Does Anyone Know?
Has the LT/SUV Market Changed in the Post-Recall World?
Not too long ago, the light truck/SUV market may have changed forever. Aug. 9, 2000, to be exact. It was a Wednesday, not unlike any other Wednesday. Except the firestorm that started that day has had a far-reaching and still unclear ®“ impact on the entire tire industry.
One tire manufacturer and one vehicle manufacturer both American icons, as companies go ®“ were shaken to their core. The whole tire industry itself was brought under microscopic scrutiny and criticism by the media and cash-carrying consumers.
A wild and wide-ranging backlash ensued hundreds of consumer lawsuits, vicious finger pointing, angry and confused tire dealers, government investigations, nightly news exposes, data analysis and re-analysis, questions about inflation pressures and load-carrying capacities, sometimes fumbled and often pointed public relations efforts, and tumbling stock prices.
On that Wednesday, Bridgestone/Firestone Inc. (BFS) recalled 6.5 million Firestone ATX, ATX II and Wilderness AT tires, at a potential total cost nearing $1 billion, leaving many analysts predicting disaster. Around 175 deaths and hundreds of injuries were alleged to have been caused by tread separations on the recalled tires, mostly by occupants of the popular Ford Explorer SUVs, on which many of the tires were OE.
And the toll is still mounting, and not just for BFS and Ford. Many other tire makers have had the quality and reliability of their light truck/SUV tires called into question. And ratings-grabbing television shows have heavily explored the safety of pick-ups and SUVs, causing additional alarm among consumers.
Meanwhile, the massive recall effort meant tire makers had to step up production of the popular P235/75R15 radial, often at the expense of other lines and sizes. And dealers were called on to fight the frontline battles, change out as many tires as possible, quell consumer fears, and protect the image of an entire industry.
Yet even with all the convulsions and upheaval and consumer concern, there is still one unanswered question: Has the LT/SUV market changed in the post-recall world?
At first glance, one would think some kind of a change has taken place. Or has it? The market continues to expand and stratify. Even sales of the troubled Ford Explorer increased in the fourth quarter of last year. But surely something happened along the way. A shift in the balance of power. A reengineering of products. A black eye that will take time to heal. Something.
In The Aftermath
The first thing everyone wants to do is believe the LT/SUV market will survive and continue to grow. And by all accounts, it will do just that. Pick-ups and SUVs dot American roads, and production isn’t showing any signs of slowing. OE and replacement tires will be needed, so demand will remain high. But customer perception is still very important, because perception is reality.
"Many customers are still buying our tires with confidence," said Shu Ishibashi, executive vice president of BFS, and president of it’s U.S. Consumer Tire Group. "In fact, we had some customers who came to us to say that they liked our tires and did not want to turn them in during the recall. Additionally, there have been some people who have asked if they could keep their recalled tires to maximize the life of the tires because they did not have any problems with them.
"While we are very gratified by the many positive statements made about our product, and even though the number of tires experiencing the problem is a very, very small percentage of the total recalled tires we produced, we want to make sure that anyone with recalled tires has them replaced."
Those owners retained their trust of the Firestone name, which is important. Trust is going to be the key for this market and that brand ®“ in the near future. No one wants to be nervous driving in his or her own vehicle. Scared customers won’t help anybody’s bottom line.
"The consumers are still in the SUV market. They are aware, but don’t know who to trust," said David Shelton, Sumitomo’s product manager of performance tires. "If they are concerned, they’re only insecure and question the value. In essence, they want to be assured they’re getting a truly good product."
Living on Borrowed Time?
If the customers are still there, where does that leave the whole market? Millions of tires were recalled and millions more had to rushed in to handle demand. Couple that with a buying public that might well stay away from the P235/75R15 size and the industry has a lot of additional work to do.
