Weather or Not

Weak Winters Hamper Winter Tire Growth and Opportunities

Sleigh bells ring, are you listening? In the lane, snow is glistening. A beautiful sight, we’re happy tonight. Walking in a ®ƒ

Winter wonderland? It’s May, winter’s over. But that doesn’t mean dealers and tiremakers aren’t thinking about winter tires. On the contrary, they’re reviewing last season while prepping for the one coming.

The winter tire market, however, isn’t like the all-season or performance markets. Weather plays such a crucial role in how the winter tire season will shape up. While a distinct lack of snow and ice wouldn’t seem too bad for drivers, it definitely isn’t too good for dealers. You can’t have winter tires without the winter weather.

Manufacturers and dealers have to be better at predicting the weather than the local forcaster – which sometimes isn’t hard. Too many tires in a mild season leads to overstock and expensive, inflated inventories.

Not enough tires for a suddenly severe season translates into too much demand and lost profit potential. It’s quite the guessing game.

"The expectations for winter tire sales are based on certain expectations in weather," said Bob Toth, marketing manager for Goodyear. "In other words, tiremakers and dealers make their best guess of what they anticipate the winter will be like.

"Obviously, the 2001-02 winter season proved to be mild. Therefore, winter tire sales were somewhat below estimates, but probably on the mark based on the soft winter weather. What it proves to us is that as tough as it is to forecast the weather, it’s even more difficult to forecast winter tire sales."

When the weather is there and the order predictions are accurate, winter tires can be vital to boosting a dealer’s bottom line. And what powers the capabilities of today’s winter tire is the technology behind it. With compounding and tread designs always being improved, winter tire performance continues to evolve.

"Most all of the new technologies that will distinguish a current tire from a better one will be in compounding," said Al Smoke, president of Vredestein Tire North America. "Manufacturers are always working on new ideas."

The winter tire market can be had under the right circumstances. The dealer just needs to be ready when the weather – and the customers ®“ blow in.

Winter Whites

This past winter didn’t really have the punch that most weather-watchers expected. Temperatures were above average and snowfall was down in most of the traditional winter tire hotbeds. That’s not to say winter storms didn’t come along from time to time – because they definitely did. However, on the whole, the winter was mild.

Warmer temps and less snowfall meant that drivers weren’t thinking as much about winter tires. When the parka doesn’t come out of the mothballs until mid-December, and drivers don’t feel their cars fishtail in snow and slide on ice until after New Years, winter tires aren’t top of mind. And every dealer knows it has to snow early and often to drive winter tire sales.

"Obviously the mild winter affected snow tire sales in a negative way, but it was not unexpected," said John Pecoraro, product marketing manager for Cooper Tire. "Early winter snow drives winter tire sales and past experience has shown that if measurable snow hasn’t fallen in the snowbelt by early December, then snow tire sales will be down. Since we had hardly any snow in 2001, winter tire sales for the 2001-2002 winter season were less than anticipated."

More than most, winter tire sales are at the mercy of the weather. Tiremakers and dealers know it and if it’s not snowing, there’s not much to be done about it. But even without the expected snowfalls, a few manufacturers, like Bridgestone and Vredestein, saw modest increases in sales.

"The winter season last year, with lack of snow and cold, was certainly below expectations," said Smoke. "We did sell more last year than in 2000, but not as much as we had anticipated. Our increase came in high performance H- and V-rated tires as those people are more inclined to buy because they have the money.

"Dealers and manufacturers who sell winter tires are like farmers – dependent on the weather. You need the snow in a timely fashion so people go buy the tires."

That’s not to say that the entire winter tire market suffered this past season. Certainly mountainous regions and classic snow magnets such as Buffalo – which seems to get buried every year ®“ had solid amounts of snow and ice.

"Overall, the 2001 winter tire selling season was a bit below expectations," said Ray Labuda, the head of Hankook’s Akron-based technical center. "However, there were certain areas that did well, such as upper New England. The dealers in those areas sold about the same number of tires in 2001 as 2000."

Can The Market Grow?

With the lack of real winter weather for the last few years and further advances in all-season tires, the winter tire market runs the risk of plateauing. In terms of sales, the market has leveled. But everyone agrees that if there’s a decent "flurry" of real winter weather this coming season, the sales will improve and the market will climb.

"There are things that a tire manufacturer or dealer cannot control," said Toth. "If we have a real winter season – with early, heavy snows ®“ you’ll see that any perceived plateau of the past couple of years will quickly disappear, and sales of winter tires will definitely jump."

