UHP BUSTS THE SOUND BARRIER
Many of you reading this article are probably standing in the middle of the ITE/SEMA Show floor. Or soon will be.
Around you are acres and acres of performance tires mounted on bright, shiny wheels. Huge diameters and short sidewalls. Practical performance and radical cosmetics.
It’s not just that the ultra-high performance market continues to grow or that SKU proliferation is more prevalent. It’s not even that OE manufacturers are now heavily leveraging performance or that these tires are big-ticket items.
They just look cool.
Any vehicle decked out with UHP tires and a nice wheel package immediately looks better. From the tread design to the sleek look, that performance look has long fueled a fire in the hearts of consumers a fire that continues to burn brightly today.
Full speed ahead. That’s the analysis of the performance tire market according to many tiremakers.
Everyone has seen the explosion of this market over the past couple years, and there’s nothing on the horizon that indicates the explosive growth won’t continue.
"In 2003, the performance tire market increased at a rate greater than it’s ever increased before, and the market will continue to grow," says Rick Brennan, high performance brand manager for Kumho Tire USA. "The trend of changing the look of the car by changing tires and wheels is going to continue. But growth will also come because the performance tire market is moving into segments that it wasn’t into it before.
"We’re starting to see 20-inch tires for light truck in all-terrain patterns. That’s because consumers are taking their vehicles even trucks with lift kits ®“ and giving them more of a sports car look with bigger wheels and tires. For dealers, this will present an even greater proliferation of tires and sizes."
It seems everything nowadays comes with huge wheels and low profile tires. And it’s only going to continue. One need look no further than the newest generation of balancers and changers they’re no longer designed to handle the smaller tires.
"I would speculate that for at least the next three to five years, the performance tire market will continue to grow steadily," says Thomas Okihisa, senior manager of high performance tires for Toyo Tire USA Corp. "It’s no longer just extreme tuners who are buying large diameter tire and wheel packages for their vehicles. We’re seeing 18- and 20-inch tire/wheel fitments on the ‘soccer mom’ SUV as a normal thing now.
"But at some point, the market has to begin leveling off. Although I hope I’m wrong, realistically you cannot expect the kind of growth that we’ve seen in the last few years to continue forever."
That’s why Brennan believes the definition of "performance tires" is going to change. If soccer moms are driving minivans with 18-inchers on them, or some 50-year-old has a big set of 20-inch chrome wheels that came OE on an SUV, the idea of a performance tire has been skewed.
"In fact, I don’t think the term ‘performance’ necessarily fits anymore, and that’s because ‘performance’ no longer just literally means how a tire performs. It also means how it looks," Brennan says. "With the popularity of plus-sizing, performance is now often appearance related. Maybe it’s time that the tire industry comes up with a new term for performance tires because they encompasses so much more."
But where should the new term for performance tires be applied? A quick pass through the ITE/SEMA Show floor reveals that the tire/wheel assemblies are bigger this year than they were last year. And it’s doubtful they’ll be smaller for next year’s show. That’s because OE wheels are larger hence the 50-something with 20-inch wheels ®“ which means replacement has to keep up. Throw in the still-hot customization side and there’s no slowdown in sight.
"From an OE position, we continue to see the evolution to larger wheel/tire diameters and higher performance ratings," says Thom Peebles, BFGoodrich Tires brand director. "That trend certainly translates to the replacement market as those consumers have to replace their tires.
"We continue to see more and more consumers upgrading the performance of their vehicles through customization. Wheels and tires are typically the first enhancement, and with a growing population of younger car owners, that trend will continue to be a major contributor to the performance market."
Everyone’s heard the joke about what OE manufacturers demand out of a tire. There are three criteria. They have to be round, black and cheap. And OEMs don’t really care much about the first two.
Seriously though, the OE market has a major impact on the performance market. Whatever tire is put on at OE will have to be replaced in two or three years. And, according to Carl Casalbore, vice president of retail sales and high performance tire development for Cooper, OE is trending towards more high performance-orientated tires.
"OE is having more of an effect on the performance tire market because OEs are using more ultra-high performance fitments, and often on vehicles that previously weren’t considered performance vehicles," says Brennan. "For example, the Ford F-150 Harley Davidson Edition comes with 20-inch wheels and UHP tires. Owners of these and other such vehicles are what we call ‘accidental’ performance tire buyers because they often don’t realize that their vehicle has performance tires until it’s time to replace them.