"From our perspective, the bottom line probably is that the market borrowed ahead on the replacement of several million units of a very popular size," said Skip Viola, vice president of sales and marketing for Laramie Tire. "Since many suppliers have been left with excess inventory and capacity, marketing P235/75R15s will require a very aggressive approach. Look for lots of specials.
"We’ll be cautious in developing new products in this size until the market situation stabilizes."
That stabilization may take a while. Many of the recalled tires were taken out of service early, shifting the replacement cycles for most of the affected vehicles. That, in turn, has had a dramatic impact on many of the manufacturers.
"At a glance, the unfortunate recall has affected this segment in a number of ways," said Jim Vogel, vice president of sales and marketing for Goodyear North American Tire. "With the 6.5 million recalled P235/75R15 Firestone tires being replaced by the end of 2000, you have to realize that many of these tires saw an early replacement, and that takes many tires out of the regular cycle for replacement tire sales over the next two years."
"The recall created a tremendous amount of premature re-tiring," said Shelton. "The normal flow of products has been altered. I think we’ll see a decrease in the demand for P235/75R15 tires for the SUV market for a period of at least one-year since approximately six million were replaced prematurely. If this group of consumers drove the average level, then we will have a surge of demand for this size in two years as these consumers need new tires."
On the Front Lines
It’s one thing for the tire manufacturer’s to aid in the repair of the LT/SUV market; however, they’re not the one fighting the battles in the trenches. The tire dealers are. They’re the ones who have to handle the angry complaints. They’re the ones who have to convince consumers that the market is a safe one, and that LT/SUV tires are equally safe. And for Firestone dealers especially, they’re the ones who will play a major part in rebuilding the brand name and consumer loyalty. Dealers are the ones who have to be continually ready to combat any negative market perceptions.
"The advice remains the same serve and satisfy customers in a way that you’d like to be treated," said Vogel.
"More than before, motorists are looking for good information about their vehicles and their tires.
"With all that’s been happening, many customers are confused, and the media has done their part to contribute to that confusion. Many consumers may have read or heard inaccuracies about tires or specific brands and types of tires. Dealers can provide accurate product information in the form of handout brochures or in-store display materials."
Education is the best thing that can possibly come out of a recall situation. "We’ve suggested to our dealers to take the negative perception caused by the recall, and the questions they receive at the point of sale, and turn them into an opportunity to educate the consumer on the more technological aspects of our product and the expectations they have of it," said Bill Hirst, vice president of sales and marketing for Jetzon, Telstar and Centennial tire.
"The best way to combat any negativity is through knowledge," said Shelton. "The dealer’s staff must be knowledgeable of tire construction and development. In a one-on-one situation, the dealer must be able to directly answer the consumer’s questions to help overcome their fears.
"This means dealers must take the time to satisfy the customers needs, wants, and desires through solid information flow. This will require a little more time and effort than the traditional tire sale."
Realignment and Regrouping
After such a catastrophic event as this recall, the market as a whole has certainly realigned.
Vehicle manufacturers want to expand their tire options as a way to avoid potential headaches in the future. Some dealers might have become disenchanted with the brands they carry and are looking for a change. Marketing gurus say consumers, equating brand familiarity with reliability, are moving to flag brands. And despite their admirable public support for the battered BFS, you know every other tire marketer is doing all it can to capture and hold marketshare.
All of this will have a profound impact on tire manufacturers, which may or may not be able to keep up with these share shifts. Any way you cut it, brand marketshare will surely be affected by recall fallout.
"We received some calls from BFS dealers who were considering making a change to their brand lineup," said Lyle Symonds, vice president of sales and marketing for Eldorado Tire.
"Most of these have been small to medium size dealers looking to add a line as protection against possible consumer fallout. Almost all large BFS dealers have existing relationships with other suppliers.
"Some shift in marketshare is certain to occur among first-tier major brands, but the effect on other tiers will be diffused."
The vehicle manufacturers themselves will answer much of the marketshare question. If some decide to switch tire brands for certain applications, the replacement market will have to respond out of necessity. Case in point, on the 2002 Ford Explorer, customers can literally choose between Firestone, Goodyear or Michelin tires.