Cooper’s Pecoraro doesn’t necessary agree that all-season tires are as advanced as is believed, and can completely take the place of winter tires. "All-season tires have actually become less aggressive over the years when compared to early all-season designs," he said. "Many of today’s all-season designs do not provide the snow and ice traction that a dedicated winter tire provides.

"That’s why the RMA developed the new M&S rating symbol that identifies tires that are suitable in severe snow conditions. Most all-season tires on the road today won’t meet this criteria."

However, advances in technology and product offerings over the last several years have brought a different kind of growth to winter tires. Both manufacturers and dealers can benefit from multiple options to fit any customer.

"The overall winter tire market is not expanding tremendously, but it is expanding, without a doubt, by brand and winter tire type," said Phil Pacsi, executive director North American consumer tire brand marketing for Bridgestone/Firestone. "Companies providing snow tires with leading edge technology – and size additions ®“ that significantly improve vehicle traction and performance are growing steadily."

Splintering Effect?

Across all markets, SKUs are increasing and there really isn’t anything dealers can do. Automakers are forcing more sizes and options on the tire industry and tiremakers want to give customers a variety of choices, as well.

The light truck/SUV market is a classic example. It has fractured into numerous niches, including luxury and crossover SUV tires. Could this stratification happen to winter tires as well? At best, the answer is murky, with manufacturers seeing things differently.

"I don’t think that the winter tire market will stratify, but there will always be a certain market segment that will buy winter tires," said Labuda. "The sizes may expand with the introduction of new vehicles, but I don’t think the total number of tires will grow significantly."

Vredestein’s Smoke takes a realistic approach to the number of SKUs: everything balances in the end. "Will there be more SKUs in the future? Yes," he said. "But maybe some will disappear in time. In the end, it’s hard to say exactly how many more SKUs there might be."

While there are tiremakers who agree segmentation will occur in the winter tire market, they still don’t quite agree as to how quickly or how far it will go. Could there be specific winter tires manufactured for specific applications? Will the speed rating of the winter tire be critical? Unclear.

"To some degree, the specialization of the winter tire market has already begun," said Goodyear’s Toth. "With changes in new vehicles and trends in some segments, there are more tire choices, like speed ratings and those targeted at light trucks and SUVs."

"Not only is the winter tire market stratifying by size and vehicle, it is also rapidly including the light truck/SUV market," Pacsi said. "The constant growth of tire sizes and speed ratings from OE requires a subsequent growth in sizes in winter tire lines.

"Four-wheel drive vehicle owners are quickly realizing the tremendous advantages a ‘purpose built’ winter tire adds. The assumption that because you have four-wheel drive, you can handle any snow/winter-driving situation is an unfortunate myth."

Growth is inevitable. And that means that even if the winter tire market doesn’t splinter like the light truck/SUV market did, dealers are still going to have a lot of options to choose from.

"I’m afraid SKU proliferation is a fact of life," Pecoraro said. "I don’t see an end to it for the foreseeable future. This is being driven by the auto companies, not the tire companies."

Technological Know-How

Providing superior traction is really what the winter tire is all about. In reality, the tire is the only part of the vehicle that touches the road, so the traction a tire can deliver in snowy and icy conditions is critical.

"In simplistic terms, there are two primary approaches to winter tire traction," said Toth. "One is in compounding, and the objective is to find compounds that remain soft and pliant in sub-freezing temperatures. The other avenue is in tread design, with more biting edges.

"Tires play the single most important role in determining how a vehicle will handle in an emergency situation. It doesn’t matter how many electronic systems there are on a vehicle – such as traction control and anti-lock braking. The brakes stop the wheels; the tires stop the vehicle."

Some, like BFS’ Pacsi, believe that any new winter tire technology will come out of what’s already there rather than a brand new idea.

"The technological advances in the winter tire market will be primarily evolutionary rather than revolutionary," he said. "There is nothing short-term that will change the market the way studless technologies did in the early 1990s. There will be improvements in studless designs and rubber-compounding, but these will be incremental advances.

"Along those lines, we combined studless technology with runflat technology to produce the Blizzak MZ-03 RFT, our first runflat winter tire. As automakers expand the use of runflat tires, runflat winter tires will be required to provide winter traction without sacrificing runflat performance."

Modifying the compound or tread design to enhance traction is the usual course. Cooper is one tiremaker that has gone this route, recently patenting a design feature call the "snow groove."

"It causes a certain amount of snow to remain lodged in the tread, capitalizing on the higher traction properties of ‘snow-on-snow’ vs. ‘snow-on-rubber’," said Pecoraro.

The applications and constantly-improving technology are there in the winter tire market. The customers will be there, as well. The biggest remaining variable is the weather.

Come late October/early November, dealers should keep one eye on the sky and one on the front door. And try not get too upset by that first, early snowfall.