As you reflect on the past year for your business, what comes to mind? Maybe it’s a word that sums up this year in the tire industry or a phrase that describes how your business has fared. No matter what it is, you can’t argue that we’re living through fast-changing times in a fast-paced world. Whether it’s shifts in supply or implementing new technology at the shop, tire dealers have been at the center of it all.
Sure, the industry isn’t the same as it was when you started. Good or bad, that’s up to you. To finish out the year, though, let’s go through some of the trends that screamed out to the Tire Review team in 2021 and how they’ll affect your business in the new year.
Supply Chain Challenges
During Falken Tire’s annual dealer meeting in September, Rick Brennan, executive director of marketing, began his address with, “I’m going to start off by talking about the word of the day, and the word of the day for the tire industry right now is supply.” Try word of the last year and a half.
How did this supply challenge occur? Here’s the short of it: At the onset of the pandemic, tire plants shut down. Demand was low but inventory was high. That inventory eventually sold out and demand exploded as cities around the world started to reopen. Add in price increases for raw materials, soaring container prices, skyrocketing shipping costs, port congestion, a labor shortage and many more economic factors, and it’s probably been harder to get the tires you need when you need them. Not to mention tire price increases that have come on top of it. However, the supply situation is improving.
You can see this in the data. The U.S. Tire Manufacturers Association projected earlier this year that total tire shipments for 2021 would be 336.1 million units compared to 303.2 million units in 2020. This year’s projected shipments actually surpass 2019’s 332.7 million total shipments. If we dig into the data and look at replacement tire shipments alone, you can see the projections for 2021, compared to both 2020 and 2019 numbers, in Table 1 below.
The industry is recovering, but when will supply stabilize? When will shortages end? No one knows for sure. The New York Times predicts supply shortages on all goods will stick through 2022. Forbes says as long as demand holds up through the holiday shopping season, COVID outbreaks continue to shut shipping hubs around the world, and extreme weather batters individual links in the chain, disruption is expected to persist.
However, tire manufacturers are responding to what’s happening. Brennan said Falken, for example, is making a $122 million investment in manufacturing technology at its Tonawanda, New York, plant to ramp up production and enhance the plant’s mixing and compounding capabilities. In November, Bridgestone Americas’ Scott Damon, chief operating officer, said the company was leveraging its manufacturing footprint around the world to send more tires to the North American market, which has rebounded quicker than others. Manufacturers like Toyo and Hankook have told us they’re doing the same thing. Others, like Kenda American Rubber, that were hit with antidumping duties at the beginning of 2021, have moved production from one country to another and are ramping back up.
Vehicle and Shop Management Data
As business owners, tire dealers are aware that if you can’t measure it, you can’t improve it. Over the years, we’ve seen various type of software that keep track of what a tire dealership makes in tires and service, the location’s daily car count, missed opportunities for service, the amount of money a shop is making on a certain service and so on and so forth. With today’s shop management tools, you can measure anything! These technologies are being taken to the next level—both behind and in front of the counter.
Case in point is SideKick360, a software that debuted this year that’s exclusively distributed by Epicor and integrated with ASA Automotive System’s TireMaster shop management platform. This software, as its name implies, acts as a “sidekick” for service advisors and business owners. With the click of a button, a service advisor can analyze customer data and past invoices. The system also tells service advisors what services a customer’s vehicle might be due for and where tires are at in their lifecycle. For tire dealers, the system tracks key metrics, from tire sellout across a dealership’s multiple locations to what brands and sizes are selling in a certain locale.
Hunter Engineering’s HunterNet2, released in 2020, also has features that gives tire dealers actionable data to better steer their business to make more profit. It’s a free customer portal that connects with Hunter’s tire changers, wheel balancers, alignment and inspection systems and brake lathes to measure performance data. Shop owners can access this data from their phones or laptops and see metrics like money made off of alignments by location, tires changed per day, ROI on their Hunter equipment and much more across multiple locations.
This need for data and transparency has also translated to the consumer side of the business. Customers want a window into the repair process to understand the health of their vehicle. Hunter and Hennessy Industries, manufacturers of Coats tire changers, wheel balancers and inspection equipment, fulfilled this need with inspection equipment that measures a tire’s tread depth, wheel alignment and other undercar metrics and creates a report that service advisors can share and talk about with customers. This way, the sales process becomes more consultative, according to Kyle Harris, product manager for Hennessy Industries.
This year, Tire Pros unveiled its way for allowing customers to be more a part of the repair process through an online customer portal in which a customer can see their past transactions with a shop, recommended services and receive texts about where their vehicle is in the repair process.
The Ever-Expanding All-Terrain Segment
Long gone are the days of one all-terrain tire offering. Now, manufacturers are creating A/T tires for different consumer lifestyles.
Take Hercules Tires’ launch, for example, of two all-terrain tires this summer. The company introduced the next-generation Terra Trac A/T in two distinct models: the Terra Trac A/T X-Journey for CUVs and the Terra Trac A/T X-Venture for SUVs and light trucks. The models were launched so that Hercules could cover more of the all-terrain market and appeal to a broader base of customers. With both tires, Hercules is able to cover more than 80% of the all-terrain tire market.