"With some customers being offered a tire choice, the market may change," said Ishibashi. "However, our share of OE sales remains strong and we are gratified by the support shown us by our vehicle manufacturer customers.
"Obviously, sales of our Firestone replacement tires have dropped since the recall was initiated. However, our OE share remains strong in the face of an overall decline in new car production and sales. And our Bridgestone and associate brand sales have maintained, and, in many cases, increased. It is hard for us to judge the overall effect on the OE market since we are one of many suppliers."
Naturally, one of the biggest backlashes with the recall has to do with declining sales. Will customers wait longer to replace their existing tires or will they switch brands when the OE tires need to be replaced? In fact, simply supplying tires to replace the recalled Firestone ATX, ATX II and Wilderness AT may have already shifted the balance of power.
"Based on our figures and those of Ford, Goodyear tires accounted for more than half of all the tires that Ford dealers put on customers’ vehicles as replacements for the recalled Firestone tires," said Vogel. "Our share of the P-metric business in North America increased, contributing to a resurgence in total consumer share that went beyond our goal."
While not interviewed specifically for this article, Jean-Michel Guillon, vice president of sales for Michelin Americas Small Tires (MAST), told attendees of the group’s recent dealer meeting that MAST "represented 55% of the total industry growth in 2000." Through the recall, said Guillon, MAST "sold in four months, two million tires over an already aggressive business plan."
Other manufacturers and marketers have made similar gained-business claims. Regardless of who won and who lost, the real impact of any marketshare shift is falling squarely on the tire dealer.
Reinventing the Wheel?
The recall will have other profound impacts on tire makers. The TREAD Act, a direct result of the recall and the first substantial legislation or regulation directed at the tire industry in decades, will have an effect on tire design, construction and maintenance. Problem is, no one knows how. And the potential exists that "solutions" to perceived "problems" will result in over-engineering and additional convolution or an already convoluted LT/SUV tire segment.
At the same time, some manufacturers are taking different approaches to developing the next generation of LT/SUV tires. "A lot of exciting concepts are emerging in the segment. Sizing and tread designs are evolving toward the performance end of the spectrum," said Richard Purol, vice president of sales and marketing for Sumitomo Tire. "We’re working to incorporate this trend on a true LT/SUV casing platform, avoiding some of the pitfalls of misapplying passenger tires."
One thing that is expected to happen is the Department of Transportation updating speed and durability requirements for both passenger and light truck/SUV tires within the next year. The minimum standards will most certainly be increased across the board, forcing the entire industry to comply.
"Bridgestone/Firestone is not waiting for these standards to be rewritten. We are in the process of enhancing the construction of all of our tires, beginning with our LT/SUV tires," said Ishibashi. "Of course, we will certainly ensure that the government standards are addressed, but we see them as the minimum requirement and our tires will always have an additional safety margin as part of our philosophy of continuous improvement."
Turning Dust Into Diamonds
During the recall and its immediate aftermath, tire dealers were the ones who had to bear the brunt of concerned consumers. Answering questions about the product, safety concerns, handling the anger, avoiding a decline in sales, thoughts of switching tire lines to stay afloat all of a sudden, there’s a lot more on a dealer’s plate. And it all starts with taking care of the customer.
"We have always maintained open communication with our dealers. The recall situation was no exception," said BFS’s Ishibashi. "Our dealers are an extension of our family and have been an integral part of the communication process since we initiated the recall.
"Their number one priority, as well as that of BFS, has been and always will be customer satisfaction. This message and philosophy is key in addressing product or safety concerns."
Said Vogel: "Goodyear has communicated with its dealers and store managers throughout the recall, providing them with the latest information we had on the recall itself and related product safety issues. We also distributed news releases on proper applications for the recalled LT/SUV tires.
