Gaining Grip: With Added Demand, All-Season UHP Market Going Nowhere But Up - Tire Review Magazine

Gaining Grip: With Added Demand, All-Season UHP Market Going Nowhere But Up

It’s no secret that sales of performance tires have been steadily increasing for the last decade, but one segment in particular – all-season UHP tires – has seen particularly rapid growth.

Most likely, OE fitments and customer demands have already caused a huge majority of tire dealers to address this segment. With the ever-increasing popularity and potential profit margin of all-season UHP tires, you can’t afford not to.

Technological advances in tread design and compounds, tightening consumer budgets and the continued manufacturing of vehicles with all-season UHP-friendly fitments have combined to make this segment an important part of any tire dealer’s business.

Currently, the overall summer UHP market is larger than the all-season segment, but the latter is growing at a much faster rate, according to Ron Sinclair, senior vice president of marketing for American Tire Distributors.

With predicted growth of 20% per year in 2008 and 2009, unit sales in the all-season UHP segment will meet those of the summer segment by the end of 2009, he says.

Toyo Tire U.S.A. has seen similar growth, with all-season UHP sales increasing by 10% to 15% each year for the past five years, says Joe Jordan, national sales manager for performance and specialty tires.

“It continues to be a growing segment as more and more manufacturers build cars with low profile, large diameter fitments,” he says. “In the replacement segment, we have seen nothing but continued growth, despite the current state of the economy. Although we’ve seen a drop-off in sales of the plus-size fitments, that’s more with regard to summer tires, not all-season tires.”

Car manufacturers are helping the trend to catch on, as well, by introducing vehicles that come equipped with all-season UHP tires as OE. Ford, Volvo, Saab and several other OEMs are making sporty vehicles that come with 17- and 18-inch all-season fitments, according to Chris Pantani, Cooper’s director of UHP marketing and motorsports.

“Growth will continue because OEMs are still producing those cars,” Toyo’s Jordan says. “They’re dropping off truck production because of low sales, but they’re still producing cars with this type of fitment. Independent tire dealers haven’t even seen the 2006, 2007 and 2008 cars for tire replacement yet, so they have yet to see that huge explosion of sales. It’s going to continue to grow and become a bigger part of their market.”

While other segments may be negatively affected by the current economic slowdown, the opposite is true for all-season UHP tires. In general, drivers are looking to get more value out of their money, and having a year-round, reliable tire is a solution many have adopted. In addition, several vehicles that get favorable gas mileage have all-season UHP fitments, according to Pantani.

“Cars like the Nissan Altima or Chevy HHR, which get better gas mileage, are still coming with 17- and 18-inch fitments,” he says. “There is still that combination of high performance tires and cars that get more than 30 miles per gallon. So the demand will still be there.”

Former all-season UHP tires, while improving traction over their summer counterparts, were lacking in the areas of handling and performance. Because of constant technological advances, however, this is no longer the case, says Bill Bainbridge, marketing director for Hankook Tire America.

“Five or six years ago, the trade-off wasn’t that favorable,” he says. “You either got traction and you didn’t really get a high level of performance, or vice versa. Today, technology and versatility are driving the market, and that makes the all-season UHP tire a better product. Generally speaking, every manufacturer’s technology in that segment has advanced a lot over the last three or four years.”

With consumers no longer having to sacrifice performance for added versatility on the road, business in this segment is booming.

Profit Potential
Whether your shop is located in the snowbelt or in warm southern temperatures, carrying all-season UHP tires is vital to your business. With higher profit margins than most other passenger tires, all-season UHP tires will satisfy a large part of your customer base while improving your bottom line.

“This segment is more mainstream than it’s ever been,” says Jordan. “There are over 160 vehicle models with all-season UHP tires on them as OE as opposed to 10 years ago, when there were maybe 80. Fitments have doubled and will continue to grow – if dealers don’t have them in stock they’re going to lose sales.”

While it’s still important for dealers to offer winter tires, especially in colder climates, in more and more cases customers are looking specifically for one set of tires that’s going to take them year-round, Cooper’s Pantani says. “You’re going to see an even stronger push toward that with the economy being what it is.”

While size proliferation has made keeping a complete all-season UHP inventory more of a challenge, Jordan estimates dealers can cover 70% of existing fitments by keeping about 14 sizes on hand.

More important than keeping the most popular sizes in stock is working with a reliable distributor that has “a broad assortment and deep inventory of all-season UHP tires,” says ATD’s Sinclair. “A dealer should expect this inventory commitment, as well as frequent delivery, from their distribution partner.”

“Southern dealers may not think there’s enough business to justify carrying that extra inventory, but the broader way of looking at it is the more choices you can offer a consumer, the better,” Bainbridge adds.

The guidelines for helping your customers choose the right tire in this segment are the same as with any other – consider the person’s driving style, how they use their vehicle, their performance expectations and, of course, their budget.

It’s also important to ask whether the vehicle in question will be required to travel daily on hazardous roads, or if it will remain in the garage on wintery days, notes Bainbridge.

“In the northern half of the country, if you’re driving your BMW five days a week, 50 weeks a year and you rely on this vehicle to get you to work, the best case scenario is going to be choosing summer tires and then winter tires,” he says. “When you start coming down out of those severe winter areas, or when you have an alternative means of getting where you need to go – like another vehicle with more aggressive tread that you can take to work on bad days – then all-season tires are a good choice.”

Popular Sellers
Hankook first entered the all-season UHP market about three years ago with the introduction of its Ventus V4 ES, the company’s first true offering in this segment.

Available in some 30 sizes ranging from 16- to 24-inch diameters, the tire is Hankook’s top seller in the UHP segment, Bainbridge says.

“A lot of manufacturers were already operating in that all-season, speed-rated category, but we kind of took a different approach,” he says. “We made UHP the first priority, and then developed all-season capabilities, as opposed to taking an all-season tire and changing the compounding to try to make it a higher speed category.”

Cooper’s Zeon Sport A/S, introduced in 2005, is the tiremaker’s most popular offering in this segment. In addition to providing drivers with year-round traction, handling and high-speed capabilities, the Zeon Sport A/S is “one of the best value tires out there,” according to Pantani. “That’s really what people are looking for right now – they want to have the best dry, wet and optional snow capabilities, but they want all that at a good price. With a Cooper product, you’re not giving up any of those characteristics.

The Proxes 4 is Toyo’s top selling all-season UHP tire for cars, followed by the recently launched Proxes ST II for trucks and SUVs, Jordan says.

“Toyo was one of the very first to come out with an all-season UHP tire, the Proxes Z1 in the early 1990s,” he says. “After doing it for about 17 years, we really understand what a customer is looking for. A lot of it is security and knowing if they get stuck in a situation, they can get out of it.”

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