Hot Tires and Cool Wheels
The tire and the wheel.
Each is similar in that they’re round and are a major component of any vehicle. But while one is made of rubber, the other is metal – steel, aluminum or an alloy. One costs more than the other, and one may never need replacing. One is purchased for its safety characteristics, one purely for its looks.
No matter the similarities or differences, tires and wheels are linked together. They’re a well-known couple or pair. Fred and Ginger, Abbott and Costello, salt and pepper. And while the wheel could possibly work without the tire, there’s no way the tire could function without the wheel.
So why not package them together in a sale?
It’s safe to say that tire and wheel packages have probably been around since the first tire dealer decided it was a good idea to add wheels to his sales menu. Granted, they may not have been popular, but the thought was there. Then, at some point along the way, tire and wheel packages became cool. But they weren’t made cool by the dealer; they were popularized by car-happy consumers, and Detroit muscle mania.
"I would say you could look pretty far back to find the growth in popularity of tire and wheel packages – even to the muscle cars of the 60s and 70s – and realize that this market has always been there," said John Clancy, Pirelli Tire North America’s ultra-high performance product manager.
However, others look to the more recent past and the creation of modification kits and packages for vehicle enhancement. Being cool is one thing, being a necessity is something completely different.
"Tire and wheel packages have always been around, but their popularity took off about 1993-1994 when the aftermarket started to develop the components for new-age vehicles, including suspension kits, engine chips, exhaust systems and ground effects," said Ed Shaffer, corporate manager of product marketing for Goodyear Dunlop. "As these components started to become available for affordable vehicles – i.e. Honda Civic, Toyota Celica, Mitsubishi Eclipse and others – the market has exploded."
Popularity and Prevalence
Regardless of when they became popular, tire/wheel packages are becoming more and more prevalent today. And it doesn’t look as though they’re a fad that’s going to go away anytime soon. Why not? Simple: people love to work on their cars. Car owners maintain a real fascination with changing and customizing the appearance of their rides.
"I believe with the number of sport sedans, sport compact vehicles and the explosion of SUVs and light trucks, consumers will continue to invest in the customizing and performance enhancement of their vehicles," said Shaffer. "OEMs have grown increasingly aware of the lucrative opportunities that exist in tire and wheel packages. As a result, they’re offering plus-sizing or special custom packages on more and more broadline entry-level vehicles, direct from the factory.
"The OEMs have also branched out to develop and sell aftermarket performance parts, body kits and, of course, tire and wheel packages for their vehicles."
The most popular customization seems to be plus-sizing, not so much for performance reasons but to create more of an aesthetic value. But even as tire/wheel packages get bigger, the OE level can only do so much to keep up with demand. That means the replacement market – specifically, the tire dealer – is going to have to pick up the slack.
"A quick review of vehicles in any parking garage will reveal even more about this popularity," said David Insull, director of performance product and custom wheels at Heafner Tire Group. "The first thing you’ll notice is that there is an increase in larger diameter wheels coupled with the tires to go along with them, even from the OEM. Tire size proliferation continues, making tire and wheel packages easier to do for more vehicles.
"Such combinations are available for every vehicle segment, from family or luxury passenger sedans, to performance vehicles ranging from sport compacts to higher-end coupes, all the way to the explosive light truck and SUV segment," he said.
"The desire to upgrade a vehicle’s performance and aesthetics will continue to be the driving force behind the strong growth in tire and wheel combinations," said Clancy. "We expect this trend to continue as the market demands larger wheel diameters and new styles of wheels at a rapid rate. The replacement market will be the place where the trends begin, and wheel and tire
suppliers can effectively meet the different requirements of the buyer in terms of performance and taste."
One thing going against the independent tire dealer is this: tire/wheel packages are something that can be purchased independent of the dealer. Many times, a tire/wheel package can be bought via the Internet or by mail order, cutting the dealer out of the equation. Specialty shops also have a hold on the package market. So while these packages are popular, the average tire dealer faces strong competition from unexpected directions.
"Tire and wheel packages have been more prevalent with the retail mail order houses vs. the average independent tire dealer," said Mike Leverington, director of marketing for Kumho Tire USA. "These types of businesses promote tire/wheel packages consistently in automotive enthusiast magazines.
"Another retailer that has done very well with tire/wheel packages has been the specialty shops that focus on high performance and ultra-high performance tires, wheels, and the aftermarket parts businesses."
No matter who’s handling the product, no one is seeing the tire/wheel package business going away. If anything, competition will be fierce, and opportunities will grow.
"While the economy may slow the volume of sales, tire and wheel package popularity will continue as long as people maintain their love affair with their automobiles," said Shaffer.
Heafner’s Insull agrees wholeheartedly. "No matter how you look at it, this business is here for a long time to come. We don’t think this market will go away. In fact, we have actually done a number of things to make it even simpler for the dealers to take advantage of its increased popularity."
Worth the Effort?
