American Tire LLC.
But he believes “the race to see who can make the biggest tire is finally slowing down. We’ve reached the engineering limits within the size available under the car.
Tuner: hot or cold?
For years, “tuner” has been the big buzzword in the HP/UHP segment. When asked to assess the state of the tuner market, responses from manufacturers and marketers varied.
The tuner market is still “quite hot,” says ZT Wholesale’s Mathis, though he adds “that perception may be from the market (now) being divided between 20 brands rather than six or eight brands.”
Cooper Tire & Rubber Co. describes the tuner market as “alive and well.” However, the types of tuner vehicles are changing, says Chris Pantani, Cooper’s director of UHP marketing and motorsports. There’s been a shift from tuning sport compacts to tuning domestic automobiles, he reports. (“Let’s not forget that muscle cars were the original tuner vehicles in the 1960s and ‘70s.”)
Smallwood says Falken has observed a “slowing in tuner sizes, but a lot of the remaining volume has gone to the very low-cost (suppliers). Sizes also have shifted away from the traditional tuner sizes in the 17- to 18-inch rim diameters to larger rim diameter sizes such as 19-inch through 20-inch.”
Doug Addis, territory sales manager for Maxxis International — USA, says tuner “has cooled down for several reasons. The first would be economic conditions. With gas prices so high, discretionary spending has slowed a bit. Secondly, there are more players competing for that tuner business. The pie has been sliced into smaller pieces.”
One tuner market sub-segment, “the very discriminating ‘high-end’ tuner” sub-segment, remains profitable, “particularly with European applications,” says Julie Sediq, director of marketing communications for Toyo Tire U.S.A. Corp. “This segment is less affected by economic conditions.”
Joerg Burfien, director of research and development for Continental Tire North America Inc. (CTNA), is optimistic about future profit opportunities in the tuner market. “We’re looking forward to an increase (in tuner business).”
HP/UHP tire manufacturers and marketers say demand for their products will increase during 2008. One major reason is that more vehicles are coming out of the factory with traditional HP/UHP tire and wheel sizes. “Generally, the HP segment is developing more towards broad market,” says Burfien.
“More vehicles during the last three years have entered the market with HP and UHP tires,” says Pantani.
Expect a lot more of the same, says Rick Brennan, vice president of marketing for Kumho Tire U.S.A. Inc. At last month’s Kumho dealer meeting, Brennan went as far as to say that five years from now all new cars will come with performance tires on them.
Larger-rim diameters and 50- and 55-series sizes are becoming more commonplace at OE, he says. The result? More “accidental performance customers.”
The downside to this, he adds, will be the resulting sticker shock when tires need to be replaced.
Look for continued HP/UHP size proliferation, as well. Brennan says there will be 54 new HP/UHP sizes offered by vehicle manufacturers this year alone.
The constant churning of vehicles also will knock a few existing HP/UHP sizes off their perch, he adds. For example, he doesn’t expect sizes 255/30R24 (front) and 275/30R24 (rear) to be in as much demand thanks to Chrysler LLC’s announced cancellation of the Dodge Magnum.
(See the "HP/UHP market share by brand" chart in our Industry Resources area on this Web site.)