"Many of today’s compact cars are available with optional wheels that come with performance tires. People who buy these cars may buy them because they like the look, but when it comes time to replace tires, they have to buy performance tires."
"What was previously considered an aftermarket tire fitment is now an OE replacement fitment," says Okihisa. "Tire manufacturers are now making standard- or touring-type tire products in what were traditionally ultra-high performance tire sizes.
"Also, the OEs are offering more niche vehicle choices than ever before in hopes of addressing specific consumer segments. As new categories of vehicles, like the so-called ‘cross-over’ vehicles, are produced, tire manufacturers will have to respond with products that specifically address the needs of those customers."
BFGoodrich’s Pebbles believes that, while OE drives replacement, in regards to the performance market, OE is following the replacement market’s lead. For now, it seems that performance OE fitments are contributing significantly to the replacement market because of customization.
"Often times, sport compact enthusiasts will take a vehicle that was purchased with S-, T-, or H-rated tires and upgrade the performance of the vehicle simply by adding new wheels and Z-rated performance tires," says Peebles. "This trend shows up in RMA reporting of Z-rated performance sales, where several of the most popular sizes have no parallel OE fitment.
"Car manufacturers are now taking a lot of their tire sizing and performance cues from trends in the replacement market. By 2005, we believe more than one-third of OE fitments will be 17-inches or above."
Another market that’s starting to guide OE direction is the turner segment. OEMs have increased tire size, changed wheel offerings and are even selling what could be considered complete tuner vehicles all in direct response to what they see going on around them.
"The tuner market has had a huge influence on OE, in terms of tires and wheels," says Toyo’s Okihisa. "We are starting to see more and more vehicles that are coming OE with larger wheel diameters and lower profile tires. Many sizes that were previously considered ‘tuner sizes’ can now be found on new vehicles as either standard or an option.
"But, as OEMs start producing a larger variety of vehicles to attack niche markets, the tuner market will, in turn, have to respond by making products for these new vehicles."
"Some OEMs have seen the huge growth in the tuner/ customization market as an opportunity for them to sell more vehicles," Peebles says. "The influence they are exerting is achieved by making their vehicles attractive to those consumers who are doing the customizing. Not just attractive from a styling standpoint although that’s important ®“ but also designing the vehicles in a way that makes it easier for the consumer to customize the car."
Carmakers are taking in more of what is happening in the aftermarket and incorporating those elements into new vehicles so their designs will be more attractive to the tuner buyer. Hence cars like the Mini and the Ford Focus. As Kumho’s Brennan says, the tuner market isn’t just about the Honda Civics anymore.
"There are many models out there that appeal to a broader range of people," he says. "People buy cars like the Focus, Neon or Mini because they’re cool looking. It could be a family guy who wants a small car but doesn’t want the standard econobox, so he buys the upgraded model that happens to come with a tire size that’s traditionally been a tuner size."
Making the Sale
Many times with today’s performance tires, the replacement customer experiences serious sticker shock. The customer made the vehicle purchase based on his or her needs and desires (mostly desires). Tire brand, line and size never came into the equation.
Until it’s time to buy replacements.
Now the customer’s at the local tire dealer wanting to know why replacement tires cost $179 per and why he/she can’t get four tires for that $179.
Naturally, the dealer explains all the
features and benefits of the replacement
tire and why it’s important to install that particular type of tire. But how can a dealer sell a customer replacement tires when the customer can only see dollar signs?
"If it is an OE tire, remind him that he bought the car because he likes the way it looks or drives," says Brennan. "If it’s a specialty fitment that’s more expensive, you have to use the features, benefits and the emotions that were there when the guy bought the car.
"For example, if a consumer has a vehicle with a specialty tire on it, such as an 18-inch tire or a run-flat, the guy will have sticker shock when he discovers he can’t buy four tires for $99. The dealer may have to remind him that the car he bought wasn’t the cheap base model. He bought it for a reason and the tires were part of that purchase decision.
"The important point that dealers have to know is that selling tires to the performance market is not just about tires; dealers must also know about the car and why those tires are used on that particular car. Today’s performance market means that tires are an integral component on the car not a commodity. Dealers must help the consumer make the emotional connection between the car he bought and the tires that are on the car."