As stated earlier, there’s a lot of different distribution channels for tire/wheel packages and that translates into a lot of competition for tire dealers. So does that mean only dealers in a tire/wheel package-friendly market should go after the business? Or is the pie big enough for all dealers to get a slice?
"Tire and wheel packages represent additional profit opportunities for the retail dealer. I don’t believe it should be a choice of one or the other whether a dealer sells packages or not," said Leverington. "Probably the best result will be from a mix of doing both. The market and demographics do impact what might be more popular, but if done right, tire/wheel packages may be more cost advantageous.
"The key to whether tire dealers should get involved with tire and wheel packages depends on how well the dealer understands the ultra-high performance business, including tires, wheels and applications," he said. "A dealer who doesn’t completely understand the total business and doesn’t have highly-trained retail salespeople, will certainly have the odds stacked against him.
"The dealer must be committed, identified and have the ability to communicate the proper image so they can be readily known by the consumer as a place to shop for ultra-high performance tires and wheels," Leverington added.
Everyone agrees that each individual dealer has to make a decision that best suits his shop and his market. After all, it’s his money and his name on the line.
"Each individual dealer must decide whether this opportunity is right for his business," said Dunlop’s Shaffer. "Does the dealer have the capability to support this business, including the space, proper equipment and training necessary to ensure success?
"The direction in which to take one’s business is dependent on available resources and sound business sense. There is already a great deal of competition vying for this market," Shaffer said.
"If a dealer believes that his business can benefit from the opportunity to sell tire and wheel packages, and he can redirect his efforts to specialize in the customization or Ôtuner’ business, then it would make good sense to do so. However, in many cases, a dealer does not have the proper tools and is better off sticking with what he’s comfortable with and can manage properly."
Shaffer suggests that selling tire/wheel packages should be determined by the market. "The everyday tire consumer wants his vehicle safe and in good working condition. He’s not overly concerned about enhanced performance or customizing his or her vehicle," he said.
"Dealers should always be doing what’s best for their customers," said Heafner’s Insull. "Obviously, doing what is best means different things for different people.
"While the day-in day-out bread-and-butter may be tire sales, dealers can always market custom wheels," he said. "The easiest way to do this is by offering tire and wheel packages. The successful businessperson is always looking to maximize sales and profit opportunities, why not add to both of these areas by including a custom wheel sale along with the tire sale they’re going to make?"
True. Because, while there is a dealership name to think of, the dealer must also think of his profitability.
"Dealers should be focusing on selling the combo," said Clancy. "This will allow them the opportunity to sell the customer up to a more profitable ultra-high performance tire and wheel package. This adds additional profits to the dealer’s bottom line.
"But the dealer will never be able to really capitalize on the tremendous opportunity for sales and profits if they just take care of the customers coming in the door. They have to aggressively market themselves as a professional and expert outlet for performance tires and wheels."
Added Insull: "If the dealer utilizes the package concept approach there is also an opportunity to address the wants and desires of a consumer to freshen, update, differentiate or simply improve on the appearance and/or performance of their vehicle."
Good With the Bad
Obviously, with tire/wheel packages – as with anything a dealer does – the pros and cons have to be weighed. Everything has its pluses and minuses. With tire/wheel packages, the pros are easy to figure out.
"I really can’t see any cons to selling tire and wheel packages, while the pros are almost endless," said Heafner’s Insull. "Dealers can ensure a proper match of tire and wheel combinations in a number of ways, be it wheel and tire size compatibility or package compatibility to vehicle for both style and fit.
"Dealers can also direct the movement of product they need or want to sell," he added. "They can make it much more difficult for their competitors to know exactly what they’re selling either item for. And, again, tire and wheel packages should be considered as a marketing strategy."
Profits are the most immediate upside to tire/wheel packages. It’s a great sale and can really build the bottom line.
"Very often the gross profit is not nearly as high on the tire sale as it is with the high performance wheel sale," Kumho’s Leverington said. "Together, as a package, the tire and wheel products compliment each other.
"The wheel sales will draw the high dollar. Selling wheels will also improve ultra-high performance tire sales, which generally yield the highest gross profits relative to other tires sales," he said.
There’s also another pro that some dealers might not think about – new and different customers. "It can drive new customers into their locations," said Shaffer, "which increases their profit potential. It can give them the opportunity to sell additional add-on products. Just take a look at the ITE/SEMA show and all the components that the consumer has to choose from to customize and design his vehicle."
Attracting customers is one of the biggest upsides that Pirelli’s John Clancy sees with tire/wheel packages. "Don’t underestimate the ability and benefit of attracting customers who are completely involved with their vehicles," he said "These are the customers who are innovators and trendsetters, and ones that other people will seek tire-buying or wheel-buying advice from."
However, any downside to the tire/wheel package business is easy to figure out, as well. Training and capital are key, and not inexpensive. Without both, a dealer’s attempt at these packages will be brutally tough.
