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OTR/Ag/Specialty Tires

Pulling Ahead: Trailer Tire Market Offers Stability, Profitability

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In these uncertain times, a tire segment that offers low inventory, high profit margins, limited competition and steady growth may seem too good to be true.

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Fortunately, this scenario isn’t fiction, as dealers who take the time to look into the specialty/trailer tire segment will soon discover. Because the majority of dealerships don’t carry these tires, being one of a few dealers in a particular area to offer replacement trailer tires can have a substantial impact on profit margins.

Sales of trailer tires have grown steadily for the last several years, a trend that Maxxis USA expects will continue.

“Trailer sales themselves have fallen off slightly, but not to the extent of the car business, because trailers have multiple uses and are less impacted by fuel costs,” says a company spokesperson. “Our trailer tire sales are still very strong.”

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While the second half of this year may be relatively flat compared with 2008, this segment should continue to grow. “It’s hard to imagine any factor that could spike the segment until the economy improves,” according to Maxxis.

The tiremaker advised any dealers who aren’t currently carrying trailer tires to reconsider, saying, “This is generally a higher profit segment and is easy to inventory. In addition, there could be an opportunity to sell other products for the tow vehicle.”

Backing up the claim of consistent growth is Randy Groh, vice president of product marketing for US AutoForce. “We group trailer tires into our specialty tires category, which also includes ATV and other tires. The last few years, that category has been getting bigger and bigger.”

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He says the majority of trailer tires US AutoForce stocks are imported. In recent years, there has been an increase of larger ST rated tires manufactured in China, where previously only smaller trailer tires were made.

“I’ve heard some concerns from dealers, mainly with the larger tires, of blowouts,” Groh says. “It may simply be because Chinese tires have such a big marketshare, so people want to blame them for blowouts. I don’t think that has much to do with the actual quality; after all, these tires sit for a long time and they’re not always stored in the best of conditions.”

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To that point, it’s important for dealers considering this segment to keep in mind the differences in storage, service, and applications that set trailer tires apart from passenger tires.

“First of all, do not mount trailer tires on passenger cars or light trucks,” Maxxis says. “Trailer tires are not designed to perform on drive or steering axles. Also, from a construction point of view, ST radial trailer tires will feature stronger and heavier gauge materials than a comparable passenger/LT tire. The rubber compound will also contain more chemicals to resist weather and ozone cracking.”

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To allow for a larger weight-carrying capacity, trailer tires are constructed with a stiffer sidewall. That stiffness helps control sway problems associated with sidewall flexing, which could cause dangerous problems when towing a loaded trailer. The key to avoiding flexing is proper tire inflation.

Unlike passenger or light truck tires, trailer tires, because they are used less frequently, often will not wear out before they need to be replaced. If a trailer tire is older than three or four years, it should be checked by a professional before being used, according to the Rubber Manufacturers Association’s Web site, www.rma.org.

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The life of a trailer tire is limited by time and duty cycles, according to Maxxis.

“Industry standards suggest that trailer tires should be replaced after three to four years of service regardless of tread depth or tire appearance. The mileage expectation of a trailer tire is typically between 5,000 to 12,000 miles,” the company spokesperson says.

In order to help extend the life of these tires, proper storage is important. “Too often, people will just park the trailer and let it sit over the winter,” Groh says. “The tires aren’t covered, they’re exposed to temperature extremes and they will flat spot, even if the full weight of a boat or recreational vehicle isn’t sitting on them.”

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For correct storage, it’s best to keep weight off of the tires, as well as keep them covered so they’re protected from the sun, he says.

“For extended storage, remove the load from the tires by putting the trailer on blocks, and air-down the tires from maximum pressure,” Maxxis says.

Seeking Success
Tire dealers need to keep a few key things in mind when choosing to enter this segment, not the least of which is location. It’s ideal for dealers to be in an area where there is plenty of use for trailers, which are primarily used to tow boats, horses, livestock, equipment and campers.

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If the market does exist, taking a proactive approach to gaining customers will produce the best results. Dealers who are new to the segment may want to consider contacting local marinas and farm supply stores to help pass the word along that there is a reliable source for both the products and service they will be looking for.

The most important thing to remember when helping a customer select a replacement trailer tire is to match the tire with the load weight and type of application the trailer will be used for.

Consumers in this segment often need a replacement tire fast, since no one wants to delay vacation plans or other activities while waiting for their new tire. Dealers who can keep key sizes in stock will fare better than those who don’t. And luckily, that amounts to far fewer tires to keep on hand than in most other segments.

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“With a minimum inventory investment in four or five key sizes, dealers can have 80% coverage,” according to Maxxis. “Consumers generally just want quick and easy access and don’t want to have to shop all over town to find a dealer.”

Along those lines, it’s also an advantage to have quick access to a well-stocked distributor warehouse.

“Obviously if it’s the right season and they know a lot of people are going to be coming in, they can stock the most popular sizes, but quick access to a good warehouse is key,” Groh says. “For example, in the Milwaukee area, one of our bigger dealers is within 30 minutes of our 8,000-square-foot warehouse. So he doesn’t need to stock trailer tires. He can practically have the customer sit in his waiting room while someone comes and gets the tires and puts them on, and the customer might never know he didn’t have them in stock.”

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Dealers entering the trailer tire market at this time also should be aware of the growing demand for wheel and tire assemblies, as opposed to selling them as separate units. Another trend is the shift to radial tires, which have become more popular with customers in recent years because of their ability to carry heavier loads.

Despite their differences, trailer tires require no special equipment for mounting, balancing or servicing, a fact that adds to the absence of a large up-front investment.

In addition to fast service, consumers in this segment are also looking for value, Groh says.

Finally, keep in mind that the trailer tire segment is typically a very seasonal market.

“When the weather breaks, people take their boats out and get everything ready, and that’s when they want their trailer tires,” he says. “There’s such a short window in the spring when you get most of your sales. Up here, as soon as the lakes thaw, people start bringing out their recreational items. By mid-May or Memorial Day, most of that business is done. About 90% of the sales in this segment are in that two-month window.”

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