The Skid-Steer Tire Market is Changing, But Up-to-Date Dealers Can Profit

It’s been called the Swiss army knife of construction – the most versatile of all mobile machines. It’s the ubiquitous skid-steer loader, and thanks to its compact size and suitability for specialty attachments, it can handle just about any task.

Does that guarantee an easy stream of sales for skid-steer tire dealers? Not necessarily.

From a big-picture standpoint, sales of new skid-steer loaders and tires correlate with housing starts, says Rhett Turpin, product manager for ATV and skid-steer tires at Carlisle Tire & Wheel Co.

According to the U.S. Census Bureau and the Department of Housing and Urban Development, housing starts have declined across the country, with the biggest drop (38%) occurring in the western region of the country. Starts in the Northeast fell 2.5%, and in the Midwest, they fell 17.9%. The southern region of the U.S. saw a 23.1% decrease.

But, that doesn’t mean gloom and doom for skid-steer tires. “The replacement market for skid-steer tires remains very strong, despite a softening at the OE level, primarily due to the number of new units sold over the course of the last 10 years,” says Turpin. “The skid-steer remains as one of the most versatile and economical pieces of equipment available. Further, the ease of use and easy access by consumers through equipment rental outlets has contributed to the use of skid-steers and overall tire consumption.”

“Housing and construction have been robust over the past few years,” adds Ryan Sung, marketing assistant for Tireco Inc., “and, despite the recent downturn, the overall market is still strong.”

Plus, beyond all the statistics, it’s really equipment users that drive tire sales at the dealer level. It’s paving, demolition, landscaping and rental companies, construction contractors and farmers – not housing analysts – that truly determine whether the year will be profitable for skid-steer tire dealers or not.

So, to be successful in their regional markets, dealers need to know exactly what their customers want. Whether it’s deeper tread, a tougher tire or the lowest-cost tire, skid-steer equipment users have specific demands.

Industry insiders say that skid-steer loader owners are starting to turn away from tires in favor of tracks. While some are trading in their skid-steer loaders for compact track loaders – different machines altogether – others are retrofitting their loaders with over-the-tire rubber tracks.

While tire-equipped skid-steer loaders have versatility, track loaders and over-the-tire rubber tracks offer bigger footprints. And, that means better flotation and traction in soft-soil conditions.

“The overall skid-steer market is going through an evolution where tracks are replacing tire positions,” says Jared Steier, product manager for tracks at Charlotte, N.C.-based Solideal USA, a supplier of tires, wheels and rubber tracks to the construction and material-handling markets. “The biggest trend is the growing rubber track market, which has eroded skid-steer machine sales.”

Carlisle’s Turpin agrees. “There appears to be a growing shift to tracked units (new equipment units) in North America. This growth is primarily concentrated on the premium-priced units, for which users are willing to pay the higher initial cost of a tracked system.”

The bad news: Many skid-steer loader owners are buying from equipment dealers, which offer tracks as standard procedure. The good news: A proactive tire dealer can turn a potential tire sale crisis into an opportunity.

Instead of seeing tracks as the enemy, why not consider selling them right along with tires? “The rubber track is the perfect attachment for skid-steers and allows skid-steer operators to experience the flotation of a rubber-track machine without losing the versatility of a skid-steer machine,” claims Steier.

Another advantage to selling this kind of ‘specialty’ product to skid-steer loader operators is the real possibility of better long-term profit margins. “A rubber over-the-tire track is an excellent up sell to skid-steer tire customers and will be profitable for any tire dealers ready to sell it,” Steier adds.

Still, it’s important to remember that skid-steer tires aren’t going away anytime soon. “Clearly, the use of tracks will impact the skid-steer tire market,” says Sung. “I think, however, that the availability and ease of replacing tires are major factors in their use.”

Though hardly at risk of extinction, it’s no secret that tires in many market segments have taken on commodity status in the wake of pricing pressures. Tires for skid-steer loaders are no exception.

Because skid-steer tire buyers are primarily business owners, when a loader goes down, so does the bottom line. And, because cost control is the cornerstone of any healthy business, it’s not a surprise when many of these customers look for the lowest-priced tire. Unfortunately, demand for low-cost tires tends to erode dealer profit margin.

Cost consciousness isn’t the only factor driving down pricing in the skid-steer tire market. “Just as imports have affected the rest of the tire market, the influx of foreign tires has put downward pressure on the prices in the skid-steer market,” says Sung. “Dealers should look to ensure they can get a steady supply of tires and that they are doing business with a supplier with a proven record of excellence.”

He adds: “Recent events have shown that buying product from brokers or distributors who do not have such track records raises the risk of doing business. It ultimately comes down to the quality of tire and the quality of the company you’re doing business with,” he says. “And, the best of these qualities are not always concurrent with the cheapest price.”

One of the best ways to combat the commodity buying attitude is to “establish a strong relationship with customers and stress the features and benefits of products,” according to Mike Castaneda, assistant vice president of aftermarket sales at Greenball Corp. “We see our aftermarket customers asking for our Power Master HD heavy-duty. This tells me that extra-deep tread and rim-guard features are important to the end user.”

Steier has observed similar trends. “With the aggressive applications of skid-steer machines, operators are demanding thicker sidewalls and a tread profile that meets their job requirement,” he states.

“In a business-to-business world, obviously, price is important,” says George Zafirov, marketing manager at McLaren Industries, manufacturer of Bullman brand tires and tracks. “But, that doesn’t mean a price-quality compromise. Dealers can combat the commodity attitude by not selling commodity products.”

Specifically, Zafirov is talking about up-sell products, such as Bullman semi-pneumatic tires. McLaren discontinued its pneumatic tire business to focus on “semi-pneumatic” skid-steer tires, which combine the strength and stability of a solid tire with the cushioned ride of a pneumatic tire, according to Zafirov. Available in sizes 8×16.5, 10×16.5 and 12×16.5, the semi-pneumatic tire is flatproof yet cushioned by air.

Taking advantage of the trend towards track loaders, McLaren also offers Bullman over-the-tire tracks for skid-steer loaders that dealers can promote as providing the benefits of a track loader at a lower cost. “Having options gives one dealer an advantage over another,” says Zafirov. “It’s a way out of the rat race, the commoditizing process.”

“Sell overall value to your customer,” Turpin adds. “In most cases, this will not be the least expensive tire available. There are many opportunities to sell up to the next level of product quality, enhance your customer’s trust in your service and enhance your bottom line.”