A decade ago, you could cover 80% or more of the commercial light truck tire market with six sizes, all of them 16 inches.
“That is changing,” says John Soule, manager of Michelin brand light truck tires at Michelin North America (MNA). “We are now in the middle of a sizing transition that is bringing in lower profile light truck commercial sizes.”
What Soule is talking about is the rush to equip new GM, Ford and Dodge light trucks with more sizing options. “We will see more SKU complexity with the move to the larger 17- and 18-inch sizes. Light truck owners will move to these sizes for their extra load carrying capability and their ability to fill the fender hole in a more aesthetically pleasing manner.”
That is not to say the replacement market for commercial light truck tires is growing; it isn’t. In fact, it has declined by 10% from 2005 to year-to-date 2006. Gas prices are delaying purchases, and small commercial fleets are looking for more durable, high-value products that will deliver low cost per mile.
For these reasons, Soule says MNA is concentrating on the quality factor. “We are working closely with the OEMs at increasing the durability of our light truck tires even more,” he says. “You’ll find three steel belts in our LTX tires in load range D and E,” he adds. “We are also seeing former 11R22.5 tire owners moving to 19.5-inch sizes because they offer the kind of ownership value and durability these customers demand.”
The Low-Down on Sizes
Soule expects that, in the near future, dealers will have to stock nine to 12 light truck commercial sizes to cover the market.
Adding perspective, Goodyear Tire & Rubber Co. says the OE and replacement channels for commercial light truck tires stand at 3.1 million tires. Of this, 19.5-inch sizes are gobbling up 1.9 million, with 16-inch sizes falling to 1.2 million. It is expected that the 16-inch size will fall even further, while 17.5- and 19.5-inch sizes will grow in popularity.
Donn Kramer, director of marketing for Goodyear’s North American commercial tire division, says the 225/70R19.5 size is now the volume leader in this narrow market sector, where it is expected to enjoy a 5% to 8% growth rate per year from now through 2010. The 245/70R19.5 size will experience a 3% to 4% growth rate during the same time period, while the once-dominant 235/85R16 size will decline rapidly,” he says.
Bridgestone/Firestone North American Tire (BFNAT) takes the subject a bit further. Rod Hutchinson, BFNAT’s manager of product planning for light truck and SUV tires, says that, at the turn of the century, the dominant 16-inch commercial light truck size gave way to 17- and 18-inch light truck sizes. “We need look no further than the new Ford, Dodge and GM light truck chassis changes to explain the evolution in tire size popularity,” he says.
“For example, we are seeing a high demand for LT245/70R17 and LT265/70R17 sizes on the Dodge Ram three-quarter ton dually because of the durability of the product and its retreadability,” Hutchinson explains. “Typically, we see these types of vehicles in construction settings. Application by application, we’ll see a growing demand for specific sizes.
“At GM, the new 2500 and 3500 chassis include 16- and 17-inch sizes,” he continues. “At Ford, the new F-250s and F-350s call for an 18-inch diameter, and at Dodge, the new Ram 2500 and 3500 chassis are being fitted with 17-inch tires.
“The 16-inch sizes we’ve depended on for so many years were largely 85-series tires,” Hutchinson adds. “But, sizing popularity has evolved into a bump in demand for 17-inch sizes in a 70 series and, more noticeably, in 18-inch sizes with 70-series aspect ratios. The addition of more SKUs for the independent tire dealer is a natural result. Precisely the same thing happened with the automobile.”
Although the new sizes are lower and wider, they effectively carry the same load and come with the same outside diameter as the 16-inch sizes they are replacing. It’s simply a matter of being more eye appealing and durable. A shorter sidewall means less sidewall damage during urban or construction use. These are small pluses, but pluses nonetheless.
“We are also getting requests for 17-inch sizes with more traction built in,” says Kramer. “That’s why we’re paying attention to the steel-steel 255/70R17 and the 265/70R17 sizes with more aggressive lug tread designs.
“Everyone from Federal Express, to UPS, to Budget to Penske is looking for a lower cost of ownership,” Kramer adds. “We believe this need will trickle down further to small, local accounts, including electricians and plumbers with fleets as small as a few vans or light trucks. This is also a great choice for the heating and air-conditioning fleets that carry heavy loads.”
Construction Trends
Joining in the discussion at Goodyear is Richard Kirk, product marketing manager for regional P&D and urban applications. “Today’s more sophisticated fleet, whether large or small, is also in the process of making a complete changeover from all-fabric tires to steel-steel tires.
“We can show very easily how a 245/75R17 steel-steel radial will outperform a 245/75R17 fabric tire,” says Kirk. “The owner of the steel-steel radial will enjoy a 50% improvement in ownership value based on original mileage and retreadability alone. That’s why the marketplace for OE and replacement medium radial tires, which currently requires 26.5 million medium radial truck tires yearly, is now using less than a million fabric tires today.”
“Keep in mind that tires in countries like Brazil, as well as home-market tires in Southeast Asia, are 50% bias-ply fabric tires,” says Kramer. “The U.S. is where the change is taking place, which explains why China is shipping in 6 million low-cost steel-steel radial tires a year.”
Long-Term Opportunity
Most important to Kramer is the opportunity for independent tire dealers to nurture long-term relationships with commercial light truck tire customers. He doesn’t want dealers to stop at the point of sale.
“Suggest to these customers that you will implement a highly personal, periodic preventative maintenance (PM) check. Every time you see a vehicle in for one of your PM checks, you have the opportunity to participate in the sale of other types of vehicle services, ranging from oil changes and balancing to retreads and brakes,” he says.
Smart, aggressive dealers will quickly see ways they can assist small fleet customers beyond just tires and basic service.
In addition, pay attention to how the tires you recommend will impact the fleet’s bottom line in terms of cost-per-mile.
“It is within your purview to offer the owner a substantial reduction in the cost of owning a set of tires just by putting on a set of 225/70R19.5 steel-steel medium radial truck tires,” he says. “Even better, the user will be able to do more work with his four new tires than with the 16-inch tires he just asked you to remove.”
Bill Vandewater, consumer products manager and sales engineer at BFNAT, also likes this market segment. “If you’re a dealer, you need to sit down for a minute and think about this business,” he says. “It’ll pay your overhead and more if you can show the customer that you will set up a complete periodic maintenance program for all of their light trucks – from pickups to box trucks.
“Like the big fleets, none of these people can afford downtime, whether they are florists, electricians, dry cleaners or plumbers. Moreover, their vehicles are often overloaded and exposed to stop-and-go driving, hard turns and curbing every day. That’s because they often are on a new route every day, and they don’t know what they’re going to encounter,” Vandewater says.
“Make it your job to work with them at maximizing their overall vehicle costs, including tires. You must rotate their tires, advise them about load-carrying capacities and constantly check inflation pressures – just like you would with the big fleets,” says Vandewater. “Even though this market segment isn’t growing, it is changing, and with change comes new opportunities and new relationships.”