"In addition, all outlets received a Goodyear-sponsored tire care poster to display in their showrooms, and have made tire care brochures available for distribution to consumers. Dealers and consumers also were directed to Goodyear’s Web site, where continual updates were presented."
Perhaps the one good thing that will come from the recall is making sure that the customer is satisfied and better educated. Instead of just going through the motions and getting on to the next sale, dealers will be more focused on the customer’s immediate and extended needs.
"Many of us in the industry tend to look at the tire sale as ‘selling hoops.’ We really need to be more concerned with answering the wants and needs of the consumer," said Sumitomo’s Shelton. "Part of satisfying the consumer is educating them on what the tire is designed to do, what it’s limitations are, and how they need to care for their tires.
"No amount of over-engineering will make a tire impervious to misuse, neglect, or abuse. Well, at least not within the constraints of the market price. It is a shame that while everything automotive has increased tenfold in cost over the last few decades, tires have improved tenfold, but the price tag has diminished considerably."
Stay Close and Be Smart
But the dealer still has to survive. The dealer who sells LT/SUV tires especially those who specialize in the market ®“ need to make a living, recall or no. Fortunately, the market isn’t going to disappear. On the contrary, it appears that it will continue to flourish, but landing new sales may take a little more work.
"Look at the roads today," said Vogel. "Light trucks and SUVs aren’t going away. It’s a huge market, and a market that isn’t going to diminish any time soon.
"Dealers should follow the trends as the new ‘cross-over’ vehicles make an impact in the market. These vehicles will require a rugged, light truck/SUV tire look while providing a performance tire ride.
"If the dealers stay close to the market, they’ll continue to do well in this segment, but well-known brands should be more desirable as consumers translate increased awareness into flag brand purchases."
And of any vehicle owner, the LT/SUV owner is naturally more inclined to listen to a dealer something that smart dealers will capitalize on. "LT/SUV owners are great customers because they drive expensive vehicles and they probably are open to listening to a trusted tire dealer," said Symonds. "Offering choices beyond OE downstreams and specials should be profitable and reinforce the dealer’s professional image.
The Road Ahead
But even with all of this, what will happen to the LT/SUV market in the future? Many consumers are still leery of these vehicles for a number of reasons. From the tires to the high center of gravity. Will the market remain strong, or will consumer safety concerns lead to a decline? Time will tell.
"The pickup and SUV market will most likely continue to flourish because of the overall popularity of this type of vehicle, but there may be some moderation in the segment’s growth," said Ishibashi. "However this question is best addressed by the auto manufacturers who control production."
Actually the consuming public will decide. If the LT/SUV market does decline, it’ll drop because consumer demand for the vehicles has tapered off and not because of the tires.
Conversely, the vehicle market will not continue to expand and leave the tire side lagging behind.
"It seems sales of new SUVs are slowing a little for a number of reasons, most likely not connected to the recall," said Viola. "The overall economy, too many SUVs being offered, and possible consumer boredom with the concept.
Rollover performance certainly has attracted attention, and I’m sure all vehicle manufacturers will develop a response."
Just as there may be some tinkering done at the vehicle OE level, there might also be some technology changes on the tire side, as well. But when, if at all, will these potential changes come?
"Advanced concept tread designs will continue to gain popularity in the sport truck segment, as well as low profile-plus applications," said Sumitomo’s Purol. "OE will drive innovations, such as pressure monitors. Outside of maintaining unquestionably high overall quality standards though, I don’t see revolutionary changes in the LT/SUV mass market."
Tips for Operating SUVs
One of the most important aspects of owning and driving a SUV is that you recognize that it is different from a car, minivan, or even a pickup.
Universally, SUVs have a higher center of gravity, which alone is a significant concern when it comes to emergency maneuvering. Additionally, some retain truck-like ride and handling characteristics, while others have been softened by the vehicle maker to provide a more car-like ride and feel. These handling and feel issues could give drivers a false sense of security.
