Times change. For those of you who have been around the tire business for the last 15-20 years, you have seen plenty of change: new brands, new segments and new sizes. You’ve seen the rise of the mud terrain and the fall of 13-inch and then the 14-inch passenger tire. You’ve seen skyrocketing mileage warranties and the introduction of the (Y) speed rating. The catalyst for most of that change has been technology, trends in vehicle tuning or original equipment.
While tire technology is a fascinating subject, we’ll leave it out for the bulk of this examination. For our purposes, we’ll touch on the impact of new vehicles and their associated customization trends. New market conditions lead to new vehicles that then lead to new tires. As the need for these tires grows from small to big, a new segment is formed and our lives as tire sellers get more exciting or exasperating as a result, depending on your perspective.
For instance, years of performance tuning momentum that started in the 1990s and OE wheel diameter trends that bloomed through the 2000s led to a surge in UHP summer tires that peaked in 2007 at almost 6 million units. The surge was short lived though, as volumes have since fallen back down to under 4 million (WYZ rated), according to data from the U.S. Tire Manufacturers Association. While UHP summer peaked in 2007, all-season was still the UHP minority with only 4.7 million units in the segment. Since then, it has taken a dramatically different direction than summer UHP and increased by almost 250%. That growth was a simple reaction to one undeniable fact: consumers were not getting what they wanted out of the tires that were originally on their cars or those that were available to them in the aftermarket in their size. Led by customer dissatisfaction and poor CSI (Customer Satisfaction Index) scores, OEMs started homologating all-season tires in place of traditional UHP summer sizes. Tire manufacturers augmented their UHP all-season coverage in kind. As it turned out, customers liked the look of performance but wanted more tread life and the utility of all-season traction. In about 15 years, UHP all-season grew from just over 3 million tires to just under 12 million tires, UTSMA data shows.
Right now, the crossover SUV vehicle segment is booming, and there is no shortage of tires in the market to accommodate many of the vehicles. Most top tire brands have at least one dedicated tread for CUVs, or at the very minimum, have worked the sizes into more traditional highway-terrain treads. However, there is a growing section of the CUV market that is largely unrepresented in the replacement tire market – the luxury performance CUV.
Growth in the CUV Segment
The midsize luxury CUV segment, which includes vehicles like Audi Q7, BMW X3, Mercedes-Benz GLE, Land Rover Range Rover Sport, Porsche Cayenne, Volvo XC90 and many more, has grown to more than 54% since 2014 and now totals over 1 million vehicles sold in 2018, according to a 2018 GoodCarBadCar.net report (see chart above). When considered in total over the last five years, there have been almost 4.6 million vehicles sold in the midsize luxury CUV segment in the U.S. since 2014, and that number is projected to grow.
The geographic opportunity is also wide open. As expected, high vehicle penetration for luxury CUVs is evident in California, New York and Florida, IHS Markit data reports. But there is significant opportunity in all states including, but not limited, to: Texas, Illinois, New Jersey, Pennsylvania, Ohio, Michigan, Georgia, Massachusetts, Virginia, Colorado, Washington and North Carolina.
From a tire standpoint, many of these vehicles are fitted with 19- to 22-inch rim diameters, unique sizes and, in some instances, UHP summer tires. This makes it difficult for consumers to find their tire size and/or model in stock at retailers or available at a reasonable price. These fitments are also difficult for dealers to stock as the OE brands are widely varied, the models and sizes are specialized and aftermarket options are few and far between.
The scenario for luxury CUV tires is remarkably similar to the UHP segment history above. Customers are not getting what they want out of the tires on their luxury CUVs, and, in some cases, there were no aftermarket alternatives until very recently. That is changing slowly as new sizes are getting added to existing tire models to accommodate some of these vehicles, but the options available to most consumers are few.
Successful all-season CUV tires intended for luxury CUVs will need to cover both the unique fitments inherent to the segment and more popular fitments featured on luxury CUVs and mainstream CUVs. Take a moment to consider the following: Crossovers with V-speed-rated tires and above have increased by 230% since 2014, IHS Markit data reports. Crossovers with V-speed-rated tires and above with 20-inch rim diameters and above have grown by 318% in that same time.
Whether you already noticed the increased traffic of luxury CUVs in your business and are searching for a solution, or are just starting to think about it, the time is now to be prepared. You owe it to your business, and your future customers will thank you for providing a gratifying answer to the questions they will ask about replacing the tires on their luxury CUVs. TR
Bob Abram has more than 20 years of experience in the tire industry. He started in the business working as the director of merchandising for Dealer Tire and has spent the majority of the last 12 years as a product planning manager for Yokohama Tire Corp.
Check out the rest of the May digital edition of Tire Review here.