Consumer Tires Retail

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With apologies to Mark Twain, it appears that the rumors of the death of the large pickup truck/SUV market have been greatly exaggerated.

Of course, nobody can dispute the fact that sales of light trucks dropped considerably (nearly 25%) last year. But now that gas prices have remained somewhat stable for a relatively long period of time, the market, in turn, has stabilized.

“The Ford F-150 and the Chevy Silverado are still some of the top vehicles sold in the U.S.,” says Jonathan Lee, brand manager, Wrangler tires, for Goodyear Tire & Rubber Co.

Furthermore, many consumers who bought pickups and SUVs during the segment’s “boom period” are expected to hold onto them for a long time, says Tom Gravalos, vice president of marketing, motorsports and original equipment sales for Pirelli Tire North America Inc.

That’s good news for light truck/SUV tire dealers.

New products

The fact that consumers continue to buy and drive pickup trucks and SUVs doesn’t minimize the bumps that the market has experienced.

“I think what we saw last year when gas prices spiked through the roof (is that) consumers became very sensitive to the fuel efficiency of vehicles, and weren’t out there buying large vehicles,” says Doug Girvin, director of product marketing, passenger and light truck tires, Michelin North America Inc.

That didn’t change Michelin’s long-term product development or marketing plans, he adds. The company recently introduced its Michelin LTX MS 2, a light truck tire. “We didn’t feel that this was a disappearing market. The demand may be pent-up, but it doesn’t disappear.”

A number of other companies have launched new light truck/SUV tires this year.

Goodyear rolled out two, the Wrangler DuraTrac and the Wrangler MT/R with Kevlar.

[PAGEBREAK]“When we look at light truck customers, there is definitely the consumer who needs a truck for a specific reason, whether it’s hauling things or getting to the job site,” says Lee.

Falken Tire Corp. has jumped into the light truck/SUV tire category with both feet. This past summer, it rolled out a new tire, the High Country A/T, which spans “a lot of OE sizes,” according to Mark Richter, Falken’s senior manager of dealer marketing.

With sizes to fit rims ranging from 15 inches to 20 inches in diameter, the High Country A/T “is more of a core line for dealers to start with. Falken, in the all-terrain market, has not had a modern (LT) size offering in quite some time,” he explains.

“Not many companies are coming out with complete, new light truck tire lines. It’s a new direction for us... and we see it as a huge opportunity to be the new kids on the block.”

Other companies are rounding out their LT/SUV tire size offerings. At this month’s Specialty Equipment Market Association Show in Las Vegas, Nev., Hankook Tire America Corp. will debut a 22-inch mud-terrain size, says Bill Bainbridge, the company’s director of brand communications.

“In light truck all-terrain, (we’ll have) a 325/50R22 and in the crossover vehicle realm, a 255/50R19.

As we introduced the all-terrains and mud-terrains over the last couple of years, we started out with the high-volume sizes. The niche sizes are coming into production now.”

Crossover appeal

According to the Rubber Manufacturers Association, OE light truck tire shipments are expected to fall 12% for the full year, while replacement units are expected to decline 18%. However, next year should be better. An increase of nearly 8% is anticipated on the replacement side.

“I think the downward trend took place in the first half of the year and we’re starting to see some of those things come back,” says Lee. “For example, August shipments at the industry level were higher than July shipments, and the quarter-to-date is higher in 2009 than it was in 2008.”

The drop in pickup truck/SUV sales that took place last year amounted to “a foot on the brake for a while,” says Pirelli’s Gravalos. “But it’s coming back around.”

“Last year when gas prices spiked, a lot of people parked their SUVs and pickups, but they didn’t get rid of them,” says Steve Hutchinson, vice president of marketing for Toyo Tire U.S.A. Corp.

“The LT/SUV market will have its ups and downs as far as gas prices and that sort of thing.... but the spirit of America is still SUV/light truck. It’s part of our lore. And it’s the customization of these vehicles (with aftermarket tires and wheels) that makes it so cool.”

Another factor that should buttress light truck and SUV tire sales is the continued popularity of crossover vehicles.