Finally, despite the "sales pitch" at the car dealership, SUVs are, in fact, limited in their load carrying capacity. Some can carry little more than four adults and a couple of suitcases. Yet, most SUVs are seriously overloaded by consumers who believe the TV ads, but don’t read the owner’s manual.
They are sport utility vehicles, not tanks. And in today’s market, with so many different variations within the overall SUV category, it’s more important than ever for consumers to know what they’re driving, and how to handle it.
Here are some general guidelines and concepts you can pass on to your SUV-owning customers:
The heavier a vehicle is, the more time/room should be allowed for acceleration and deceleration. Allow additional assured distance between your vehicle and the next to permit a safe stop. Also, allow more time/room to accelerate and safely merge onto a highway entrance for example.
Just because a SUV has a roof rack does not mean its an open invitation to pile it on. There are suggested weight limits restricting how much a driver can place on the top of the vehicle usually around 100 pounds. Drivers should check their owner’s manuals. Also be aware that any weight added to the top changes the vehicle’s center of gravity. Higher center of gravity means the upper level weight may pull the vehicle one way or the other as it takes corners or makes any abrupt moves.
Consumers should also know the total weight atheir SUV can carry. Overloading the vehicle compromises its intended handling ability, and can stress the tires. Again, when heavier, it takes longer to make accelerations and decelerations. Prevent shifting loads by keeping all cargo battened down as much as possible.
High center of gravity. The dreaded rollover situation. Many SUVs are considerably "taller" in terms of where the weight distribution sits compared to a car, minivan or pickup truck. A minivan can be the same visible height from pavement to the roof, but how that mass is distributed can be very different. The initial concept behind a SUV was to make it useful in both on-road and off-road situations, which means additional ground clearance.
That alone means a higher center of gravity. For those who never take the roads less traveled, more ground clearance is clearly not a necessity. But for those who travel bumpy roads, the added clearance keeps the vehicle from getting caught on rocks or debris in the road. Clearance also helps when cresting an acute hill, whether it be on sand, rock or dirt. Keeping the approach and departure angles high helps prevent the body and bumper from hitting the terrain before the tires can get traction (the approach), and deliver a clear path for the rear bumper and body (the departure).
Keeping components tucked up and under is important, but that also puts more weight at a higher point in the overall structure of the vehicle. But the height positioning of the majority of the mass isn’t a figure that stands alone. How this weight is distributed horizontally laterally and from front to back ®“ is equally important.
How wide is the SUV? If you take one of the widest SUVs as an example, the AMG Hummer’s width offsets the tremendous ground clearance by keeping a lot of the mass very firmly and centrally located. This is an intentional design; the Hummer is based on the military HMVEE, which was designed for optimum handling and performance under duress, and to maintain proper balance in any situation. Drivers need to know what their vehicle is capable of doing, and respect its limitations and drive accordingly. Tipping and rollovers occur when the vehicle makes a sharp, sudden turn. This is augmented by the speed of the vehicle at the time of the turn, how sharp a turn is made, and the vehicle’s center of gravity.
How a driver reacts to the unexpected makes a difference. Pot holes, raised metal plates, animals or pedestrians, debris, other vehicles making abrupt maneuvers or loosing control, and the driver’s own vehicle malfunctions can happen at any time. Swerving quickly to avoid an obstacle will place the vehicle in a hazardous position. Again, this depends on center of gravity and speed.
Remember to respect the speed and distance points made earlier. Traveling at slower speeds means there is less of a chance a sudden maneuver will result in a rollover. If the drivers leaves enough space in front, they have a greater probability of braking in a safe manner and keeping control of their SUV. This is not ignoring that accidents happen, and happen quickly, and sometimes an impact situation cannot be avoided.
The SUV structure and design should help a driver survive an impact. Regardless, drivers simply must wear their safety belts to optimize their chances of surviving even the lightest accident.
Information courtesy of SUV.com