The connection that drivers have with their vehicles is critical. Cars are designed with very specific performance characteristics which require tires that meet those standards. If the tires can’t live up to those standards, the performance of the vehicle will suffer. But not every customer sees it that way. Especially at replacement time.
The consumer may not understand all the technical terms associated with performance tires. But they’ll probably figure out what the dealer is really saying to them that a lesser tire wouldn’t do any good.
Another idea of how to handle the situation comes from Cooper’s Casalbore. "The best way to look at this may be to consider the correlation between a new car in 1968, with what the price of a replacement tire would have been at that time, compared to the price of a car in 2003 and the replacement cost of tires today," he says. "Car prices have definitely increased significantly with moderate gains in tire prices within the correlation. Especially when you consider the amount of technology that is involved with tires today.
"The savvy tire dealer will explain how replacement performance tires are critical to match the engineering and design specs for the vehicle. Price can be addressed in the selection of brands offered which makes it important to have a well-known brands to meet value expectations of the buyer."
BFGoodrich’s Peebles also believes there are two other things that can help transition a customer who’s jittery about the price: better consumer education and sales personnel with hands-on experience.
"First, the entire industry both manufacturers and retailers ®“ need to do a better job of conveying the value of products to consumers," says Peebles. "Tires are highly engineered products that deliver a great deal of value to consumers, so it is unfortunate that sticker shock is a reality.
"While features and benefits can help convey this point, there is no substitute for real world experience. Talking about it and showing it are two very different things. Either way, being able to convey this first-hand experience to consumers is much more credible and convincing than simply pointing out information in a brochure. Performance enthusiasts want to buy from people who share their enthusiasm, passion, and knowledge."
There is a lot made of grassroots racing, and rightly so. There seems to be a grassroots level for nearly any type of racing, from SCCA to dirt track to the newest sport of drifting where drivers try to control a 450 hp car while it slides from side to side at high speed through a marked course.
Tire makers, in some form or fashion event or club sponsor, team sponsor, facility sponsor, or through its dealer ®“ are at nearly every one of these events.
Helping club events and racers is one thing, but how does being involved with grassroots racing really help the tiremaker? Can it really have an impact on brand perception?
"We still do believe that there is no substitute for the one-on-one interactions we have with consumers at that level," says Peebles. "A large part of that involves our event marketing and motorsports activities. Advertising can help maintain equity for a brand, but in order to stay on the cutting edge and really convey what your brand is all about, you have to be in the market interacting with consumers."
Grassroots involvement is a name booster and, consequently, a revenue booster. It brings value to the brand and shows that the tiremaker is truly serious about its technology.
"Racing involvement at the grassroots level is a must for us," says Okihisa. "These are the enthusiasts that we’re trying to reach, and they’re also the ones who appreciate corporate support and involvement the most. These enthusiasts are also the ones that your mainstream customer base often go to when seeking opinions or advice."
Sometimes for lesser known brands, grassroots racing involvement is one of the main forms of advertising. Not every company has the budget to afford television or print advertisements on a regular basis. That’s why Falken Tire sponsors the Race to the Clouds at Pikes Peak and is involved in the NOPI Nationals. That’s why Yokohama Tire Corp. got involved with the D1 Grand Prix the new motorsport of drifting.
"Kumho’s brand name is a product of the company’s grassroots involvement," Brennan says. "We’re involved at the grassroots level because that involvement gets people talking about our tires. When people need information, they often turn to grassroot racing sources friends, family, co-workers ®“ because they trust those people. Our involvement in grassroot motorsports helps us build relationships with people who are seen as trustworthy authorities on tires.
"Can this help build sales? Absolutely, because it’s believable and sincere. We also see a trickle-down effect to dealers because consumers will walk in and say, ‘My friend, who races on Kumhos, told me they’re good tires.’"
Another aspect of grassroots racing is that it brings a key element of the tuner segment into play. Hard core tuners are into "street" racing, and are always looking for the latest, hottest trends. Oftentimes, those trends are on a small racetrack in the middle of nowhere long before they’re prevalent in the mainstream.
"Grassroots activity primes the pump for future recognition," says Casalbore. "Involvement does matter. It helps build the foundation for future brand recognition and provides a chance to showcase the technology that the brand has to offer."
Grassroots is where the performance fire starts. However you want to define it, the "performance" tire market will continue to expand. Someday it will probably slow down, but for now success here means being on the leading edge of what’s cool.