“That’s another class of vehicle that’s playing an important role,” says Michelin’s Girvin. “It’s been the whole advent of that vehicle that we think will maintain what we internally call ‘recreational vehicles,’ whether they’re a pickup truck, an SUV or a crossover.

“It’s the growth of the crossover that will drive the recreational category in the future. It makes sense — you have to get the kids around, you need the space to do it, but maybe you don’t need as much space or you don’t want as much of a truck-like ride as you had with an SUV.”

The crossover vehicle category poses a number of challenges for replacement tire suppliers, says Dan King, vice president of sales and marketing, Yokohama Tire Corp. “How do we categorize crossovers? How can we, as an industry, meet or exceed the customers’ expectations with the right products? How does the retailer view it? Right now, the retailer is sometimes selling a performance tire for the (crossover) vehicle, sometimes a traditional passenger tire and sometimes an SUV tire.”

[PAGEBREAK]Future growth?

Another light truck/SUV tire trend to keep an eye on is sizing, according to tire manufacturers.

“I think the biggest impact we’re seeing is less plus-sizing on SUVs,” says King. “For several years, we had a huge run on plus-sizing to 20 inches and 22 inches. That has really slowed down. You’re not seeing a lot of new people in that segment.”

At the same time, vehicle owners who already have made the investment in plus-size tire and wheel combos are not reversing direction.

“We don’t hear a lot of people saying, ‘I’ve had 20 inches on for the last two years, but now I want to take them off.’

“When you look at it, a larger diameter fills up the wheel well much more nicely, and it lends itself to the direction of where the OEMs want the look of their vehicles to be.”

“The styling is so much better with a larger wheel diameter,” says Gravalos. “From 2004 to 2008, 24 of the sizes that have shown growth are 17-inch and above — 235/75R15 is not a growth size. Even the 16s aren’t. But we’re seeing 17s, 18s and even lots of 19s and 20s.”

That said, tiremakers agree that the era of extreme sizing (24 inches and 26 inches) is probably over, or at least in a state of  limbo. “The super-aggressive sizes have slowed down,” says Falken’s Richter.

What’s the forecast for light truck/SUV tires in 2010? “We certainly see hopeful signs moving ahead, but I wouldn’t say it’s going to be rapid growth,” says Goodyear’s Lee.

“Fall is the prime light truck tire selling season, so we expect to see some healthy numbers. In our business, we see a big uptick in LT tire sales in the fall.”

A lot will depend upon miles driven, says Pirelli’s Gravalos. “If you look at miles driven, you’ll see (it has) done a little bit of an uptick, but it’s still in the range of below 2006-2007 levels. That says to me that consumption is going to be slow for a while.”

It takes a long time for pickups and SUVs to cycle through their life spans, “especially with some of the investments people have made,” according to Girvin.

“They’ve spent thousands of dollars,” not only on vehicles but on tire and wheel packages.  “Tires still need to be maintained and replaced.”    ■

The Cash for Clunkers connection -- Buy-back program will have an impact on light truck tire sales, says Hankook

The government’s “Cash for Clunkers” program, though completed, will have an effect on replacement light truck/SUV tire sales, says Bill Bainbridge, director of brand communications for Hankook Tire America Corp.

“An awful lot of people, while their SUV or light truck might not have been a real clunker, used (the program) as an opportunity to downsize (to a smaller vehicle) because it was so much more attractive to get another car.

“A lot of people whose vehicles were getting up there in age — vehicles that might have been (ripe for replacement) or maybe for hanging onto for a little longer — took advantage of the program and said, ‘Hey, this is a great time to buy something else.’”

But don’t count the light truck/SUV market out, he says. “As people are getting through the fall and economic signs are starting to show that things may be stabilizing, next spring — when people are ready to get out and about again —  they may just say, ‘We’ve given up the utilitarian function of an SUV or pickup. Can we afford to do that again?’ And if they feel good about it, I think pickups and SUVs will come back. The love of recreational vehicles doesn’t go away overnight.”

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