"This business requires greater capital resources to allow for carrying the proper inventory and also for training and retaining the most professional retail managers," Clancy said.
Dunlop’s Shaffer points out that any tire dealer must have a firm understanding of this particular market, because without that, all the hard work won’t make a difference. "It takes the right knowledge, capital, equipment and training to be successful," he said.
The capital costs for tire changing and balancing equipment to handle larger 17- to 20-inch-plus tires and wheels can be steep, another reason why tire dealers must be both highly dedicated and extremely prepared.
One more con to the tire/wheel package is very apparent to wheel dealers, but may be overlooked by some tire dealers who don’t handle wheels often.
"Wheels are so trendy that they don’t have much more shelf life than a head of lettuce," Leverington said. "If the dealer makes a bad wheel buy, he’ll suffer with high expenses to rid himself of unwanted wheels. Inventory management is very important relative to wheels."
Figuring It Out
Tire manufacturer can be a big help. They can supply the dealer with market demographics, marketing insight, product packages and information that can aid in selling tire/wheel packages.
"A manufacturer can offer a wide range of tire sizes so proper fitment can be achieved on more vehicles. They can offer accurate OE data coupled with suggested optional tire sizes from plus 0 through plus 4," Insull said. "Wheel and tire distributors can maintain inventory to support the manufacturer and dealer. They can also be the conduits to the sale by simplifying and offering the most popular tire and wheel packages based on market knowledge."
Tire makers have one more thing they can offer: brand name recognition. That alone can help many dealers win high profit tire/wheel business. While many customers may shy away from names and product packages they’ve never heard of, a strong brand name could be enough to sway customers into a sale.
Kumho’s Leverington agrees. "Consumers who are excited about the tire product will very often be in the market for optional size wheels as well. Helping the dealer to portray a high performance image with a positive brand name, point-of-sale displays and advertising support can make a difference.
"Tire companies also have the research to help dealers determine the correct inventory of tires that will help drive their wheel inventory. If the dealer is doing business with his local wholesaler, working out programs that will assist in keeping wheel inventory current with market trends is always helpful."
Pirelli also agrees that supplying POS materials along with product training and advice on industry trends is invaluable. But it recognizes that industry data is also important.
"Tire companies with strong ties to OE can support dealers with their knowledge of vehicle trends and on the new models coming.," said Clancy. "Ties to car club events and racing activities also get dealers closer to the customer."
Everyone agrees this seemingly inseparable pair can bring higher margins and better bottom line results. But the ball, as they say, remains in the dealer’s court. Only he can decide the level of commitment, the amount of capital, the extent of training, the balance of inventory, and the focus of promotion he is willing to put forth to capture high profit tire/wheel package sales.
ROCK-N-ROAD PERFORMANCE FROM NEW BFG T/A
High performance doesn’t just come on Porsches, Corvettes or BMWs. High performance – rather, a higher level of performance – comes into play even when driving through thick mud, climbing sharp rocks or just navigating neighborhood streets in bad weather.
Earlier this year, Michelin North America proved that point with the roll out of the new BFGoodrich Mud-Terrain T/A KM, which replaces the now retired Radial Mud-Terrain T/A. The two-day introduction event, held at the 500,000-acre Flying M Ranch in Nevada, one of the largest working ranches in the U.S., showed the new product is a more than capable successor.
Driving along the foothills of the Sierra Nevadas, journalists got first-hand experience of how Michelin met its goals for the new radial. "Our goal was to develop a tire with superb off-road traction for all conditions – mud, rocks, dirt and sand – balanced by good manners on pavement," said Scott Dishman, BFGoodrich brand marketing manager. "When we set out to improve a tire that was already considered the industry benchmark, we knew it wouldn’t be easy."
According to BFGoodrich officials, the new Mud-Terrain T/A KM provides superior mud traction and slick rock performance, even wear, and a quieter, more comfortable ride compared to its predecessor. The new Mud-Terrain T/A KM also equals its kin in durability, hydroplaning resistance, dry and snow traction, said the company. The new tire features a dual tread radius profile, which creates a larger, more rectangular footprint, said BFGoodrich officials, which increases tread contact.
The Mud-Terrain T/A KM’s aggressive tread pattern features large shoulder blocks called "DiggerLugz", which deliver "exceptional power in digging through deep mud, dirt and sand." With a similar tread-void ratio to its predecessor, the Mud-Terrain T/A/ KM’s tread blocks have been reoriented to reduce road noise and improve rock climbing traction, officials said.
The tire also has a rim protector designed to guard against damage, particularly when the tire is run at lower inflation pressures on tough off-road terrain. The tire’s durability comes from the company’s TriGard construction with three polyester cord plies that provide bruise resistance in the sidewall and tread areas, BFGoodrich officials said.
The new Mud-Terrain T/A KM is now available in 25 sizes, including 15-, 16-, 16.5-, 17- and 18-inch sizes. All comes with raised white lettering. The company plans to add additional larger sizes within the next year.