This fall, Hankook Tire also launched two new tires to round out its light truck offering: the rugged-terrain Dynapro XT and Dynapro AT2 Xtreme, the successor to the AT2 that Hankook says is more aggressive than its predecessor but still has on-road manners. With these additions, Hankook says its Dynapro line now suits the needs of both light truck and SUV/CUV consumers. As we know, light truck and SUV/CUVs continue to grow and make up close to 70% of new vehicle sales today.
Curtis Brison, Hankook’s vice president of PLCT sale, told us, “The reasons for choosing these light trucks vary, so this creates a market for different types of products. We know that consumers are wanting to invest in the performance and look of their vehicle, so we take this research and bring it to these products to help meet each driver’s individual needs.”
Other A/T tires launched this year include Vredestein’s Pinza A/T tire line for North America. Abhishek Bisht, assistant vice president of the Americas at Apollo Tyres, said the Pinza A/T tire range is a pick-up truck and SUV all-terrain tire that’s capable yet comfortable. The A/T trend continues with Milestar’s extension of its Patagonia family of light truck and SUV tires with the all-new A/T Pro, which the company displayed at the 2021 SEMA Show. This aggressive all-terrain tire is specifically designed to conquer any terrain during any condition and has a three-peak mountain snowflake rating, according to Tireco, parent company of the Milestar brand.
Increasing All-Weather Options
While companies like Nokian Tyres, Apollo Vredestein and Toyo Tires have played in the all-weather segment for years, more manufactures are taking note of this growing tire segment that nestles itself between all-season and winter tires.
Continental Tire, for example, has launched two all-weather tires under its General Tire brand over the past year. The first being the General AltiMax 365 AW, which marked the brand’s entry into the all-weather category, and the General G-Max Justice AW, which is a pursuit tire.
The General AltiMax 365 AW sits between General’s all-season touring tire, the AltiMax RT 43, and winter tire, the AltiMax Arctic 12. The tire is designed to have good capability in warmer climates and is optimized for snow and winter conditions, as evidenced by its three-peak mountain snowflake rating, according to Joe Maher, product planning manager for passenger car, touring and all-weather tires.
At Continental’s Gold Dealer Meeting in Riviera Maya, Mexico, in September, Maher unveiled the G-Max Justice AW. He said the tire is available in seven sizes, covering the majority of the pursuit market, and has an all-weather, ultra-high-performance construction and a high apex for handling.
Toyo Tire also made moves in the all-weather segment in 2020 with the release of the Toyo Celsius Cargo, an all-weather, commercial-grade tire designed for commercial vans and light trucks. The company said the Celsius Cargo’s construction is built for year-round reliability in applications including local deliveries, services and transportation. This is the latest addition in the Toyo Celsius all-weather tire line, which includes a Celsius for passenger cars, CUVs and SUVs. Toyo will come out with an addition to its Celsius line in the form of the Celsius Sport, an all-weather UHP tire set to debut in Q1 of 2022.
Ready or not, here they come. It wasn’t so long ago that EV tires were but a twinkle in the automotive aftermarket’s eye. But with how popular EVs have become (and how popular they’re bound to be in 2022 – we’re looking at you, Hertz and Tesla), most major tire companies today have found the time has come to start offering their own EV tire products.
Consider this: According to a recent report by Kelley Blue Book, U.S. EV sales grew to an all-time high in the third quarter of 2021. The report states sales of new vehicles declined 13.4% year over year in Q3 primarily due to low inventory and high prices affecting seemingly every industry on Earth right now. Meanwhile, sales of electrified vehicles, meaning the combined total of electric vehicles, hybrids and plug-in hybrids, jumped by nearly 60% during that same timeframe.
It’s worth noting that even as the auto industry faces major challenges in labor and raw materials, compounded by higher prices, the demand for electric vehicles is still growing.
So, why is this? It’s the combination of a few factors. Consumers are starting to turn a corner on accepting these vehicles, more manufacturers are making them, and the government is backing them.
Janine Young, a commissioning editor for Smithers, explained to Tire Review earlier this year how the movement of the transportation market toward alternative powertrains is affecting the tire market.
“As demand for EVs resumes, the transformation of tires is critically needed to support electrification and eventually autonomous vehicles,” Young said. “Tires must join the rest of the vehicle in connectivity through sensors or other systems, providing real-time data on tire inflation, condition and wear.”
EV tires also have to be built to withstand the stresses of the EV lifestyle. Tire manufacturers have to use specific tire compounds to support the heavy load and extra torque that comes with the EV driving experience. Hankook Tire is one of many tire manufacturers developing tires for EVs, and one of the compounds they use in this process is called “Aqua Pine.” Aqua Pine contains compounds that are stronger and more durable than compounds you might find in tires for gas-powered cars, so the tires can better assist the power delivery and driving characteristics of the EV. Michelin is another, and in the company’s Michelin Pilot Sport EV tire, the company proposed a specific solution for the Formula E championship’s all-electric single-seaters that is similar in its concept to a road tire.
As EVs continue to proliferate the car parc, there should be no surprises when EV components like tires begin to proliferate shop shelves as well.